Craft' and trade sectors

Among the five selected industries, construction had the highest share of craft employment in the total employment of this sector, with a 73% EU average. In the wood and furniture sectors this relative share was 58%, in the textile industries 51%, and in electronics and electrical machinery only 18%. Productivity, measured as value added at factor cost per person employed, was much lower in crafts than in medium-sized and large enterprises (MLEs): in the construction sector, for example, crafts only reached 71% of MLE productivity (2001 data - Source: Euro­stat/DIW).

E-Business Activity

The e-Business W@tch cross-sector studies show that small firms in general have taken the first step to go digital and most of them have computers, access to the internet and use the world wide web and e-mail. However, they are still far from digitally integrating their business processes: the “e-” part of these processes tends to be a front-end, customer-facing activity.

In craft firms, computers are mainly used for administration, and only to a very limited extent in  selling  or  purchasing  processes  with a slight
preference to the latter. In fact, trading transactions rely very much on personal, long-standing relation­ships with customers and suppliers.

Furthermore, many craft firms lack not only the critical size but also the in­vestment power needed for adopting e-business. Consequently, in com­parison with small companies from other sec­tors studied by the e-Business W@tch, crafts are lagging behind in the adoption of informa- tion and communication technology (ICT).

The main results of the 2003 e-Business W@tch survey indicated that:

• About two thirds of all craft enterprises in the EU have access to the Internet, but about one third of those are connected with low bandwidth via analogue dial-up modem.
• About one quarter of craft enterprises have a website, but only about 3% of firms sell any products or services online.
• Although one in five craft firms purchases supplies or MRO goods online, the share of goods pro­cured online is still marginal (less than 5% in most cases).
• Most C&T firms (83%) purchase directly from suppliers’ websites, and one in four firms that buy online claim to have integrated their ICT system with that of a supplier.

e-Business Adoption in the C&T sector (2003)

	Website	Sell online	Buy online
DE	55	6	47
EL	35	7	10
ES	25	4	17
FR	21	3	11
IT	24	<1	13
UK	42	3	38
EE	43	5	15
PL	28	2	11
EU-5	32	3	24
Micro	23	3	20
Small	41	3	25
Country data weighted by employment. Size-band data in % of enterprises. EU5 = DE, ES, FR, IT, UK. Micro = 1-9, small = 10-49 employees.

The heterogeneity of the C&T sector implies that e-business developments differ largely across its sub-sectors: In industries which are more familiar with ICT, such as electrical machinery and electronics, the level of e-business usage is high, while in crafts like textile manufacturing and building cleaners this level is low.

As reported by craft firms themselves (2003 e-Business W@tch survey), the most important reason for not engaging in e-business is that the “company is too small to benefit” (75% of non-users). In comparison, 'only' about 30-45% (depending on the sector) felt that the required technology was either "too expensive" or "too complicated".

Furthermore, just a small fraction (about 4%) of craft firms reported that they had made recruit-ment efforts for people with special IT skills in the twelve months before the survey - across the other sectors studied by the e-Business W@tch this percentage was, on average, twice as high (9%).

Conclusions

For many craft firms, the critical challenge in the area of e-business is to find the right balance between keeping themselves technologically up-to-date and not over­investing in complex ICT systems. Comprehensive and highly sophistica-ted use of ICT and e-business may not be economic in many craft firms. However, the non-application of e-business, even in rudimentary forms of web-presence and correspondence with customers and suppliers, may put the C&T sector at a serious disadvantage in the medium term.

Another challenge may stem from the fact that many crafts are part of the supply chain of large enterprises. It is, thus, reasonable to expect that they would feel knock-on effects from the e-business initiatives of their sector's “giants”: Smaller firms would have to adapt to their larger counterparts’ standards - or risk to be out of business.

Policy Implications

Since crafts are generally rooted in the local and regional economy, support to their e-business initiatives should also take place at the local and regional level. In this sense, craft chambers or chambers of commerce could take a leading role in promoting the introduction and extension of e-business practices in C&T.

Policy could also seek to further encourage the links between research and craft firms. Specialised research, education and knowledge transfer are needed to assist craft firms in keeping their role as "employment motors" in the knowledge economy. Networks of excellence between public research institutions, craft asso-ciations and craft firms, could act as catalysts in this process.

Last but not least, the construction industry –being the largest employer in Europe- deserves particular attention in e-business policy making. By intervening in areas like shared standards, e-lear­ning, B2A (business-to-administration) appli-cations and legal aspects policy could accelerate the uptake of ICT in construction crafts.

Download the study report

• E-Business in Craft' and Trade: Quantitative report – E-business use in 2003/04, (May 2004), pdf (1.0 MB)
• E-Business in Craft'n and Trade: Key issues, case studies, conclusions (Aug. 2004), pdf (1.3 MB)