Scooters clustering efforts in Europe · 2019-10-15 · Scooters clustering efforts in Europe...

Scooters clustering efforts in Europe

European Cluster Mapping Project “Identifi-cation, analysis, and monitoring of business clusters in Europe”

Case study for the Commission of the Euro-pean Communities Enterprise and Industry Directorate-General*

17 January 2008

*The opinions expressed are those of the authors, the con-

sultancy Competitiveness (www.competitiveness.com ), and

do not represent the Commission's official position.

http://www.competitiveness.com/

S c o o t e r s c l u s t e r i n g e f f o r t s i n E u r o p e

O b j e c t i v e s o f t h e c a s e s t u d i e s

Table of contents

1. Objectives of the case studies ............................................. 4

Addressing the European innovation gap ...................................... 4

Understanding if clustering efforts are helping to close the gap..... 4

Why the Powered Two Wheeler (PTW) industry clustering efforts in Europe can be a useful example ................................................... 5

2. The clustering efforts in the PTW industry in Europe......... 6

The Powered Two Wheeler (PWT) industry................................... 6

The Powered Two Wheeler industry in Europe.............................. 7

Structure of the European PTW industry ....................................... 7

The European challenge ............................................................. 11

3. Have the clustering efforts been a driver for innovation in PTW cluster in Europe?............................................................... 17

Identifying the European bottle neck ........................................... 17

Initiative to restructure industry and business cooperation .......... 18

4. Successes and failures of the PTW clustering efforts in Europe .......................................................................................... 23

In defining the perimeter for the clustering effort ......................... 23

In setting the strategies to build a sustainable competitive advantage ................................................................................... 23

In managing the clustering efforts jointly ..................................... 23

In applying the learning to the whole economy ............................ 23

5. Learning from the PTW clustering efforts in Europe ........ 24

Implications for the local and regional support institutions ........... 24

Implications for the national and EU institutions .......................... 24

1 8 J a n u a r y 2 0 0 8 E u r o p e I n n o v a C l u s t e r M a p p i n g - C a s e S c o o t e r s E u r o p e 2



6. Bibliography ........................................................................ 27

Table of figures Figure 1 PTW manufacture in Europe, 2001-2006 (ACEM) .............. 8

Figure 2 Geographical presentation of the PTW industry in Italy ...... 9

Figure 3 The needed supply chain restructuring............................. 13

Figure 4 Formulating supplier strategies ........................................ 20




1. Objectives of the case studies

Under the 6th framework programme, the European Commission / DG Enterprise and Industry, has launched a range of projects related to clusters and innovation. One of them, under the Europe INNOVA programme, develops a comprehensive set of data and analysis around clusters, innovation, and related policies. In December 2006, the importance of these studies was reinforced by the Competitive-ness Council’s conclusions, which describe clustering as an area of priority where actions should take place in support of innovation.

Addressing the European innovation gap There have been many other efforts to address the European innova-tion gap, and it is difficult to summarize the actions needed and pro-posed in one paragraph, but the report “Creating an innovative Europe” commissioned to former Prime Minister of Finland, Esko Aho, by the Hampton Court Summit, gives a clear message of the actions required and how clustering efforts could help close that gap.

The report states in its summary: “Achieving an Innovative Europe requires a combination of a market for innovative goods and ser-vices, focussed resources, new financial structures and mobility of people, money and organisations. Together these constitute a para-digm shift going well beyond the narrow domain of R&D and innova-tion policy.”1

Understanding if clustering efforts are helping to close the gap The Aho report gives as well a perspective of how clustering efforts can help that paradigm shift:

“Clusters and, more generally, regional agglomerations are often at the core of innovative development. It is widely recognised that new firms thrive in the proximity with other companies, investors, educational insti-tutions and research centres afforded by clusters particularly in the presence of world-class academic institutions. Mobility can be maxi-

1 http://ec.europa.eu/invest-in-research/action/2006_ahogroup_en.htm




mised when there is a local labour market that allows regular flows of people from one situation to another, with accompanying diffusion of knowledge. As well as the greater opportunity range it is clear that barri-ers such as the need to move house or schooling for families are re-moved. However, it also emphasizes that minimising such barriers more generally will create a more functional society. It is important to ensure that clusters are defined in terms of the new market and knowledge relationships needed for emerging sectors to thrive. It is even counter-productive to reinforce traditional sectoral clusters as these may inhibit the necessary mobility. Firms in traditional sectors are far more likely to find innovative growth by forming new linkages and apply-ing new technology to their existing products and services. This can be facilitated by opening the clusters to cooperation with and learn-ing from other clusters in the same or other sectors.”2

Why the Powered Two Wheeler (PTW) industry cluster-ing efforts in Europe can be a useful example

2 http://ec.europa.eu/invest-in-research/action/2006_ahogroup_en.htm



T h e c l u s t e r i n g e f f o r t s i n t h e P T W i n d u s t r y i n E u r o p e

2. The clustering efforts in the PTW industry in Europe

The Powered Two Wheeler (PWT) industry Powered two wheelers are getting more popular worldwide playing increasingly important role in the development of a fully sustainable integrated transportation system. This category of vehicles includes motorcycles, scooters, mopeds and cyclemotors.

Globally the market for powered two wheelers is divided into two ma-jor regions. The first one comprises US, Japan and Western Europe, where consumers mainly see the PWT vehicles as a pleasant way of transportation and already having one or more automobiles more expensive and powerful machines. The other region includes Asia/Pacific, Latin America and Africa/Mideast where PWT vehicles are the only means of transport for families and work purposes. These machines are cheaper and less powerful.

The world demand3 for PTW was estimated at 14 million vehicles per year in 1995. Since then, the market has been growing rapidly and is predicted to reach 55.7 million units in 20114 with annual rise of 5.4%. The increase will result from the growing demand both in de-veloped and emerging markets. There will be sustainable demand for all categories of motorcycles, however China, one of the largest PTW markets, will move away from PTW vehicles toward automobiles. To compensate the decrease in demand developed markets will favour PTW production due to the rising fuel prices and restrictions on car use.

3 The EU accounted for 12%, i.e. 1.7 million vehicles of the world demand. 70% of PTW found a

customer in Asia (Japan excluded). China alone accounted for 30% of worldwide sales as although

only 3 out of 1000 inhabitants would own a PTW, even at such a low density the huge population

size creates the world's largest PTW market. 4 Source: Fredonia Group Inc., report October 1, 2007




The Powered Two Wheeler industry in Europe The future trend in the demand for the PTW vehicles in Europe is clearly seen now. Scooters, mopeds and motorcycles are affordable and simple transport, easily accessible by drivers of all ages. Traffic congestion, increasing price for gasoline, parking problems, ecologic issues, and restrictions to engines no bigger than 50cc and speeds up to 45 km/h encourage the use of PTW vehicles. If in 1998 the European5 PTW Park consisted of 25.7 million vehicles then in 2004, the figure went up to 29 million unites.

Europe was a leading production centre of PTW vehicles in the past. Peugeot (France), Triumph (UK) and BMW (Germany) have always been famous trademarks among powered two wheeler machines. Europe launched Piaggio Vespa (Italy), a “global cultural icon” of the PTW industry and continues offering new motorcycle marques such as Aprilia (Italy), Derbi (Spain), Ducati (Italy) and KTM (Austria).

The share of European products is very small outside their birthplace counting to 2.6% of the US PTW market and to 0.5% of the Japa-nese market. In European countries EU producers occupy leading positions conceding 30% of its market only to Japanese producers. The high exchange rate of Japanese currency during past years im-proved competitive position of EU manufacturers but this is only a temporary factor.

Structure of the European PTW industry The European PTW industry consists of mopeds6 and motorcycles7 production. Traditionally EU manufacturers have stronger position in the production of mopeds than in the production of motorcycles.

Market fragmentation in Europe has favoured the coexistence of about 30 manufacturers among which there are some assemblers8. The Piaggio Group, Peugeot MTC, and MBK are the three largest European PTW manufacturers. In 1990s, the three producers pos-sessed more than 60% of European PTW production.

5 Total EU 15+10+2 6 Mopeds are two-wheel motor-driven vehicles with an engine displacement of 50 ccm or less, and

a maximum speed of 45 km/hour. 7 Motorcycles are PTW vehicles that are larger and faster than mopeds. 8 BMW stands out as an integrated motorcycle and car producer




When the overall PTW production fell by more than 30% over the period 1998-2005, there was a clear distinction in the product base between countries at that time:

France and Spain manufactured mainly small-engine and utility machines

Austria, Germany and the UK concentrated on larger ca-pacity, higher value and enthusiast machines

Italy focused on sports bikes and scooters The spread of the PTW production is not homogenous across the Europe. The production is concentrated in three regions9 (Figure 1):

Italy (Milan, Noeale, Bologna, Atessa and Pontedera) France (Saint Quentin) Spain (Barcelona)

Year 2001 2002 2003 2004 2005 2006Austria AU 40.088 53.440 55.957 56.651 59.986 69.045Czech Republic CZ 5.308 7.880 2.185 1.785 1.607 1.015Germany DE 120.790 121.704 109.120 102.836 100.952 106.340Spain ES 253.420 223.733 209.020 230.854 249.472 253.710France FR 358.115 158.562 154.764 255.738 259.200 232.427Italy IT 749.000 736.500 697.000 685.500 695.000 708.550Portugal PT 129 123 44 31 61 65Sweden SE 177 290 312 447 533United Kingdom UK 29.809 15.000 31.500 26.215 34.582 42.078Total 1.556.836 1.317.232 1.259.590 1.359.922 1.401.246 1.413.763

Figure 1 PTW manufacture in Europe, 2001-2006 (ACEM)

Geographically industrial players mainly locate near production and assembly sites with high concentration of manufacturing companies.

Taking the example of Italy (Figure 2) the following clusters have been formed around particular manufactures:

Milan around 2 manufacturers: Cagiva and Gilera Noale around 1 manufacturer: Aprilia Bologna around 2 manufacturers: Malaguti and Beta Pontedera around 1 manufacturer: Piaggio Atessa around 1 manufacturer: Honda

9 The three countries produced 96% of the European PTW in 1995. Direct employment was esti-

mated at about 20 000 jobs, and the total amount of the industry at more than 40 000 jobs.




Figure 2 Geographical presentation of the PTW industry in Italy

Other European manufacturers are in

Italy: Benelli, Bimota, Ducati, Fantic, Husqvarna, Italjet, Laverda, Moto Morini, MV Agusta, Vespa and Moto Guzzi

France: MBK, Peugeot Spain: Derbi, Gas Gas, Honda, Montesa, Rieju, Scopra, Suzuki

For a long time, Italy has been a leading European producer. In 1993 it provided 50% of the mopeds and 70% of the motorcycles produced in the EU. Later the Italian PTW industry even strengthened its domi-nant position partially due to the framework policy carried out by Ital-ian government. The policy stimulated market growth of the industry and helped the PTW manufactures to gain competitive advantage.

The small size of the European manufacturers was a significant dis-advantage of the European PTW industry comparing to the growing Asian manufactures. In 1992 on the PTW market, Japanese produc-ers sold about 140,000 units of their 10 most popular models whereas European producers only reported 27,000 units.

The polarised structure is another characteristic of the European PTW components industries. In 1995, there were nearly 2000 sup-pliers with a low average turnover value, 387 000 ECU. Since then, PTW manufacturers have significantly reduced the number of com-ponent suppliers, but for a long time, 7% of the total number of sup-




pliers accounted for half of the sales. Moreover, there have been only a few common suppliers, even in strategic components.

In the middle of 90s 44 biggest suppliers in the European PTW in-dustry had the following characteristics:

The majority of the companies were family-owned firms operat-ing with a single production plant

The dimensions of the main suppliers, with some exceptions of those supplying also the auto industry, were quite modest: 60% of suppliers had a turnover less than 25 million ECU; and 44% had a number of workers less than 200

Most suppliers were specialised in processes, operating verti-cally and carrying out labour intensive activities

More than half of the companies operated only on domestic markets

There was inadequate level of product and process innovation The majority of firms had weak quality assurance systems10 but

quite effective logistic systems11 40% of the component suppliers had more than 50% depend-

ency rate on 2-wheelers market

The existence of numerous residual suppliers with a low unit turnover value demonstrated the de-centralisation of single operations in-stead of formation of the completely assembled systems. The lack of common suppliers showed a dispersion of specialisation that brought the following considerable consequences:

Low standardisation of technical solutions among various PTW, even in the case of similar contents

Fragmentation of the suppliers’ resources dedicated to R&D Low interest of manufacturers from automotive components

towards the PTW sector Lack of industrial economies of scale.

10 Even though most of the firms were audited by their clients (38 out of 44), only 9 out of 44 ob-

tained the ISO 9000 certification and less than 12 carried out their supplies according to the self-

qualification principle. In average, quality department represented some 4% of the total workforce. 11 26 firms out of 30 utilised order-driven integrated information systems and 21 out of 40 were

linked to their clients through EDI systems.

1 8 J a n u a r y 2 0 0 8 E u r o p e I n n o v a C l u s t e r M a p p i n g - C a s e S c o o t e r s E u r o p e 1 0



Globally, the European PTW manufacturers still have a good repu-tation in the global market of the powered two wheelers. Rich heri-tage of motorcycle history supports the image of European PTW in-dustry which stands for products embodying both beauty and techni-cal quality.

The European challenge During the past decades, the European PTW industry has witnessed changes in its market potential in the global markets and in the evo-lution of demand. In parallel, the European players have been ex-periencing the consolidation of a single market within the EU. These factors have increased the competition and pushed the industry mar-gins down.

If for example the large motorcycles produced by European manufac-turers are leading in important areas of technology, there are huge challenges in cost reduction, developing economies of scale and up-dating distribution channels. Additionally, restrictions on access by new riders or industrial competition from developing nations need to be faced by the right strategic actions.

Competing in fragmented common markets and outside Europe In addition to the low absolute demand, the European PTW produc-ers command a significant market share only in their home markets. They are virtually absent from the Asian growth countries and in other developing regions. Many tariff and non-tariff barriers, espe-cially in Asia, close some important non-European markets. At the same time, the very same Asian countries enjoy a free access to the European markets.

On the one hand, within the scheme of Generalized Tariff Prefer-ences (GSP), the EU grants preferential import tariffs to the least-developed countries to boost their economic development. On the other hand, the EU translates special relationships with for instance neighbouring countries or accession countries into tariff preferences.

The European PTW Industry has fragmented structure where the industry is composed of a few large and many small producers. The fragmentation of the industry is the result of the fragmented Euro-pean markets. Different technical standards, homologation pro-




cedures and driving regulations across Member States force pro-ducers to offer many different models. In fact, the harmonisation of norms and standards in line with the Single Market programme has only begun.

Additionally, the European PTW manufacturers face higher labour costs due to higher wage levels but also due to lower flexibility and more extensive labour regulations than their foreign competitors.

In fact, the importance of European legislation and activities within all member countries has significantly increased, and it has become essential for the European PTW business to have a broad view of the complex economy, social, political, technical and legal issues sur-rounding European integration, regulation, harmonisation and trade. All these issues represent a great challenge for the motorcycle in-dustry.

While promoting competition, would the most effective policy be to reduce the number of regulations rather than creating new policies?

Difficulties in developing economies of scale European industry faces tough challenges related to the market structure because European manufacturers of small motorcycles lag behind both in terms of manufacturing cost and massive-production of technologically advanced components. The handicap is too high costs and too small scale. In comparison with their global competi-tors, even large firms have insufficient size to exploit economies of scale. However, some progress has been made in both areas in terms of component standardisation.

Additional strategic risk lies in the certain key components where European PTW producers are entirely dependent on Japanese suppliers, to some extent controlled by Japanese motorcycle manu-facturers. In contrast to manufacturers expectations, there still exists a large number of European suppliers that are less competitive than their Asian counterparts. These suppliers are still mainly interested in markets close to their facilities. The technological experience in indi-vidual components is very modest because quality control is not fully




structured due to the inability to free resources towards technological development and economies of scale.

Briefly, one may state that the European component supplier’s net-work is weak: they are characterised by an insufficient technological knowledge, insufficient quality and high prices. There’s a lack of funds for aggressive R&D and investment. Losses, under-capitalisation and a predominance of family-owned enterprises are responsible for insufficient capital that can be mobilised for financing of expansion and R&D.

It has become clear to the manufacturers that it is now time for a se-rious reorganization of the manufacturing processes:

Only key competitive processes should not be outsourced It is necessary to decrease the vertical integration and go

trough a gradual subcontracting to suppliers

This needed restructuring will have a tremendous impact in the na-ture of relationship between PTW manufacturers and suppliers. The market is forcing a supply chain manufacturing that leads suppliers to assume a more important role because: the future competitiveness of the European PTW industry leans on competitive component sup-pliers.

Fashion influence

Homogenization of local

regulation

Market fluctuation

Expansion into new markets

Intense non-European

competitionLEAN PRODUCTION

Increased outsourcing by PTW manufacturing

Sourcing of full systems

Delegation of design responsibility+

Figure 3 The needed supply chain restructuring




The growing added value transfer to suppliers implies evolving from the purchase of client designed individual components into a pro-curement model based on full systems progressively designed by suppliers. The purchase of full systems has double benefit for the client: it saves the assembling costs of individual components and gives the client more flexibility due to the reduction on the number of direct suppliers, and due inability to use standardised components in different models. On the other hand, lower number of direct suppliers and the co-operation among analogous suppliers and manufacturers may also help to develop constructive confidence and to create a minimum critical mass to address investment in technology.

How to develop and increase trust between partners and managers, essential to develop both the favourable envi-ronment for innovation and future strategies for the SMEs and family oriented businesses?

Low capacity to respond to changing demand In order to maintain the competitiveness in the future, the European PTW industry will have to increase scale through sales abroad.

The manufacturers are forced to adopt more active commercial poli-cies and to concentrate their efforts on brand building, communica-tion, and right-on-time product launches12. One key issue is the need to find the right balance between technology development and de-sign, more related to understanding changing consumer require-ments and taste. Some progress has already been made in terms of niche strategy development13.

The 50cc market has been affected by an important evolution char-acterized by a strong and continued decrease of the old mopeds re-placed by modern and highly equipped scooters with approximately

12 The importance of time-to-market has increased due to the increasing influence of fashion on

scooters and the continued outcome of new products addressed to specific market segments 13 In recent years, European PTW producers have been producing motorcycles designed to meet

the specific tastes and requirements of particular groups of buyers, enabling small scale manufac-

turing and targeted sales. In addition, the adoption of modular designs has allowed them to simul-

taneously improve production efficiency and increase the number of models offered to bikers.




the same features as cars. The scooter market, which accounts for more than half of the European sales, is increasingly becoming a fashion-oriented market. In fact, product life cycle is decreasing from 10 to 3 years: the offer of new models grows at a very rapid pace.14

During the past 15 years, the PTW market has been evolving, would it be for the small functional 125cc, highly developed scooters GT or the big cylinders. Successful manufacturers need to be highly crea-tive as different consumer sectors ask from their “dream bike” to be funny vehicles oriented either towards the ease or the pleasure of driving, prestigious objects making a difference in the social circles, performing sports equipment or secure premium vehicles with inte-gral ABS15 combined with ASC taking into account the increase in the need for the sense of security. The latter has been increasing in importance during the past couple of years as the European players see how security and after sales services or the lack of it plays also on the image of the whole business (motorcycles, accessories, pilots’ and passengers’ equipment).

In addition to that, the traditional distribution channels are getting outdated.

For example, Internet sales are increasing in both new and second hand acquisitions. Besides being purely image creation tools for sin-gle marques, concessionaires have their own web sites, and the buy-ing decision is often build on price comparisons, small announces, available information and advices on blogs. These create a counter power of consumers to institutional communication of marques, forc-ing the manufacturers to get closer to their clients. Today, the Ameri-can manufactures are already used to such business, but the Euro-pean players are still lacking behind.

Also, in order to satisfy the growing number of price sensitive con-sumers, the sales figures of such mastodons as Géant and Auchan, who commercialise Chinese marques Jonway and Yiying, are getting

14 Often, scooters are addressed to very young impulse buyers who value fashion, design, graphics

and colour. Some manufacturers re-style the scooters every 6 months. Today, one estimates that

there are more than 100 models in the market. 15 BMW was the first manufacturer to present ABS in motorcycles in 1986 and keeps on developing

the technology further




higher and higher16. At the same time, there are manufacturers who are looking for to establish long term relationships with end users and with those who play leading role in sales operations and big sales volumes.

In such an environment, manufacturers must adapt to market de-mands in an attempt to anticipate the market and be able to offer the right model at the right time: time to market becomes critical.

What actions should be launched to help local SMEs de-velop market driven innovative processes and products? How to break mental barriers to inter-sectoral innovation in order to better drive market rather than industry ori-ented initiatives?

16 2005 was a record year for the production of bicycles in China: production climbed to 80,430,000

units; about 10% more than in 2004. Electric bike production almost doubled in 2005; from 6,76

million units to 12,11 million; a big 79% increase. Despite the increase in the production, the Chi-

nese bicycle industry is not bursting with confidence about the years to come. It’s because worries

are mounting on quality and image of the bikes produced; on the increased competition from coun-

tries like Bangladesh, Sri Lanka and Indonesia and on export subsidies that are dropping year by

year.



H a v e t h e c l u s t e r i n g e f f o r t s b e e n a d r i v e r f o r i n n o v a t i o n i n P T W c l u s t e r i n E u r o p e ?

3. Have the clustering efforts been a driver for innovation in PTW cluster in Europe?

As common European markets and national PTW clusters fall behind in sales volumes, it seems interesting to explore possibilities to drive competitiveness reinforcement actions at European, trans-national level, combining both strategic analysis, change management tools and common policy work.

Identifying the European bottle neck The Motorcycle Industry in Europe (ACEM17) Task Force clearly stated the fundamental need for European PTW supplier coop-eration, and the diagnosis of the PTW European industry realized by the manufacturers was further discussed during the Milan conference “European PTW Industry on 1st and 2nd Tier Suppliers Cooperation”, held in November 1995. After the seminar, and in order to grasp the supplier’s interest for the following steps, personal telephone inter-view was carried out with some 50-60 suppliers (representing 70% of conference participants). The main results were the following:

Most suppliers share industry diagnosis The areas of enhancement agreed by suppliers coincided with

the needs found by manufacturers: cost reduction18, technology update, flexibility and quality improvement

Suppliers also share the need to cooperate with manufacturers in order to implement these enhancement processes (in con-trast, co-operation with other suppliers was not considered relevant, even impossible for competing suppliers)

17 The Motorcycle Industry in Europe (ACEM), created in 1994 by the merger of 2 PTW manufac-

turers’ associations (ACEM and COLIMO), is the professional body representing today 11 PTW

manufacturers, 11 national associations, and 3 guest members present in 11 European countries.

ACEM members represent a turn-over of 10 billion EURO and 100 000 jobs. 18 67% of suppliers interviewed identified cost reduction as a priority area of enhancement for their

companies.




Globally, interviewed suppliers unanimously are wiling to take part in further meetings at the European level with manufacturers and other suppliers in order to share needs and launch co-operation initia-tives19, the first step in getting a more outstanding role for the suppli-ers.

In the first place, interested suppliers needed to take a strategic de-cision on how to compete because not all of them can be turned into full system suppliers because it requires standardisation of compo-nents and technological leadership (both in products and processes):

Suppliers with needed capacity saw that larger volumes could give access to economies of scale in manufacturing and R&D. They needed additional abilities to develop integrate compo-nents from other suppliers and to take part in the first steps of design for new models together with client manufacturers.

The suppliers who did no wish or could not develop such poten-tial needed to undertake a different strategy. They had the op-portunity to concentrate on individual component manufactur-ing, showing their cost and logistic advantages and assembly expertise. They were able to compete at a local level that needed production flexibility.

Initiative to restructure industry and business coop-eration Agreement to cooperate20 is not the most difficult part in the process to reinforce industry’s competitiveness. The most difficult part is how to do it: building trust between industry agents through an action-oriented process.

19 85% of interviewees were interested in taking part in system and subsystem development pro-

grammes together with manufacturers and other suppliers. 46% thought their company would be

more successful if agreements with other suppliers could be signed to develop full systems. 20 Would it be between suppliers and manufacturers, among suppliers themselves, or even be-

tween governments and the private sector




In this respect, it became convenient to launch a pro-gramme under the auspices of the European Commission to restructure the European motorcycle suppliers for in-ternational competitiveness.

Given the importance of the scooter segment for the European PTW industry, the first PTW supplier restructuring pilot programme was carried out in that segment. As an important mentality change was required among the vast majority of agents in the sector (manufac-turers, public institutions such as European Commission, and coop-eration agents), the intervention of a specialized consultant team was needed to:

identify the areas of agreement among analogous suppliers and manage the change management process.

The participants agreed on the following final objectives of the initia-tive :

1. Achieve a two tier supplier structure for the scooter industry o 1st tier suppliers assumed the role of leaders in the com-

ponent systems development o 2nd tier suppliers coordinated their developments through

1st tier suppliers 2. Develop joint programmes in technology, production processes,

quality systems, etc. among non-competing 1st tier and 2nd tier suppliers in different European countries

3. Identify potential standardized components that would need non-European technology

Defining the strategic business segments European component suppliers may be grouped by technology, ma-terials or geographic location. However, at a strategic business seg-ment level, two supplier typologies needed to be identified according




to their differentiated interaction with clients: standard component suppliers21 and personalized component suppliers22.

Grouping PTW manufacturers and suppliers by strategic business segments allowed the design of cooperation programmes that adapted to the specific needs of a group of companies sharing the same interests.

Suppliers need to understand how they compete strategically

Standard components suppliers

Personalized components suppliers

Global markets

Excellence in cost and logistics

Global markets

Production flexibility

Technological Leadership

Critical Mass

Figure 4 Formulating supplier strategies

Both supplier groups needed to reinforce their competitiveness through costs reduction, quality improvement and better services. Nevertheless, to differentiate suppliers by specific typologies it is necessary to upgrade technology, introduce standardisation and sys-tem development.

Action building to reinforce the chosen segments The steps to reinforce competitiveness for standard component sup-pliers took into account the need to develop critical mass to attain

21 Standard component suppliers compete for technology differentiation. Standard components can

be assembled for various models by different manufacturers. They need to be continental in order

to have the capacity to obtain economies of scale in R&D and manufacturing processes. The com-

ponent becomes standardized when it acquires technologic supremacy at a sufficiently attractive

cost and the motorcycle manufacturer includes it when designing the new model: brakes, speed-

ometers, suspensions, engines, ... 22 Personalized component suppliers are suppliers with capacity to provide tailor-made responses

to manufacturers’ needs. Those suppliers compete in client proximity and services related to prod-

uct differentiation. As the supplier size is conditioned by the client entity, they often diversify their

activities beyond the motorcycle industry.




economies of scale in R&D and production processes. Such critical mass must be sought by suppliers while operating at a global level, and developing standard components that can be used by the largest possible number of world manufacturers at the early design steps of new models.

Therefore, abilities in co-design needed to be developed to comply with the most demanding international quality standards. Such re-quirements may be addressed by cooperating in pan-European programmes with other non-competitor standard component suppli-ers and with motorcycle manufacturers.

Personalized component suppliers tend to address substantially dif-ferent competitive challenges: increase their personalized service level to assure required production flexibility close to the clients. Risk needs to be diversified beyond the motorcycle industry and technol-ogy contributions usually come from other industries. Cost reduction as quality enhancement is determined by local motorcycle manufac-turers.

To address these challenges, cooperation must be driven at clus-ter (geographical concentrations) level, which may include Euro-pean inter-cluster joint cooperation technology programmes at later stages.

In other words, the development of systems with full supply has dif-ferent implications depending on suppliers’ business segment. The systems developed by standard suppliers will tend to become more universal, with long series. On the contrary, personalized component suppliers may develop the systems suitable to differentiate models and brands and, therefore, those that demand higher production and logistics flexibility.

Scooter Suppliers' Project 1996-1998

The project was initiated by the by ACEM, the European Powered Two Wheeler (PTW) association. The objective of the project was to make a transition of the PTW supplier base into two tier structure because PTW manufactures moved to purchasing full components systems. The pilot project consisted of three stages:




1st stage November 1996 – February 1997

Facilitating internal strategic change in the supplier company

2nd stage March 1997 – December 1997

Creating trust within suppliers in one cluster

3rd stage January 1997 – June 1998

Creating trust between supplier groups or tier 1 suppliers and manufacturers

The project aimed to enhance the competitiveness of PTW manufactures worldwide through finding ways towards cost reduction, technology im-provements, productivity increase, flexibility, and better quality. Another objective was the development of joint programmes in technology, produc-tion processes, quality systems, management techniques etc. among non-competing tier 1 and tier 2 suppliers in different European countries.

The expected results of the projects were the following:

• increase in the number of European 1st tier component sys-tem suppliers;

• decrease in the number of suppliers of some parts but in-crease in scale and competitiveness of the remaining sup-pliers;

• smaller technology gap for critical components between the EU and Japan;

• better industrial cooperation both in the European PTW clus-ters and at the international level (Japan)

• consolidation of European employment in the PTW industry



S u c c e s s e s a n d f a i l u r e s o f t h e P T W c l u s t e r i n g e f f o r t s i n E u r o p e

4. Successes and failures of the PTW clustering efforts in Europe

In defining the perimeter for the clustering effort

In setting the strategies to build a sustainable com-petitive advantage The European Scooter Suppliers Cluster Project driven in 1996-1998 was instrumental in enhancing the linkages between European PTW actors. The project resulted in the creation of some real “Euro-pean SMEs”23, but it failed in forcing the large OEMs24 to join forces in the areas related to the needed economies of scale, for example in a project to develop joint engines. In fact, the OEMs preferred to use their influence in front of their national governments to obtain special treatments (financial, labour flexibility…), rather that to follow the recommendations coming out of the cluster project. The unfortunate result of not joining forces is that basically all the European PTW industry lost in competitiveness.

It seems that while trying to create a competitive Europe, it might be useful to prevent national and regional governments protecting their short term “champions” in order to ameliorate the competitiveness of the whole European industry, especially in such a specific business as PTW is. At the same time, giving direct financial support to artifi-cial interclustering organisations, which have recently become the new trend in European industrial and innovation policies, should be avoided because of the risk of failing in concrete results.

In managing the clustering efforts jointly

In applying the learning to the whole economy

23 For example an Italian and a Spanish supplier joined their forces to set up a plant in France 24 Piaggio, Aprilia, Peugeot, Derbi, etc.



L e a r n i n g f r o m t h e P T W c l u s t e r i n g e f f o r t s i n E u r o p e

5. Learning from the PTW clustering efforts in Europe

Implications for the local and regional support institu-tions When approaching a cluster initiative, it is essential to set the good perimeter for it: it has to cover the whole value chain from the suppli-ers to the market, it means, all the necessary actors to develop a business and reach the market.

Implications for the national and EU institutions Today, in addition to the trans-sectoral competition, taxation or em-ployment rules, PTW business is influenced by the policy frameworks and regulations related to integrated transport strategies, local trans-port plans, countryside traffic management strategies, or sustainable transport and road safety programmes.

The European Commission’s White Paper of 2001 “European trans-port policy for 2010: time to decide” aims to promote a sustainable transport policy. The White Paper proposes to achieve sustainability by gradually breaking the link between transport growth and eco-nomic growth, principally in three ways: changing the modal split in the long term, clearing infrastructure bottlenecks and placing safety and quality at the heart of the transport policy. Both the Federation of European Motorcyclists Associations (FEMA) and ACEM participated in the mid-term review conference of the White Paper held in Brus-sels late 2005. Thus, in its final version

motorcyclists are mentioned three times : twice in the con-text of dangers in road circulation and once in the context of presenting a slight interest in changing priority lane allo-cations by some local authorities in cities and conurbations

PTW industry is not mentioned even once, leaving the in-terests of the business far behind questions on European railway infrastructure or overloaded airports.




In November 2006, at the invitation of the Finnish Presidency of the EU and of the Italian Ministry of Transport, ACEM participated in the 4th Verona Ministerial Conference of European Ministers of Trans-port. ACEM25 fully supports the objective set up in the European Commission’s Road Safety Action Programme to halve the number of road accidents on European roads by the year 2010. Thus, once again, the press release of the 2772nd Council Meeting on Transport, Telecommunications and Energy held in Brussels at the end of the Finnish EU presidency in December 2006 mentions motorcyclists as vulnerable road users, but does not deal with reinforcement of the European PTW business at all.

It is evident that the PTW industry relies on the availability of efficient and safe logistics in order to ensure the shipping of components and to provide just in time delivery of motorcycles and scooters across the EU, but it is not enough to strengthen the European PTW busi-ness. Being industry’s and transport’s stakeholder, ACEM and its members look forward to contributing to the definition of Transport Policy, at EU level and in the Member States, for a more competitive economy and an improved mobility in Europe.

Currently, an EU directive concerning the harmonisation of legisla-tion on measures against air pollution by motor vehicle emissions is looking for to have a straightforward impact on costs and on the envi-ronmental impact of motor vehicles26. The European Commission believes that “green” public procurement would help motor manu-facturers to build the market credibility of less-polluting and more-energy-efficient vehicles.

To date, at the EU level, framework on state and regional aid to PTW business have been drafted27. Moreover, there are regulations with intentions to increase competition in the PTW sector – for ex-ample in lowering the cost of owning and using motor vehicles, and

25 The European PTW industry responses are related to the development of new technologies in

vehicles, to innovative training programmes and disseminating PTW friendly best practices in the

field of road infrastructure or to new safety-oriented advertising guidelines. 26 See directive 2001/100, OJ L16 (18.01.2002): Motor vehicle emissions – technical controls 27 For example, communication OJ C 368 (22.12.2001) determines the Community framework for

State aid to the motor vehicle industry and communication OJ C 70 (19.03.2002) contains a multi-

sectoral framework on regional aid for large investment projects, excluding transport sector but

containing specific provisions for the motor vehicle industry.




thus discouraging the shift to other modes of transport28. Neverthe-less, one may argue that discouraging competition in the PTW sector is not the most efficient way to promote that kind of modal shift!

Actors like ACEM are committed to continually develop and maintain a strong and viable PTW industry in Europe and can be a competent partner of European institutions.

28 See regulation 1400/2002 of 31 July 2002 on the application of Article 81(3) of the treaty to

categories of vertical agreements and concerted practices in the motor vehicle sector (OJ L 203 ,

01/08/2002).



B i b l i o g r a p h y

6. Bibliography

ACEM and The Cluster Competitiveness Group: “European Supplier Industry Analysis” Survey by five large European PTW producers, 1997-1998.

ACEM: “Yearbook 2006”. Facts and figures on PTWs in Europe. 2006.

European Commission: “2772nd Council Meeting on Transport, Tele-communications and Energy”. Press Release 15900/06 (Presse 343). Brussels, December 2006.

European Commission: “European transport policy for 2010: time to decide”. White Paper. Luxembourg, 2001.

MKC: “A Sustainable Integrated Transport Strategy for Milton Keynes”; January 1999.

Task Force of European Manufacturers of the Motorcycle Industry: “Input Report”.

www.acembike.org

www.bike-eu.com

www.moto-net.com


http://www.acembike.org/

http://www.bike-eu.com/

http://www.moto-net.com/



Date post:	06-Apr-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

Scooters clustering efforts in Europe · 2019-10-15 · Scooters clustering efforts in Europe...

Documents