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Magnette: Industry Matters in Wallonia

Minister-President of Wallonia Paul Magnette addressed AmCham Belgium members at a special luncheon on April 20, held at the beautiful Château de la Hulpe. Over 40 members attended this lunch, sponsored by AWEX, the Wallonia Foreign Trade and Investment Agency.

After a short introduction by Pascale Delcomminette, CEO of AWEX, Minister-President Paul Magnette started his speech, entitled ‘Wallonia at the Time of the Fourth Industrial Revolution,’ by addressing how the recent terrorist attacks and the so-called ‘Belgium bashing’ in international media affects Wallonia too. “This country deserves a better reputation,” he said, stressing that it’s a job for the three regions to do together and Wallonia will do its part.

Wallonia has a number of obvious assets to bring to the table, such as its geographic location, the quality of the infrastructure and of the workforce, excellence in R&D and a solid industrial fabric. It also has some surprises up its sleeve.

The Minister-President said he looks to other economically comparable regions in the world for inspiration – for example, the Rust Belt in the United States. The Rust Belt was the traditional industrial heartland which propelled the US to become the world’s largest economy, but the region experienced a deep decline, not only economically, but also through demographic problems and social problems.

While some people from outside the United States think it is all about Silicon Valley or the West Coast nowadays, in fact, the Rust Belt remains an important engine for the American economy. Businesses from the first Industrial Revolution have found new life thanks to productive partnerships between companies and universities, opening up new sectors and diversifying the region’s economic base.

Wallonia has seen a similar decline and recovery in the past century. The real crisis started at the end of the 1960s and the early 70s, but its roots lie in the 1930s. For nearly 50 years, the region had not invested enough in the diversification of its industrial structure and relied too much on its classic powerhouse industries such as steel, coal, glass and chemistry. These sectors, except for the chemical sector, lost their competitiveness over the years and declined very rapidly in the 1980s and 1990s. At the end of the 1990s, Wallonia had lost more than 140,000 industrial jobs within 20 years.

According to Magnette, “the first thing that you have to realize is that industry matters in Wallonia.” The region has decided to reinvest in industry by showing strong public support for industry on the one hand, and, on the other hand, making strategic choices about which sectors to support. The five most important and globally competitive clusters for Wallonia are aeronautics, the food industry, logistics, mechanics and biopharma.

In Belgium, the links between universities and companies were very limited in the past: universities were doing theoretical research and companies only development, but there was not enough research and development. Like in the Rust Belt, the region has focused on strengthening the connection between companies and universities. The Walloon Region focuses on investing in long-term research and development, and supporting those companies which use R&D to launch new products for the world markets. When it comes to the share of R&D investments, Wallonia is now one of the best students in the class in Europe.

While Wallonia’s industrial cluster policy is paying dividends, the Minister-President also acknowledged the region can do more to expand its export markets. The United States is Wallonia’s most important trading partner outside of Europe, and the fourth overall, but it still only represents a small fraction of exports: 85% of Wallonia’s exports are destined for other EU countries. This represents both a challenge and an opportunity. “We have to help our companies go to more remote markets, to win new markets and grow,” said Mr. Magnette.

The Minister-President is confident about the future. “Wallonia is moving in the right direction and we know where we’re going. We have a good strategy. It’s a region which is on the right track and which in ten years’ time should grow even faster than it grows today,” he concluded.