9370

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Global Champions in innovation

Companies spending more than 50 million € in Research and Development per year. In such companies usually several hundred people are involved in R&D. The companies show a significant portion of their global R&D expenditures in the respective field of technology and market. Figure 1 and Table 1 present the importance of innovations by contry.

Germany has the 87 Global Champions in innovations, including the 5 largest Global Champions (Volkswagen, Daimler, BMW, Bosch, Siemens). Russia has only 4 Global Champions in innovations and is not in the top 20.

If one wants to be successful, one must think. One must think until it hurts (Lord Thomson of Fleet).

References

Simon, H. (2016). Weltmarktführer sprechen deutsch, FAZ, 01.02.2016. Weltzentrum der Medizintechnik Tuttlingen (2017). http://www.weltzentrum-

dermedizintechnik.de [11.12.2017].

Industrial R&D Scoreboard of the EU-commission (2017).

Rammert, Ch., Frietsch, R. (2015). Global Champions und Hidden Champions: Internationale Konzerne und KMU im Innovationswettbewerb. Fraunhofer ISI Discussion Papers Innovation Systems and Policy Analysis. Karlsruhe. No. 45.

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“Trumponomics” – the macroeconomic policy of US President Donald Trump

M. Wenke

1. Introduction

In retrospective, the year 2016 will be seen as the year with significant cuts for the European as well for the world economy. The first is linked with the surprising BREXIT-referendum, in which the very small majority of British voters destroyed the hopes about a continuous and calm integration process of the EU. The second is connected with the same surprising election of Mr. Donald Trump president of the USA. As the BREXIT decision in the first run will directly affect the European

Union, Mr. Trump’s new economic policy of “America first” and “Make America great again” will potentially, of course be dependent on the measures finally carried out, cause much more damage to the world trade ties between countries and continents. Even though, almost 10 months after inauguration, there has only little or nothing of announcements been put into action, Mr. Trump’s statements regarding isolation and focusing on US American needs first already established anxiousness and uncertainty among international and even national businesses. In the following the most important actions of the already announced plan of “Trumponomics” are presented and then the potential consequences for the US economy as well as for the EU are discussed. The paper ends with some concluding remarks.

2. What do we know about Mr. Trump’s macroeconomic policy?

From the outside in the view point of the US economy often seems only to consist on the global players of Silicon Valley new economies, like Google, Apple, Twitter etc. Additionally we know about Pfizer, General Electric, General Motors and the bunch of other well established and market leading companies. The flipside of that coin is represented by old industrialized areas, in which the “Rust Belt” of the Middle West (Illinois, Indiana, Michigan, Ohio and Pennsylvania) is nowadays the most “popular” one. As the Ruhr-Area in Germany and Nord-Pas-de Calais in France, these regions during the 70s and 80s of the last century were heavily hit by worldwide structural change of production and the reorganization of supply chains via outsourcing of old industrial production plants and offshoring activities. Globalization especially affected mining, steal and metal construction and caused high unemployment during the processes of economic structural disruption.

2.1 Revitalization of “old industrialized regions”

As different countries and their governments differently dealt with the outcomes of structural change, the American Rust Belt and its problems seemingly have been pushed to the hidden corner already by former US governments. As that holds for other old industrialized regions, the rapid and long term downturn of

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industries caused or was accompanied by increasing unemployment and poverty, as well as the worsening of public infrastructure of many kinds, transport, medical care, education, housing etc. and increasing crime. During the election campaign, a candidate for President Mr. Trump especially promised to support those people lost and forgotten in the Rust Belt and other old industrialized areas. Based on some kind of “economic populism”, he promised to reopen the coal mines and steel factories to revitalize the old industries. As this strategy could be interpreted as an impossible

“reanimation of already dead industries”, so most economists expect and the protection policy experiences in Europe (mentioned above) indicate a high probability of failure. Based on common sense and experiences already mentioned, revitalization of former old industrial areas isn’t possible by protection measures, especially there can’t be a “roll back” of globalization. So the most successful policy strategies elsewhere are based on modernization, introduced by the additional revitalization of public educational infrastructure, which nowadays in the US besides Harvard, MIT, UCLA and the other private elite schools and higher educational institutions seems to be of very low quality and very badly equipped with financial and educational staff resources.

If this modernization strategy is successful, unfortunately the majority of Mr. Trump’s voters will not benefit from that. The reason reflects the problem of mismatch-unemployment: During revitalization and modernization processes the skill requests significantly are changing, mine and steel workers are not immediately able to be retrained to work in modern industries/services, and some are too old to be successfully reeducated. That means that the modernization strategy should be backed by social/unemployment benefits, what calls for a clear social policy strategy of Mr. Trump’s government. This is not available yet.

The summary of President Trumps’ idea of strategies to revitalize the US

American industry is that there are more serious doubts than any realistic chances to receive an innovative and competitive industrial sector in the foreseeable future.

2.2 Governmental investment program

Another brick in Mr. Trump’s strategy striving for the economic recovery of the USA is a huge 1 trill US $ investment program for a 10 year period ahead. Undoubtedly, especially in the rural regions and the old industrial rust belt areas there is a high need for significant increases of public infrastructural investments. As the highly controversial investment of a wall construction to prevent more efficiently illegal immigration from Mexico is in the focus of public discussions also outside the USA, there is only little information about other concrete plans of the Trump government. Reconstructions and improvements of the road/highway infrastructure, railway and mobile phone networks, airports and other public infrastructure equipment have been the subjects of discussion. Besides the nonspecific character of the investment targets, lack of clarity can be identified regarding the financial sources of that enormous investment plan. Even though the president plans to incorporate

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tax turnover the same time is an additional reduction of selected budgets within the overall expenditures. Most probable this will be expenses for medium and low income households, whom he promised to lead them out of unemployment, poverty and partly disastrous housing und living conditions.

2.5 Reduction of the import surplus

Already during the election campaign, the candidate Trump heavily complained about unfair trade agreements, which have to be canceled or at least renegotiated. Additionally he argued against single countries like China and Germany about their unfair trade behavior, resulting in big and permanent trade deficits with those economies. He already repeated those threats seriously after having been elected and immediately started the discussion about implementing various barriers to trade against those countries. Together with the revitalization tasks already discussed in chapter 2.1 President Trump seems to think about killing two birds with one stone: As the modernization strategy focusses on the domestic economic view, protection and other “enforcement measures” are discussed to keep production inside the USA and to keep competitive foreign businesses out of the US economy. That is a very old style of protectionism, to strengthen the American industry by “law and order” and regulations. As there might be short and medium run advantages of such protection measures for the lacking behind American industries, the long run und fundamental consequences, specifically due to unforeseeable dynamics, are almost only negative ones:

Protectionism reduces the domestic market pressure, regularly introduced by international competitors in free trade systems. That makes domestic companies more reluctant/relaxed regarding innovation necessities with the risk to lose the contact with respective innovative international market developments.

Protectionism destroys existing and during long time developed supply chains and so far endangers domestic production lines, too.

Forcing domestic production units to stay inside the US economy by tax incentives or even threats more sounds being a strategy of socialist or central planned economies than of the formerly defender state of liberal markets and free trade. This is a direct intervention of governmental authorities into management decision making processes and distorts competition positions of domestic businesses, because they are hindered to utilize advantages outside the country.

Protectionism introduced by one of the most important economic players in the world will initiate an accelerating trade war and so far is “poison” for economic welfare all over the world.

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3. Potential outcomes…

3.1…for the US

Many of the policy instruments mentioned above, like governmental public infrastructure investments, tax reductions and import barriers could boost overall domestic economic growth in the USA, but the question still is how that will be financed. As quoted, experts are expecting significant increases of governmental debt, what strictly will limit the future financial degrees of freedom for the Trump government and besides, will increase the probability of finally implemented “real” governmental shut downs. The expected growth boost will not reach all US American citizens, because of the already mentioned effects on income distribution and a lack of positive effects for low income households. Additionally, as the growth pace of the economy was already high at the end of 2017, further boosts could accelerate inflation. That is one of the reasons why FED governor Yellen during her last meeting of her council December 13 2017 decided to increase prime interest rates the third time for “sliding out” from the monetary easing policy. The classical Keynesian business cycle interrelations suggest that this will reduce private loan-based investments, the US $ will face a further appreciation and so exports will decrease and imports will increase further – trade deficit will additionally increase. Even though the new FED governor Powell has been appointed by president Trump himself, it is not totally out of sight that there might be severe disputes with the FED in the future.

Revitalization of the American industries should be based on modernization, innovations and significant improvements of the educational system apart from elite HEIs (Harvard, MIT etc.).

Protectionism will damage the own industries, because it will destroy well established supply chains across the borders. Free trade and worldwide competition was the American philosophy in former times. Introduction of trade barriers and protectionist strategies could initiate a trade war, which will only yield losers, as we had that strategy and related experiences already almost 100 years ago.

3.2…for Europe

US Protectionism will definitely harm the European economies via trade downturn. To overcome or even bypass the negative effects the FDI of European companies in the US could increase further (as they are already high). It also might happen that as a consequence those FDI flows inside Europe could be reduced and so far limit investment and long term growth perspectives here.

US modernization strategies could ask for more European technology, partly companies offering those technologies could increase their exports to the US. This could be supported by the expected appreciation of the US$ against the €. Complaints of M. Trump about “unfair” trade strategies of Germany and other European countries could be dampened by policy measures to increase German imports,

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especially enforcing investment and private consumption expenditures inside the European Union.

4. Conclusions

In historical context there has never been a US President who obviously did not care about fundamental macroeconomic interrelations, positive and negative rebounds and dynamics to be taken into account by introducing serious changes of main economic strategies and measures like this seems to happen with the ideas of president Trump and his government. Among all the difficulties and clear contradictions of his plans – so far published – the already existing imbalance of public budgets and the movement “close to the edge of the cliff” of fiscal policy seems to be the only natural or automatic frame and limit to hinder president Trump and his government doing serious mistakes potentially threatening the long term growth and wealth perspectives of the American economy and citizens. From the knowledge point of view the end of 2017 another aspect seems to be already decided: There is no way that the Trump government is taking a major part of their voters out of the downturn circle of unemployment, poverty, weak health and no perspectives. So he will hardly meet the core of his own promises, already foreseeable only one year after his election.

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Regional location factors in the Chemical Industry

1. General Information

1.1 General information about the Chemical Industry

The chemical industry – one of the largest manufacturing industries in all developed and emerging countries:

•70% of chemicals manufactured are used to make products by other industries,

•it converts raw materials (oil, natural gas, air, water, metals, and minerals) into more than 70,000 different products.

1.2 Special Requests: Location factors

Geographical factors:

•Greenfield and brownfield sites

–brownfield sites may be already contaminated with industrial waste/have access to infrastructure and local workforce,

–greenfield sites, as undeveloped areas of open countryside, offer greater scope for the large areas of land required for chemical plants,

•other geographical factors

–access to raw materials

–availability of suitable energy supply and the existence of infrastructure such as water and sewage supplies

–transport links.

Environmental impact:

• emissions of vapour or waste liquids into the air or sea/rivers,

•solid waste,

•hot water from coolant systems,

-control of waste and emissions. Transportation and resources:

•starting materials, which may be raw materials, feedstock or commodity,

•chemicals,

•products,

•waste materials, including co-products and side-products,

•solvents and catalysts,

•energy – in the form of fuel or electricity supplied to the plant. Workforce. Labour is related to transportation issues:

•proximity to large population centres

•high-quality transport infrastructure.

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Table 1. Significance of the location factors

2. Case Studies

2.1 Chemical Industry in Ulyanovsk

Industry structure: chemistry and petrochemistry, power industry, defense industry, mechanical engineering and metallurgy.

Advantages:

•location: availability to markets,

•transport infrastructure: accessibility of main roads, driveways, communication and telecommunication,

•financial potential: reliable resources, government support, investment, salary level,

•existence of qualified employees,

•environmental responsibilities.

Disadvantages:

•high prices and lack of the required range of raw materials,

•dependence of strategic sectors on imported raw materials,

•high electricity prices and high prices for transport of goods.

Companies. Major factories in the Ulyanovsk region are “UAZ”, “Bridgestone”, “RPA Mars”, “Hempel”.

UAZ (Ulyanovsk Automobile Plant) is an automobile manufacturer based in Ulyanovsk, Russia, which manufactures off-road vehicles, buses and trucks. It is best known for the UAZ-469 utility vehicle, which has been widly used as a military vehicle in the Eastern bloc and around the world. The UAZ factory started production in 1941 as part of the Soviet war effort. In the year 2013 Ulyanovsk Automobile Plant set a record in recent years by the number of the cars realized in foreign markets. So, last year, 10 421 cars were sold in the export markets, this number exceeds 37% a similar indicator of 2012. UAZ cars were delivered to 20 countries.

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FRPC OJSC “RPA Mars” renders services on the certification of information objects, special testing and checking; mechanical and climatic tests by executing teams with the use of the world level material base and our experts’ wide experience; design and production of data-display facilities; the assembly of electronic modules; design and production of PCBs. The company provides works which correspond to the Russian interstate and national standards, and also are supported by all necessary licenses and certificates. The Company’s system of quality management is certified in the system of certification of products and quality systems for defense-industry enterprises “Oboronsertifika” and meets the requirements of ISO 9000-series international standards, SRPP VT standards, including the GOST RV 15.002-2003.

Hempel is a world-leading coatings supplier to the decorative, protective, marine, container and yacht markets. From windmills and bridges to hospitals, ships and homes, our coatings protect man-made structures from the corrosive forces of nature. They help prolong a structure’s service life, reduce maintenance costs and, we would like to think, make it more attractive. Wherever we work, we always focus on innovative solutions and advanced production techniques. But our working method remains simple: we are curious, creative and self-critical, and always strive to create extra value for our customers. We are present in more than 80 countries and have over 5,000 employees in various functions, such as: Sales, Marketing, Research & Development, Technical Service, Production & Logistic, Finance and IT. We are a truly global family with a dedicated focus on quality and a shared single passion: to make the world’s structures brighter, stronger and more sustainable. Wherever we work, we always focus on innovative solutions and advanced production techniques. But our working method remains simple: we are curious, creative and self-critical, and always strive to create extra value for our customers. We are present in more than 80 countries and have over 5,000 employees in various functions, such as: Sales, Marketing, Research & Development, Technical Service, Production & Logistic, Finance and IT. We are a truly global family with a dedicated focus on quality and a shared single passion: to make the world’s structures brighter, stronger and more sustainable.

Diversified Products. The Bridgestone Group makes and sells a range of rubber products and other diversified products. Many of these products and technologies are used in a variety of everyday applications.