Luxembourg’s Automotive (Mobility) Sector is transforming rapidly to deal with the disruptive technological change and challenges that it is facing. Joost Ortjens, Head of Sector Development – Automotive at Luxinnovation, talks about the opportunities and challenges as well as the top priorities in his 2018 strategy roadmap.

In KPMG’s Global Automotive Executive Survey 2017, the results strongly emphasised that, “the car itself will continue to be a major revenue stream but it will not be the only one and auto companies will have to develop new service-and data-driven business models together in one digital ecosystem” ensuring that the all-important customer is kept at the centre. We spoke to Joost Ortjens about the Luxembourg Automotive Sector and how he is setting his sights to grow the sector with these challenges and opportunities in mind.

Joost, how would you classify the automotive market in Luxembourg?

“Luxembourg is centrally located in the heart of the European automotive community. At the crossroads between Germany, France and Belgium, we offer excellent access to all European development locations of both Original Equipment Manufacturers (OEMs) and TIER1 suppliers. It is an ideal location for component suppliers with a multi-customer base to develop and tailor products to a wide range of customer requirements.

What we “sell” is basically the most competitive entry-ticket to the European Automotive/Mobility market. The Luxembourg automotive industry contains companies supplying global OEMs headquartered in Europe. The internal Luxembourg market (business opportunities in Luxembourg), is not much in discussion. However, Luxembourg as starting point for business development in the European single market makes a lot of sense.

There are many suppliers in Luxembourg, whose products are unlikely to become obsolete, no matter which drive concept will dominate in the future, for example tyre manufacturers like Goodyear, car glass producers like Carlex or  companies like IEE,  developing and selling  occupant classification systems and driver-state recognition sensors.

Luxembourg owes its attractiveness in part to a business friendly taxation and investment climate (includes also R&D funding). There is more to the country though. Automotive players in particular value the capabilities of the highly-educated, very international, Luxembourg working force which is at ease in most of the European business cultures and switches effortlessly between languages.

At what stage of growth is the Luxembourg Automotive Cluster?

The Luxembourg Automotive Cluster is mature and saturated (in terms of membership). Cluster management is not my remit anymore, but when I originally started with the cluster; my main task was to draw people in.

When we founded the cluster in 2014, the automotive component suppliers in Luxembourg were our foundations. To date, we have gained many new members, and many of them differentiate from the car manufacturing business in the obvious sense. Circuit Foil is well known for copper foils, but is also a supplier of radar technology (antennas) in vehicles. There is Siemens in the area of intelligent infrastructures. Then Examotive and Motion-S. These are well-developed start-up companies from Luxembourg in the areas of ICT, mobility and Big data.

In the cluster, the focus is of course on automotive and mobility solutions, but we follow the other clusters at a distance because there is a lot of cross-sectoral activity. For example, we see lots of common interest in energy storage (Cleantech) and High Performance Computing (ICT)

What are the main priorities on your 2018 strategy roadmap?

“Prospection is the main activity; trying to attract companies to Luxembourg. Under this umbrella, we have two directions:

  • Companies with new technologies in and around electromobility.
  • New technologies with new approaches and services related to car connectivity.  For example sensor experts, software and hardware, mobility services, outside of the frame of car products and services, car sharing, ride sharing, everything that brings apps from cell phone to the future connected car. Smart applications and apps in general.

When we talk about electromobility, in terms of prospection we are mainly looking to the Far East, China in particular. On the connectivity side, the US West Coast is in focus, and again China. In addition, in terms of new disruptive technologies, never forget Japan and Korea.

What are the main highlights of your prospection agenda?

“This year we will visit companies, and we will visit a few international congresses, but, we ourselves will not be present with a big booth anywhere for the entire year.

Sometimes a mission is organised around a large international congress such as CES Las Vegas, which is an important date in our calendar as it is one of the world’s premier gathering spots for the business of consumer technologies. Luxembourg and Luxinnovation had a large presence and it was very successful in terms of visibility. For example, the UJET electric scooter on display at the event and which is manufactured in Luxembourg created quite a buzz. In April 2018, I will go back to the West Coast for an international congress and some follow-up face-to-face meetings with companies showing an interest in the European market and eager to buy the best “entry ticket”.

We also are very interested in events and missions around Cooperative Intelligent Transport Systems (C-ITS). Vehicles today are already connected and import data to deliver smarter navigation solutions. However, in the near future, cars will interact with each other and with the road infrastructure. For example, the car will activate emergency breaking when a pedestrian, observed by a smart infrastructure, will suddenly cross the road. This interaction is the domain of Cooperative Intelligent Transport Systems (C-ITS), which will allow road users and traffic managers to share information and use it to coordinate their actions. This is an area in which we are very interested and the 25th ITS World Congress will be held in September of this year. Because it has such an international attendance, it is like a fact-finding and prospection “world trip” in one event.

Why is it difficult for companies outside of the European market to gain a foothold and why would someone come to Luxembourg?  

“The European Automotive market is extremely complicated because you have so many languages, so many different countries and cultures. Then on top of this in some countries such as France, Germany, Italy and the UK, there is significant economic interest to strengthen the domestic players instead of adding competition.

Luxembourg can help solve these problems. The value for companies to come to Luxembourg really is that entry ticket to the European market.  For example, we welcome Chinese suppliers offering Smart Mobility solutions because we believe they offer new insights and they add something to our existing eco-system.  Our professional work force is one of the most multilingual in the world. Europe has the single market so geographically so we are good for a company.

We also have the Cross Border digital test bed in development and that is an interesting offering for Smart Mobility innovators

What are the challenges for Luxembourg?

“The challenge for Luxembourg is to compete against regions like Bavaria and the Frankfurt Greater Region with extremely well developed R&D networks, both in private companies as well as public research and universities

This is why we became a member of Autoregion, a cross-border automotive meta-cluster that is connecting the automotive clusters in the Greater Region. Already if you look at the existing number of company research institutes in this area, it is quite impressive. We want to strengthen the relationships with the neighbouring regions because it helps balance the power with our competitors.

How important to Luxembourg is connectivity?

“Vehicle connectivity offers many new business opportunities. Many new companies are leveraging opportunities around the world more and more by doing business outside of the frame of the car:  connectivity services, infotainment ride sharing, car sharing, etc.

We want to win over companies in that sub-sector and that means thinking in a radically different way. You need to think beyond wheels and engines, and for many traditional car “makers” that is not easy.

So what is the future for cars?

“Mobility is at a historical turning point. The big story of the early 20th century was the ascent of the automobile over other forms of individual transport and that led to the mass production of vehicles. Today, the automotive industry is facing radical challenges to this model via the disruptions of electro mobility, autonomous driving, vehicle connectivity and shared economy.

I am not afraid that the car will disappear. There is a still a market for cars, or let us call it “personalised individual transportation”. Luxury or “lifestyle” brands will get stronger than they are today because they help people to differentiate in the crowd. However, companies selling practical and emotionless vehicles with good value for money, relying on the volume off their production and economies of scale, are the ones who have to rethink their businesses. Car sharing and multimodal transportation systems are developing well and they are in competition with all mainstream vehicles moving people from A to B at a reasonable price and acceptable level of comfort.

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