EU Unveils 'Made in Europe' Plan

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

The European Union (EU) has presented a strategy to revitalise its ailing industrial sectors by excluding China from public contracts in key sectors and introducing 'Made in EU' or low-carbon requirements for all public procurement and support schemes.

The European Union (EU) has unveiled its much-anticipated Industrial Accelerator Act (IAA), designed to stop the erosion of its industrial sectors by mandating that a significant proportion of goods and services supplied for publicly funded projects come from the EU. The EU's combined public procurement budget comes to more than 2 trillion euro (US$2.3 trillion).

Made in Europe

The 'Made in Europe' strategy will apply first to selected strategic sectors, including steel, cement, aluminium, cars, and net-zero technologies--all of which have been battered in recent years by cheaper foreign imports and, in the case of steel and aluminium, crippling tariffs by the U.S. It can, the European Commission (EC) stated, be extended "where appropriate, to other energy-intensive sectors such as chemicals". It is designed to help European companies combat the heavy impact of cheap imports from countries, mainly China, that do not have to contend with Europe's strict regulations and significantly higher energy prices. 

Going forward, there will be a 70% EU-content requirement for electric vehicles (EVs), excluding most battery components, 25% for aluminium and 25% for cement. There is no requirement for EU-made steel but 25% of it has to be low-carbon/green.  For solar panels, they will need to be made in Europe within three years, including the inverters and other components currently supplied by China. 

Executive Vice-President for Prosperity and Industrial Strategy Stéphane Séjourné said: "Facing unprecedented global uncertainty and unfair competition, European industry can count on the provisions of this Act to boost demand and guarantee resilient supply chains in strategic sectors. It will create jobs by directing taxpayers' money to European production, decreasing our dependencies and enhancing our economic security and sovereignty. Today marks a major step in the renewal of the European economic doctrine so the Union is fit for the 21st century, as recommended by the Draghi report."

The Goal

The aim of the IAA is to stop the ongoing decline of European industrial competitiveness by making "Buy EU" a mandatory part of all publicly supported projects in the future. The manufacturing sector is essential for safeguarding and boosting the EU's long-term economic resilience and to meet its climate neutrality goal, according to the EC. In 2024, it accounted for 18.3% of employment in the EU business economy and 14.3% of the EU's total gross domestic product (GDP)--a figure that has dropped from 17.4% in 2000. The Act has a goal to increase manufacturing's share of EU GDP to 20% by 2035. "Public procurement accounts for a significant chunk of the EU's economy: around 15% of GDP," explained Wopke Hoekstra, European commissioner for climate, net zero and clean growth. "That's a huge amount of taxpayers' money and we want to make sure it's used to support European businesses manufacturing clean products here in the EU."

China Out in the Cold

The IAA also effectively rules out Chinese involvement in large public contracts and in the ownership of EU companies. It establishes conditions for major investments in strategic sectors exceeding 100 million euro (US$116.5 million) by forbidding the involvement of any foreign country that controls more than 40% of global manufacturing capacity. This will exclude China on many fronts, including in solar and battery sectors for instance, where China controls around 80% of the global market. Foreign investors also cannot hold a majority stake in an EU company, must guarantee a 50% minimum level of European employment and must license its intellectual property to benefit the EU investment. 

Automotive Sector Response

The European Association of Automotive Suppliers (CLEPA) welcomed the support for the automotive sector by mandating vehicle assembly in the EU, an immediate 70% local content threshold for automotive production in the region and a specific 50% threshold for critical components to be implemented three years after publication. "The Industrial Accelerator Act marks a pivotal moment for the European automotive supply chain," said Benjamin Krieger, Secretary General of CLEPA. "By establishing local content and critical component thresholds, the European Commission is tackling concerns of suppliers facing unfair competition." 

Steel Sector Response

Europe's primary steel industry body, EUROFER, welcomed the IAA and called for further steps to support green steel manufactured in Europe. "For steel, the stakes are high," it stated. "The Act aims to create lead markets for low-carbon materials in sectors such as clean energy, mobility and infrastructure - an important step to help scale up new industrial technologies. Europe's steel industry is ready to deliver: companies are executing or preparing multi-billion-euro investments and have committed to cut steel-making CO2 emissions by 30% by 2030 (from a 2018 baseline). The proposal offers some welcome foundations that could stimulate demand for low-carbon steel. But the demand signal remains limited. The proposal requires 25% of steel in public procurement and public support schemes to be low-carbon - yet it does not require that this steel be produced in Europe. This matters."

Aluminium Sector Response

"We welcome the explicit focus on aluminium and the Commission's intention to use the Act to protect Europe's industrial base and reinforce its long-term competitiveness," said Paul Voss, director general of European Aluminium. "Greater clarity will be essential to ensure that the framework delivers its intended impact across sectors and supports Europe's strategic autonomy. The aluminium industry is ready to support this effort. The Industrial Accelerator Act is a chance to show how Europe can pair climate ambition with industrial strength. Let's get it right."

Key Takeaways

• The European Union (EU) presents the much-anticipated Industrial Accelerator Act (IAA), designed to stop the ongoing decline of key industrial sectors
• A "Made in Europe" mandate means all publicly funded projects will have to include a percentage of EU-produced goods and services in automotive, aluminium, cement and green energy sectors. 
• Foreign investors, especially China, will be forbidden from owning majority shares in EU companies. 

IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).