These graphs shows that European manufacturing is a zombie, except the high tech industries

Eurostat just released data on European industrial production since 2005. The numbers are quite dismal: manufacturing in Europe is not back to pre-crisis levels by a long shot.

The only European manufacturing industries that overcame the crisis and now manage to show some growth is the high tech segment – basically pharma, aircraft and spacecraft manufacturing. Electronics, optical instruments and computer production hasn’t recovered to precrisis levels.

(Ed: High tech is defined by the intensity of R&D expenditure in the industry. Also be advised: this is data on the manufacturing industry, not the economy as a whole. So when it says “computers, electronic, optical”, this means the actual production of computers and other hardware, not internet startups.)

Manufacturing took a severe hit in Europe during the crisis

Industrial production as a whole dropped by almost 20 percentage points during the crisis. While it managed to recover a bit, the industry still has 10 percentage points to go if it wants to attain precrisis levels.

For low-technology industries, the picture is bleak. While low tech industries suffered “comparatively moderate” from the crisis, they aren’t recovering. At all: “Production level in the third quarter of 2012 is still very close to the deepest level during the crisis.”

High tech manufacturing is the only driver of (modest) growth

Eurostat headlines a 26 % growth for the high tech industries, but that’s because they use 2005 as a baseline (they don’t explain why).

Medium tech industries increased 7  % compared to 2005 levels, but looking at the graph they still clock in at least 7 percentage points lower than the 2008 level.

I think it makes more sense to compare to precrisis levels (2008), so I’ve added a visual line to the graph, so you can see where we are in European manufacturing. Compared to 2008, hi tech production managed to gain a 12 percentage points. Also, if you compare it to precrisis growth, it’s not very robust – it seems to hover around the red line a bit, unsure of where to go next.

Q4 of 2012 is not yet included, but it would be interesting to see if that upward trend continues:

Not all high tech industries are created equal: “computers, electronic and optical products” and “pharmaceuticals” finish somewhere just above or below the 2008 levels.

Basically, only one sector shows decent growth in European manufacturing: air and spacecraft related machinery. You can’t exactly call the growth in these industries organic, unfortunately, as they’re  probably the two most subsidized industries in Europe.

And all those millions and possibly billions that go into these industries don’t really move the needle, because its relative weight is so small compared to pharma and electronics/computers.

Note that electronics recovered strongly after 2009 but hit a wall again in 2011, and was trending downwards in Q3 of 2012, likely caused by both the continuing economic uncertainty and offshoring of production to Asia.

France and Denmark make a very poor showing, even in the high tech segment

Finally, here’s an overview of industrial production in the last years per country.

What’s striking here is that some EU economies like France (+ 1,5 %) and Denmark (+1,4 %) are struggling to produce growth even in high tech industries. On the other hand, Estonia (+ 35,1 %) and Poland (14,5 %) are on the other end of the spectrum. They’re showing huge growth in hi tech manufacturing, but you can’t call them “outliers”, because this is data assembled over 6 years.

What is clear from the data, as Eurostat points out, is that high tech manufacturing is more resilient during times of crisis than the rest of the manufacturing industry:

Know more about this? What does all this mean? Let me know!

Photo: wwworks, Flickr

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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