The integration of the accession countries with the rest of the EU through trade is very evident in wire and cable. Official trade statistics show that total exports of the accession countries of wire and cable, including wire harnesses, stood at 3.47 billion in 2003, 12% up on the previous year, despite the poor performance of the main markets of Western Europe.
While much smaller, wire and cable imports into new member states of the EU is still very large in absolute terms. In 2003, such imports amounted to 1.97 billion, a marginal 2% up on the previous year.
Although the total trade figures are useful, in reality they mask the differences between two distinct product groups, i.e. insulated wire and cable and wire harnesses primarily for motor vehicles. In exports, considerably more than half of the wire and cable total of the accession and candidate countries are accounted for by wire harnesses. This trade is counterbalanced by only modest wire harness imports, leaving net exports of this product group at 2.19 billion for the accession and candidate countries combined, 18% higher than in the previous year. Several countries are individually major net exporters of wire harnesses. The Czech Republic, Hungary, Poland, Slovakia and Romania each claimed more than 300 million in net exports of wire harnesses in 2003.
When looking at the pattern of trade in wire harnesses, it is clear that its dynamic is strictly tied to the automotive industry of Western Europe, particularly Germany. Of all the export of wire harness in 2003, only 6% went outside the EU-15 a full 49% went to Germany the remaining part to countries like France, the United Kingdom, Belgium and Austria.
Unlike wire harnesses, trade in other insulated wire and cable is very well balanced, with 1.96 billion in exports from the accession and candidate countries being matched by 1.93 billion of imports in 2003. While overall the trade is balanced, however, there are some important exporters of insulated wire and cable: Poland, the Czech Republic and Turkey each exported more than 400 million of wire and cable in 2003.
For all three of the major new entrant exporters of wire and cable, exports exceeded imports; all other countries recorded net imports in 2003, despite a quite high absolute export value in the case of Hungary and Romania. The value figure recorded for wire and cable trade tends to be misleadingly high, as it includes connectors and fittings as well as the cable itself, but the figures clearly indicate a substantial import of cable. We estimate the value of the wire and cable market for the accession and candidate countries at around 1.6 billion, or around 280,000 tonnes of conductor. Accurately specified, we estimate imports of wire and cable at around 0.65 million, indicating a level of trade integration of around 40%.
The wire and cable products imported into the accession and candidate countries are diverse. Much import is related to infrastructure investment in power and telecom networks, but industrial investment also plays an important role. A sizeable portion also relates to OEM products required by industry, including winding wire used in motors and transformers and insulated wire used in harness assembly. Trade in the reverse direction is dominated by low voltage energy products.
While the trade interdependence between the new entrants and the EU-15 in insulated wire and cable is not as extreme as it is for wire harnesses, it is still very important. The official trade statistics indicate that in 2003 only 27% of accession and candidate country imports originated outside the EU-15, while 13% of exports went to non-EU-15 destinations. Once again, Germany is the main trading partner, accounting for around one-third of all trade in wire and cable. Germany is most significant as an importer.
The trade figures indicate a strong functional link between the cable industries of the EU-15 and the accession and candidate countries. This tie is very evident also in the companies involved in these countries on the fringes of Europe. With a few exceptions, the domestic cable companies involved in these markets are mainly small. One notable exception is Tele-Fonika Kable in Poland.
With the absence of strong domestic companies, a large part of the wire and cable industry of Central Europe (and Turkey) is owned by the big international suppliers. Through a process of acquisition that has been going on for more than a decade, the major European wire and cable companies each have a strong presence in the accession and applicant countries. To a greater or lesser extent, these companies already organise their regional business on a pan-European scale.
Between them, Nexans, Pirelli, Draka and NKT claim a major slice of wire and cable production in the more important markets, including the Czech Republic, Slovakia, Hungary, Romania and Turkey. Additionally, NKT claims much of the production in Poland not accounted for by Tele-Fonika Kable. Draka looks further afield, with interests in Estonia and Russia as well as in Turkey and the Czech Republic. Non-European wire and cable companies also have a role to play, for example Belden in Hungary.
Compared to insulated wire and cable, the level of foreign involvement in the wire harness business is even greater. Here, nearly all production is foreign owned, the industry having been formed mainly by greenfield site development rather than the acquisition of existing companies. Company presence in this business largely reflects the global market positions of the different harness makers, with Delphi, Yazaki and Sumitomo Electric each playing a major role in this market. The German company Leoni has also invested heavily, securing sites in nearly all of the main harness making countries amongst the EU entrants and, more recently, moving further east to the Ukraine.
