Download the full study reports:
Qualitative report: Economic
background and key e-business issues
(July. 2002, pdf, 1.9 MB)
(Feb 2003, pdf, 1.8 MB)
The Metal Products Industry (MPI) uses a wide range of production processes and produces a large variety of metal products, such as structural steel constructions, central heating radiators and boilers, steam generkators, containers and packa-ging for food and drinks, cutlery and tools.
This sector comprised about 270,000 enterprises in 2000 and provided jobs for about 3.2 million people in the then EU-15. The production value of fabricated metal products amounted to about €330 billion or 6.6% of total manufacturing (data for 13 countries, no data available for EL and LU - Source: Eurostat / DIW).
Compared to other industries, this sector shows a relatively low degree of integration in international trade. The majority of trade is still conducted within the EU.
|NACE Rev. 1.1 business activities|
|28||Manufacture of fabricated metal products except machinery and equipment|
The production of metal products generally requires substantial input of raw metals, with most of the firms using steel as their main input. In addition, aluminium, nickel, zinc, copper and a variety of alloys and other materials are processed. The production of structural metal products has the largest share of the overall production value.
Theoretically, e-business should offer companies from the MPI sector the same opportunities as to those in other manufacturing sectors. However, the e-Business [email protected] survey showed that metal product manufacturers appear to be hesitant to implement information and communication technologies (ICT) and e-business systems.
This sector is, thus, ranked among the late e-adopters particularly when benchmarked against other manufacturing sectors studied by the e-Business [email protected] in 2005.
In some application areas, however, diffusion appears to be above average, the most important example being the use of Enterprise Resource Planning (ERP) systems - estimated at 25% in MPI and 20% on average across all sectors studied by the e-Business [email protected] in 2003 . Negotiating contracts online and using Supply Chain Management solutions (SCM) are as widely diffused as in the other sectors.
Buying supply goods online has gained acceptance in firms representing about one third of the sector’s employment. Roughly a quarter of those companies seem to have linked their IT system to those of their suppliers, which indicates that online purchasing is more than just an occasional activity.
|Have ERP system||Buy online||IT linked to suppliers*|
Country data weighted by
employment. Size-band data in % of enterprises. EU4 = DE, FR, IT,
UK. Large = 250+ employees; medium = 50-249, small = 1-49.
Online sales are much less common than online purchases and only 6% of employees work in MPI companies that have already sold products online. Overall, 38% of firms in the MPI see e-business as a part of their daily business, compared to 45% on average in the other sectors studied by the e-Business [email protected] in 2003.
It is not easy to explain why MPI is hesitant to adopt ICT: The risks involved in engaging in new fields of technology, new business models and organisational patterns do not seem to be higher than in other industries.
Opportunity cost may play a significant role, since substantial investment -mainly in software and training- is needed, which could alternatively be used in other activities. The analysis, however, has revealed more fundamental reservations with respect to electronic transactions: Companies and industry associations alike emphasise that their ‘products and transaction methods do not lend themselves to doing business electronically’. In addition, a rather conservative atmosphere seems to prevail, making it difficult to implement major changes either in the organisation of firms, or in transactions between them.
Furthermore, MPI companies responding to the e-Business [email protected] survey attributed a relatively high importance to barriers such as “customers hesitant to buy online” or “suppliers [that] do not sell online”. Such responses hint at severe problems related to critical mass, although they might also imply that uptake could be quick once a certain threshold of e-business activity has been reached in this sector.
The general lagging behind of the MPI in e-business initiatives -in particular its SMEs- gives rise to certain implications for policy, including:
The efficiency of this industry would only benefit from a better integration of its small firms. Combined with the already "connected" medium-sized and large MPI companies, this would have a visible impact on European competitiveness.