double or nothing metals: status and future development associate professor amir sasson norwegian...
Post on 19-Dec-2015
216 Views
Preview:
TRANSCRIPT
Double or NothingMetals: Status and future
development
Associate Professor Amir Sasson
Norwegian Business School, BI
PROSINKristiansand, 25.05.2011
Cluster Attractiveness
Educational Attractiveness
Talent Attr
activenessR&D & Innovation
Attractiveness
Environmental
Attractiveness
Ownership Attractiveness
Cluster Dynamic
s
The Emerald Model
Cluster Attractiveness
Educational Attractiveness
Talent
Attractiv
eness
R&D and innovation
Attractiveness
Environmental
Attractiveness
Ownership Attractiveness
Knowledgedynamics
The Emerald Model
Consistent portion of GDP
0 %
1 %
2 %
3 %
4 %
5 %
6 %
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Share of metal industry out of GDP (Basic metals)
Share of metal industry out of GDP (Basic and febricated metals)
While GDP is increasing, the portion of oil is exploding, basic and fabricated metals maintain their national respective market shares.
This cannot be said about many other industries.
Value creation and locomotives
2000 2001 2002 2003 2004 2005 2006 2007 2008 20090
200
400
600
800
1000
1200
1400
1600
1800
2000
Primary production Secondary productionTertiary production Industry
Opera
tors
Geo &
Sei
smics
Drill &
wel
l
Subs
ea
Opera
tions
Sup
port
Tops
ide
Trea
tmen
t
Resea
rch
Inst
itutio
ns
Diagn
osis
Who
lesa
le a
nd R
etai
l
Serv
ice
Human
ser
vice
s
Hospi
tals
0
1000
2000
3000
4000
5000
6000
7000
8000
Expected returns in secondary and tertiary production.
Above average returns in primary production, but for 2009…
Not doing worse than many “central” industries e.g. health, tourism, or construction.
Industrial agglomeration
Not really… Broadly distributed. Under a few roofs only.
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
Primary production Secondary production Tertiary production
<10m NOK 10m-100m NOK 100m-1bn NOK >1bn NOK
0 %
2 %
4 %
6 %
8 %
10 %
12 %
14 %
16 %
2000 2001 2002 2003 2004 2005 2006 2007 2008
Østfold Vestfold Telemark
Vest Agder Rogaland Hordaland
Møre and Romsdal Nordland
Educational Attractiveness The pool of graduates with relevant
advanced knowledge of metal and materials is increasing in absolute and relative terms. Availability Attraction
0 %
1 %
2 %
3 %
2005 2006 2007 2008 2009
Metal university students Metal Master students Metal PhD students
Talent Attractiveness
Industry composition is in line with the industry’s focus on manufacturing as evident from the composition in other manufacturing industries (e.g., food, textiles, wood, pulp and paper, and chemicals) and labor intensive industries (e.g., fishery).
But: It is attractive to
the “wrong” type of foreign workers…
And engineers are existing! 28 %
57 %
10 %
4 % 0 %
Middle school High school Bachelor Master PhD
0 %2 %4 %6 %8 %
10 %12 %14 %16 %18 %
2000 2001 2002 2003 2004 2005 2006 2007 2008
Share of foreign university educated workers
Share of foreign workers
R&D and Innovation Attractiveness I
Metal: Relevant academic contributions are up to three times the national average
But a marginal role in the global picture of metals and materials.
0,00
0,50
1,00
1,50
2,00
2,50
3,00
2001 2002 2003 2004 2005 2006 2007 2008
Metal-related fields Other fields
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
40 %
45 %
2001 2002 2003 2004 2005 2006 2007 2008 2009
Norway China USA France Canada Brazil Russia
R&D and Innovation Attractiveness II
Oil: Both product and service innovations are significantly above national averages
Metal: Decreasing innovation activity over time.
2004 2006 20080 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
Other industries: Product innovation Oil industry: Product innovationOther industries: Service innovation Oil industry: Service innovation
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
2004 2006 2008
Other industries: Product innovation Metal industry: Product innovation
Other industries: Service innovation Metal industry: Service innovation
Ownership Attractiveness
Oil: Serial owners are technology developers
Metal: A serial owner. Attractive for foreign portfolio builders.
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
2002 2005 2008
1 - 2 3 - 5 6 and above
0
1020
304050
6070
8090
100
2002 2005 2008
1-2 3-5 > 5
Knowledge Dynamics
Local competition: Local competitors are of comparatively little significance, with only 17% of firms meeting intense competition locally. Secondary production and tertiary production firms experience high levels of local competition but this is not the source of the toughest competition that they experience.
Suppliers: Metal firms in all sectors perceive their international suppliers as more technologically leading than their national suppliers. This clearly indicates a lack of competitiveness among local and national suppliers to all sectors.
Local customers: They are not the most demanding. Collaborative linkages: 55% state that R&D institutions are
irrelevant in their innovative product developments. This percentage is much higher than in the oil industry (38%) or the health industry (32%).
Intra-industry labor spillovers: Non-existent
Competence development
The metal industry as a whole does not distinguish itself in terms of high investments in intra-firm competence development relative to other industries. Its distribution is similar to that seen in other labor-intensive industries. It differs from investments made in more “knowledge-intensive” industries.
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
40 %
<1% 1-2% 2-4% 4-8% 8-15% >15%
Oil and gas Tourism Construction Health Metals and materials
Some implications The Norwegian metal industry is at a crossroads. We argue for a “double or nothing” strategy. Norway can either
become a significant player in the metal industry or become an insignificant player that will eventually be squeezed out of the markets by giants.
We refer to this process as “the giant competition hypothesis”: when national barriers to competition, establishment and trade are gradually reduced, and output is standardized, scale considerations will motivate actors to increase their respective sizes through horizontal mergers and acquisitions, and/or through the development of superior technologies.
Questions: Is Norway to become a giant in the silicon business (or play a
decreasing role as a part of the portfolio of foreign giants)? Is Norway to become a giant in the aluminium business (different
parts of the value chain or will it sell its remaining assets to foreign giants)*
Create a synchronized strategic direction that encourages investment in knowledge that allow industrial development. Knowledge-based owner, electricity and expansion, transforming
the knowledge base and increase the knowledge infrastructure.
top related