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issue: November 2004 APPLIANCE European Edition

Guest Editorial
Looking Beyond the Borders


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by Dr. Kurt-Ludwig Gutberlet, president and CEO, BSH Bosch und Siemens Hausgeräte GmbH and president of CECED (European Committee of Domestic Equipment Manufacturers)

On March 15, 1958, about 80 representatives from Europe’s household appliance producers gathered in Paris, France to talk about the future of the appliance industry and the European market. Things have changed immeasurably since then, not least the way the industry organizes and represents itself to Europe’s decision makers. But some questions are still on the table, albeit rephrased for a new age.

Dr. Kurt-Ludwig Gutberlet

Seven countries were represented that day—France, Germany, Britain, Belgium, Italy, the Netherlands, and Switzerland. As the delegates sped across the continent by train, the post-war rebuilding of Europe was still going on. The process of creating a new interdependent “European Community”—that would never again go to war with itself—was still an idea in its infancy. Back then, a booming economy and the Iron Curtain were part and parcel of daily reality. Today it’s hard to imagine a more different geo-political scenario.

In his opening address, the meeting chairman recalled that in January of the same year the Common Market Treaty had been signed and new challenges were looming for industry. He asked his colleagues if the future European Community should consist of six, eight, 10, 12, or 17 countries. The minutes record that participants wished “from the bottom of their hearts that Europe will encompass 17 countries.” Indeed, it would have been difficult at that time to imagine more.

Fast forward to May 2004 and the European Union, as the enterprise is now called, which comprises 25 countries. Close co-operation exists with Switzerland, Norway, Iceland, and Liechtenstein, even if they all wrestle with (and periodically reject) the idea of joining the club in full. Membership negotiations are underway, albeit at different levels of progress, with Romania, Bulgaria, Turkey, and Croatia. Twenty-five is destined to become 30 before long.

Forty years after that meeting, industry found itself asking the same questions all over again. What sort of “Europe” do we have in mind? What is the European market? The conclusion that finally emerged is that the European market actually includes Turkey and the Commonwealth of Independent States, and everything west of them. The household appliance industry’s perception of Europe is thus larger than the political borders. We call it “Greater Europe.” This is CECED territory. The association has always been at the forefront of the economic and political integration of the continent.

The May 1 enlargement of the European Union (EU) represents a radical new departure to 25 member states; we have to make it work. It will be a big challenge with 450 million citizens in the Union, 20 official languages, 25 countries (with several having their own federal structure), and hundreds of regions or counties all competing to develop their respective economies and attract investment. Household incomes still vary significantly between member states. The picture is far from being simple and stable. And, of course, if we consider CECED’s Greater Europe, the numbers and complexity increase dramatically. Population alone climbs to more than 700 million people.

The last decade of the 20th century was characterized by the following key trends from the perspective of the household appliance industry:

  • Growth and consolidation of the industrial base across Greater Europe.

  • Harmonization of product safety and performance standards, hence simplification of design processes.

  • Efforts to foster the development of the marketing infrastructures necessary to exploit the new markets.

  • A drive to ensure consistent implementation of new EU directives.

  • Establishment of proper industrial associations in the new and candidate member states of the EU to ensure that the interests of the household appliance industry are properly represented.

    These developments happened well before the official birth of the 25-member EU so that industry would not only be ready to face the challenge of a new market, but would also be able to count on free and fair competition.

    Nonetheless, political enlargement represents an important step toward a Greater European market. Goods can now circulate freely to and from the 10 new member states. As a result, we expect a spurt in revenue growth in the new member states and that there will be a positive impact on consumer confidence and buying power.

    In the background, however, ever more demanding legislation and requirements to build environmental costs into the product price is top-loading the industry’s cost base. This has brought a new wave of consolidation to the sector. Rationalization and integration of industrial processes has again become a leading theme in corporate strategies. The emergence of Poland and Turkey as manufacturing forces reflects these developments. They now rank in the top five production sites in Greater Europe. Hungary, Slovakia, and the Czech Republic have significant industrial sites too.

    The political enlargement of the Union may have played some role in this, but the real trigger has been the imperatives of the market. Competition and globalization of the worldwide economy has been a much more powerful force in shaping the new manufacturing profile of the European household appliance industry. The May 1 enlargement of the EU represents the political and governmental consolidation of the market development work already done throughout the last 15 years. It stabilizes what we can now consider the market and gives us the confidence to address the high growth potential areas of Eastern Europe and of the Mediterranean basin.

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