Forging the Future: An analysis of the future prospects of the Dutch metal industry

Photo by Warut Sintapanon/Adobe Stock

What is the issue?

European manufacturing has faced a number of challenges over recent years, both due to the global COVID-19 pandemic and the consequences of Russia’s full-scale invasion of Ukraine in 2022, which caused a spike in energy costs throughout Europe.

In this context, RAND Europe was tasked by the Dutch Ministry of Economic Affairs and Climate to conduct a research project about the metal industry to assess its importance for the Dutch economy, identify the challenges the industry faces, and improve understanding of its prospects.

How did we help?

Drawing on a combination of desk research, a survey, and interviews with representatives of companies and trade associations active in the Dutch, German, and Belgian metal industries, RAND Europe’s research team developed an analysis of the following three key questions:

What is the current state of the Dutch metal industry and its importance to the Dutch economy?
How does the competitive position of the Dutch metal industry compare to that of other European metal industries?
What are the key challenges and opportunities for the Dutch metal industry out to 2035 and 2050?

What did we find?

Our research showed that the Dutch metal industry operates as an ecosystem combining two sub-sectors, the basic metal industry and the metal products industry. The Dutch metal products sector is made up of networks of highly specialised small and medium enterprises (SMEs), which collaborate closely with one another and large companies in key sectors of the Dutch economy, such as the agricultural, construction, maritime, and high-tech sectors, to provide highly tailored and innovative products and make a significant contribution to the Dutch economy. While the economic contribution of the basic metal industry is comparatively smaller, it offers strategic autonomy by producing materials that are crucial in the wider Dutch economy.

While the highly integrated nature of the Dutch metal industry makes it highly innovative and flexible, our research found that the industry faces several challenges. The industry is struggling to attract and retain skilled workers, and the high cost of energy and labour in the Netherlands means that it faces growing competition from lower-cost countries. SMEs, meanwhile, are struggling to find the time, funds, and expertise necessary to invest automation and digitalisation, which will be critical to meeting the challenges the industry faces. The industry also perceives the regulatory landscape as uncertain and there is concern about the absence of a level playing field within the EU. Finally, congestion on the Dutch energy grid means that companies in the industry are struggling to invest in decarbonisation.

What can be done?

In order to provide effective support to the industry and help it meet these challenges, we make the following recommendations based on our findings:

Consider the basic metals and metal products industries separately when designing policy. These industries have distinct characteristics and face different challenges and opportunities. Policy measures beneficial for the basic metals industry may harm the metal products industry and vice versa.
Pay attention to the industrial ecosystem of the metals industry as a whole. Measures that focus on a small number of large companies without considering the larger network of SMEs around them risk undermining the innovation and dynamism of the sector overall.
Develop a consistent long-term policy approach to the metals industry. This can provide industry players, both large multinationals and local SMEs, with the stable regulatory environment necessary to make long-term investments.
Improve the availability, quality, and attractiveness of technological education for the metals industry. Greater collaboration between the industry and national education institutions could expose students to the metals business early on, and help to improve its overall image.
Consider providing SMEs with specific support to enable digitalisation, automation, and decarbonisation. While companies are generally aware of the importance of these activities, they are struggling to find the time, expertise and funding required to engage in them. A targeted government support mechanism, combining advice and access to funding, may help SMEs kickstart activity in these domains and create a knowledge base that they can build on.
Optimise energy policy to relieve net congestion. Delays in getting access to the grid mean that companies in the metal industry are unable to expand their activities. These delays also increase energy and network costs, hampering the ability of companies in the industry to grow and decarbonise through investment in green energy facilities.