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European Metal Industry A Swot Evaluation Economics Essay

The SWOT analysis is a strategic planning tool you can use to evaluate the Strengths, Weaknesses, Opportunities and Risks that get excited about a business firm, a job or an industry. The SWOT Research tool can be utilized very effectively for an in-depth industry evaluation that can put light on the critical factors that are needed for the development and sustainability of the industry in spite of the issues and the competitive pressures. The Metal Industry of europe has been examined here on the basis of a SWOT evaluation that seeks to determine a "benchmark guide point" for the industry that may be vital for the effective monitoring of the industry. The SWOT evaluation highlights the actual fact that the metal sector in europe is currently facing a huge number of challenges and many of them are caused due to increased globalization and the environmental concern. The industry needs to give high goal to investments in new and ground breaking technologies and to continuous the value creation processes predicated on strategic sites and partnership to keep the competitive advantages. The SWOT evaluation will be utilized to identify some areas of action which industry and policy-makers need to try maintain the metal industry's competitiveness.

1. INTRODUCTION

The SWOT examination is a strategic planning tool that can be used to judge the Strengths, Weaknesses, Opportunities and Risks that are involved in a business group, a project or a business. It specifies the key objectives of the project and then identifies the internal as well as the exterior factors that are favorable and unfavorable for attaining the key goals (Oleiniuc, M. 2008). The SWOT Research tool can be used very effectively for an in-depth industry research that can throw light on the critical factors that are necessary for the expansion and sustainability of the industry in spite of the obstacles and the competitive stresses. The Metal Industry of the European Union has been examined here based on a SWOT analysis that seeks to determine a "benchmark guide point" for the industry that may be vital for the effective monitoring of the industry. Additionally, it may help in plainly studying the sectoral competitiveness studies with the objective of the development and sustenance of the material industry in the EU region (Ecorys, 2008).

The SWOT analysis highlights the fact that the metal sector in the European Union is currently facing a huge number of obstacles and most of them are caused anticipated to increased globalization and environmentally friendly task. The globalization troubles are designated by the emergence of new competitors (especially from the top emerging economies), imbalances in uncooked material products and increasing organic materials and energy prices. In addition, there will be the market imperfections pertaining to tariff and non-tariff obstacles. The global competitors are also scaling up their capacities for producing high-quality products.

2. SWOT ANALYSIS OF THE Western european STEEL INDUSTRY

The four sizes of the SWOT analysis is provided below, and described in the next.

Tabel 1. The four dimensions of the SWOT

STRENGTHS

Strong position of the European steel industry

Focus on value creation with control in product development authority and high quality output

Strong Research & Development Capabilities

High degree of Specialization

High degree of recycling

Attractive investment prospects in the new EU member states

WEAKNESSES

Dependency on the import of organic materials

Energy power of the steel industry

Availability and Recruitment of Skilled Workforce

Trade Imbalance with higher import of metal in the region

OPPORTUNITIES

New market opportunities and consolidation of the industry through M&A activities

Upstream process and marketing of raw material use

Opportunities in the high-tech special products

Use of cleaner and safer technologies

More efficient and flexible procedures and the adoption of 'smart manufacturing'

New market opportunities through partnerships and innovations

Cooperation with scrap suppliers for better recycling

Focus on high-end products and value creation

Focus on high-end products and value creation

THREATS

Stiff competition from China

Strong competition from other appearing economies

Imbalances in the demand and supply for raw materials

Increasing freight transport costs

Malfunctioning of the markets

Environmental Legislation

Long-term demographic changes

STRENGTHS

Strong position of the Western european steel industry

According to EUROFER (2012), the material industry in Europe is in a leading position on the planet with an total annual turnover of about EUR 190 billion and straight employing almost 360 thousand highly skilled personnel, and processing 200 million tons of steel per season. The 23 European Union Member States have significantly more than 500 steel production facilities plus they provide immediate and indirect employment and a living for millions of Europeans.

The EU metal industry operates across nationwide edges, and the industry has a solid and useful position in domestic markets, particularly in high-end sections. The material manufacturers in europe are well established in their principal home markets, and they have strong relations with their customers all sub-sectors. This also creates a solid groundwork for looking for new business opportunities in high-end export market segments.

Focus on value creation with authority in product development command and high quality output

The EU's metallic manufacturing industry is the world's second largest in terms of market size and it is technologically advanced due to the give attention to product quality, developing quality, performance of equipment, and innovative capacity. It really is with the capacity of providing complicated and high-quality products to the demanding customers, and the industry has a solid emphasis on value creation. Thus, a few of the key talents of the industry are its high-quality result and customer concentration, supported through advanced technology and high specifications within service and the just-in-time delivery way.

Strong Research & Development Capabilities

The metal industry in the European union is seen as a a high standard for research and development activities that keep carefully the factories at the forefront of technology which is an important competitive gain for the manufacturers. All sub industries of the material industry are engaged in R&D activities in close assistance using their customers and OEM manufacturers.

High level of Specialization

The European Union steel industry is highly customized with the tiny manufacturers providing specialised products in close business associations using their customers. Most of the material foundries operate as custom-made suppliers for the establishments they serve, and therefore there is limited competition in the industry.

High amount of recycling

The high degree of recycling that is followed in europe material industry with a large-scale scrap consumption is the power in every the sub-sectors of the industry. This makes the European steel manufacturers quite competitive compared to the suppliers in the APAC and the Middle East who are increasingly becoming dependant on scrap imports.

Attractive investment leads in the new EU member states

The participant states which may have either officially became a member of the EU or are in the process of joining, have high growth rates and strong demands for steel. Furthermore, in these countries the labor costs are low but the technological capacity, skills and the skill levels are boosting. Thus it is quite appealing to invest in business opportunities in these participant countries and this is a strong expansion factor for the EU steel industry.

WEAKNESSES

Dependency on the transfer of uncooked materials

The metallic industry in europe is highly reliant on imported raw materials and the overseas supplies form a big part of its total fresh material source. Thus the industry suffers from the weakness in conditions of secure uncooked material source and variable costs because of the continual fluctuations in fresh material and transportation prices.

Energy strength of the metal industry

The EU steel industry is suffering from the disadvantage of the extreme energy consumption for the procedure and other operations. Consequently, the industry is susceptible to energy shocks and rising fuel prices as well as to the government policies targeted at lowering emissions.

Availability and Recruitment of Skilled Workforce

The EU steel industry encounters a solid and increasing demand for highly skilled labor with an increase of knowledge and knowledge. Thus hiring and keeping skilled people is getting more difficult as the supply of labor is reducing and your competition for highly skilled and qualified workers is continually increasing.

Trade Imbalance with better import of material in the region

The EU faces the challenge of unbalanced trade flows with moderate go up in the export of material in the global marketplaces and significant upsurge in imports in to the region. A number of the factors that lead to this trade imbalance will be the high labor costs and less availability of raw materials. The increasing capacity and the oversupply by the key exporting countries (mainly China) also have contributed significantly to this situation.

OPPORTUNITIES

New market opportunities and loan consolidation of the industry through M&A activities

The material industry in the European Union has witnessed large-scale consolidations with a few of the significant merger and acquisition activities in the modern times. The metal industry and its own sub-sectors are expected to endure further consolidations through mergers and acquisitions, which can invariably improve the material industry's overall bargaining ability. More industry consolidation improves the building blocks for devising a business strategy that is geared to gain access to the best functions, knowledge, and resources and improve the management capacity over the business cycle.

Upstream process and search engine optimization of raw materials use

Upstream control and optimization of raw material usage is significant for improving the steel industry's raw materials efficiency. The factors also help reduce the ramifications of supply-side sensitivity. Furthermore, such process improvements can also lead to lower energy consumption and lesser CO2 emission.

Opportunities in the high-tech specialized products

The steel processing industry in the European Union can undergo field of expertise in the high-tech and high quality products segment to take advantage of new opportunities. Some of the innovation individuals in the processing sector are energy efficiency and environmental responsibility products. Wind flow energy is swiftly becoming more important in Europe and presently more than 100 offshore blowing wind farms are under engineering in the region, each requiring almost 3, 000 metric tons of steel.

Use of cleaner and safer technologies

The use of more efficient technologies is an important chance of increasing energy efficiency and reducing emissions through the steel production techniques. Thus, technological innovation and the use of cleaner and safer systems are important, partially needed due to legislation, also for the leads of reducing costs and meeting the increasing demand for cleaner and safer technology. Most significantly, the cleaner and safer technologies provide an important chance for proactively pursuing new business opportunities.

By participating in the European Material Technology Program (ESTEP), the EU metal industry is currently working with the European Commission and the member countries to funding long-term projects aimed at changed process solutions. The best ambitious one of the initiatives is the ULCOS (Ultra Low CO2 Steelmaking), that is designed to reduce CO2 emissions from steelmaking by 50% by 2050.

More effective and flexible processes and the adoption of 'smart manufacturing'

The metallic industry in europe must keep investing in the development of new technology and achievements of creation process improvements to be able to follow new market opportunities and to maintain and develop its competitive power. This involves higher efficiency plus more versatility in the downstream process. Some of the intelligent manufacturing processes for better corporation and management, (such as Lean, knowledge management) and the adoption of new IT technologies are key to do this objective.

New market opportunities through partnerships and innovations

The concentrate on high-quality customized steel products in close cooperation with the customers is an opportunity to differentiate also to compete with the other suppliers. Strong and collaborative human relationships help the firms to meet the expectations of the customers by creating more value. Such partnerships are usually important for the maintenance of strong business romantic relationships with the present and prospects.

Cooperation with scrap suppliers for better recycling

Recycling is an essential element of metallic production in the European Union. It really is strategically important to keep up a well-organized recycling process (or to achieve ideal scrap supply) because of the structural barriers of further upgrading the iron ore by scrap and the increasing export of scrap to the non-EU countries.

Focus on high-end products and value creation

The focus on high-quality and high value added products, alternatives and services is important to further prioritize and develop the Western steel industry's features and talents. The metal industry in the European Union has a competitive border in this area and almost all of the forecasts have forecasted that the demand in the high-end area will continue to increase.

THREATS

Stiff competition from China

China has increased its metal outcome level quite significantly and its own steel capacity level has also been influenced by its high economical progress and demand from its construction sector. China has also markedly better its international business relations and it is among the most world's major exporter of semi-finished and completed steel products. The European Union is one of the largest export spots for China and it includes flooded the spot with both chiseled and long products produced by its material industry.

Strong competition from other appearing economies

The Euro Union's metal industry not only encounters strong competitive stresses from China but also from the other large and growing economies like India, Russia, Ukraine and Brazil. India is at present scored among the top ten global metal producing countries and the Indian material industry is expected to continue its progress and expansion phase soon. The Indian steel producers are very cost-competitive and they have enough reserves of flat iron ore and coking coal, and they are striving hard to attain the global expectations for quality, efficiency, and efficiency. Brazil also has a well consolidated and low-cost metal industry because of its domestic flat iron ore reserves, low energy and labor costs.

Imbalances in the demand and supply for natural materials

The increasing demand for metal, driven usually by China, has led to the present imbalances in supply and demand for the raw materials. This can result in a shift to the low-cost countries for material production, as some of them have cheaper access to the raw materials and the availability of low-wage labor.

Increasing freight travel costs

The steel providers in the European Union face the task of the increasing freight transport rates that also boost the comparative costs and make it more difficult to be competitive in the competitive export markets. Moreover, transportation within europe is far more expensive than in the the areas including the US scheduled to defects in cross-border railway move of goods and country related variations in road legislation. Aside from increasing freight rates, malfunctioning logistics infrastructures and travel markets also are a risk to the competitiveness of the European material industry.

Malfunctioning of the vitality markets

The European Union has increased the use energy at a reliable pace and the spot is a major importer of energy (imports match more than 50% of total energy use). The transfer share of the energy consumption in your community is likely to increase steadily in the near future. The metallic industry is much end user of energy and this increasing energy use and dependence on imports would affect it. The entire competitiveness of the material sector is also hampered due to malfunctions in the vitality market sue to the poor links between energy systems, national taxations and variations in the rates structure and legislation of the power markets.

Environmental Legislation

The EU steel industry encounters the task of compliance to environmental polices regarding its energy use, CO2 emission, pollution prevention, and waste products. The brand new Emission Trading Plan (ETS) legislation might trigger the increased loss of competitiveness of the Western steel producers set alongside the other steel manufacturers do not face such restrictive emission legislations. The adverse environment legislations can also reduce the interest of buyers while investing in the material industry tasks.

Long-term demographic changes

The demographic changes in European Union correspond to a declining workforce and consequently the issue for the Western sectors to ensure and attract sufficient and skilled employees. Furthermore, the amount of young people trying to get technological programs is decreasing over the region. These factors are dangers to the steel industry, (as it is to the other companies as well) in terms of making sure the hiring of sufficient and certified people for the work in the industry. It also creates a structural hurdle to the health and competitive advantage of the industry in comparison to other countries without such issues.

3. CONCLUSION

The strengths of europe material sector constitute a strong position for interacting with the troubles of globalization due to its technology command, high-quality products, and a solid tradition for advancement and technological knowledge base. In order to maintain and fortify the competitive position, it is very important for the EU metal industry to keep the development of its current strengths while discovering the new market opportunities. The industry needs to give high concern to investments in new and impressive technologies and also to continuous the value creation processes based on strategic systems and partnership to keep up the competitive advantages. The metallic industry must be urged to constantly improve the technologies to enhance flexibility and efficiency. The problems related to the environment legislation conformity must be fulfilled by the continuous development of cleaner solutions in the development operations, management systems, products and transport.

The SWOT research may be used to identify the following six areas of action which industry and policy-makers need to take to maintain the steel industry's competitiveness (Ecorys, 2008). These are:

Engaging in dealing with the weather change task effectively

Upstream proposal and investments

Maintenance of high technology control and operational excellence

Enhancing knowledge writing and proposal in strategic networks for keeping competitive position and improving capacity for proper outlook to meet the future dangers and challenges

Setting up an even playing field and increasing the functioning of energy and travel markets in the European Union region

Enhancing the abilities base and strategies for lifelong learning

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