Territorial needs and challenges

MANUFACTURING AND MECHANICS

Manufacturing and mechanics remain fundamental pillars of the Czech economy. The increasing role of digital technologies in navigating the post-pandemic landscape is vital for entrepreneurs across these sectors. Tools such as remote access and augmented reality (AR) facilitate collaboration between remote specialists and on-site workers, enhancing training, operations, and maintenance. These technologies also enable manufacturers to adapt swiftly to evolving market demands.

Heavy manufacturing contributes substantially to environmental pollution, with Czechia ranking among the highest per capita carbon dioxide emitters in Europe. Aligning with the EU Green Deal, the Czech Republic must intensify efforts to reduce greenhouse gas emissions by at least 55% below 1990 levels by 2030, making the greening of the manufacturing sector an urgent priority.

The main territorial challenges are therefore to continue advancing digital transformation and to promote sustainable practices within manufacturing and mechanics.

A 2023 survey by AMSP ČR and IPSOS reveals that Czech SMEs and entrepreneurs recognize the importance of digitalization but still trail EU competitors by about 20% in technology adoption. Meanwhile, the Czech Republic stands out globally for its excellence in artificial intelligence research, hosting leading institutions such as Brain4Industry (Institute of Physics of the CAS), the Cybersecurity Innovation Hub (Czech Technical University), Laser Centre HiLASE, and the STAR Research & Innovation Cluster. This expertise offers strong potential to drive innovation and modernization in manufacturing.

Despite supportive policies, adapting the workforce to rapid technological change remains challenging. The country’s tertiary education attainment lags behind OECD averages, and adult participation in lifelong learning is decreasing. Skill shortages persist in engineering, mechanics, IT, mathematics, and technology fields. Moreover, over half of graduates work outside their studied disciplines, indicating education-to-labor market mismatches.

Unemployment remains relatively low but has increased slightly from 2% in 2019 to nearly 3% in 2024. The NEET rate stands at approximately 7%. Talent attraction is further constrained by a largely homogeneous skilled labor pool and limited openness to immigration.

In summary, the Czech Republic’s territorial priorities for manufacturing and mechanics include accelerating digitalization, enhancing sustainability, and better aligning education with labor market needs. Strengthening networking, knowledge exchange, and collaboration with European partners and research hubs will be crucial to addressing these challenges.

AUTO – MOTO

The automotive industry is one of the most important industries in the Czech Republic. It accounts for more than 20% of production volume, directly employs more than 120,000 people and, at full capacity, produces more than 1.3 million passenger cars per year. In total, the industry accounts for 35% of the Czech economy. It also contributes very significantly to Czech exports.

The backbone of the automotive industry in the Czech Republic today consists of three passenger car manufacturers, Škoda Auto, TPCA and Hyundai. Apart from them, the automotive industry in the Czech Republic is made up of truck manufacturers Tatra and Avia, bus manufacturers Iveco and SOR and motorcycle manufacturer JAWA.

Connected and digitised operations have already helped the automotive industry survive the pandemic. With the help of advanced manufacturing technologies, car manufacturers were also able to quickly adapt operations and begin producing urgently needed personal protective equipment for caregivers and other frontline workers.

As time passes, the role of digital technologies in coping with the aftermath of the COVID-19 pandemic and other unexpected events is becoming increasingly important for automakers. For example, when companies are trying to reduce the number of people on the plant floor, remote access and augmented reality (AR) tools can enable remote workers to connect with plant personnel so they can work together to address training, operations and maintenance. However, digital technologies can also be very helpful in evolving the operations of car manufacturers as they try to keep up with market demands.

Unfortunately, the heavy automotive industry of Czechia contributes to climate pollutions, being the biggest producer of carbon dioxide per Capita. One of the sub-targets of the Green Deal is to reduce greenhouse gas emissions by at least 55 percent below 1990 levels by 2030 and, therefore, it is absolutely crucial to put all efforts in greening the industry in the Czech Republic to achieve such goals.

The two main territorial needs of the Czech Republic are thus the continuation efforts of digitalisation of the sector and greening the sectors.

Since 2014, the European Commission has been tracking Member States’ digital progress in the Digital Economy and Society Index (DESI) reports. In 2020’s report, the Czech Republic jumped from 18th to 17th place overall – but that’s still the bottom half of the ranking. This is particularly evident in the adoption of specific digital technologies.

According to a national survey organized by AMSP ČR in cooperation with the IPSOS agency in 2020 among 100 SMEs and self-employed people, entrepreneurs take the topic of digitalization very seriously. Czech entrepreneurs are aware of the importance and benefits of digital tools across their activities and departments in their businesses. However, small Czech companies are lacking behind in digital literacy. Czech companies are lagging behind in several aspects of the digital society, e.g., they have a lower level of use of modern technologies by up to 20% compared to their EU competitors.

On the other hand, the Czech Republic is considered one of the leaders in the area of artificial intelligence and is home to wide research in this area, hosts world top-class experts and scientists and has top research centres and research infrastructures (e.g., Brain4Industry of the Institute of Physics of the CAS, Cybersecurity Innovation Hub of the Czech Technical University in Prague, Laser Centre HiLASE, STAR Research & Innovation Cluster and so on). Czech companies and start-ups have a lot to offer the world today in areas with high added value in AI and robotics. We see this proposal as a way to connect the two fields and enable the transfer of know-how to the advanced mechanics’ sector.

One of the key paths how to achieve digitalization and greening of the automotive, mechanics and advanced mechatronics sectors and how to reach the level of other European countries is through exchange of best practices, knowledge and know-how, as well as through networking and building new relationships with SMEs, hubs, science and academic centres and other experts from various areas around Europe, like CoVE. This project idea is a way how to learn from others in areas that Czech Republic lack behind as well as a way how to provide know-how to others about areas that Czechia is confident in.