Austria - The Industrial Sector

Energy

Mining and Minerals

Austria has unusually diverse mineral resources for a small country. It is the world's largest producer of magnesite. There are also significant deposits of lignite and iron ore and smaller deposits of wolfram, antimony, gypsum, graphite (lower grade), dolomite, talcum, kaolin, quartz, and salt. Minerals are found throughout the country, but most significant deposits are in Styria or in northeastern Austria.

Mineral production accounted for only about 2 percent of GDP in 1990, having declined steadily in economic importance since World War II. However, it remains a significant source of income and employment in certain mountainous areas and in 1991 consisted of 109 firms employing about 6,700 persons. The principal mineral products in 1990 were lignite (2.4 million tons), iron and manganese (2.3 million tons), magnesite (2.0 million tons), gypsum (753,000 tons), and kaolin (474,000 tons).

The industrial sector

Industry in Austria is diverse but consists mainly of traditional industries of the second industrial revolution. It is concentrated in various processing industries, each of which has long specialized in its particular sector and had often gained a global reputation for high standards of production and service.

Industry exists throughout the country. Textile production represents the principal industrial activity of the mountainous west, whereas machinery production occurs principally in the east, as does production of glass, electrical goods, and chemicals. Heavy industry tends to be located around Vienna and in several central river corridors. Iron and steel production is concentrated around Linz and Leoben.

Although industrial production is an important component of GDP, most companies are small and privately owned. Almost half employ fewer than five workers. The larger companies are often state-owned, either directly or through Austrian Industries.

The metals industries, both production and related manufacturing, accounted for 43.1 percent of industrial value added in 1991. Chemicals were the second most important segment with 12.6 percent, followed by foods and beverages with 11.8 percent, forest products and paper with 11.6 percent, textiles, leather, and clothing with 7.7 percent, glass, pottery, and quarrying with 5.3 percent, mining with 4.7 percent, and petrochemicals with 3.2 percent.

Iron and steel are largely produced by Vereinigte �sterreichische Eisen- und Stahlwerke (United Austrian Iron and Steel Works), commonly known as V�EST-Alpine, one of the major components of Austrian Industries. The company pioneered a worldwide steel production method named the LD process (after the Austrian cities of Linz and Donawitz, where it was developed). Iron and steel production in turn formed the basis for other industries, such as mechanical engineering, machine tools, vehicle production, powder metallurgy, factory engineering and construction, and automobile components.

Chemicals and petrochemicals constitute another major industry, producing such items as synthetic textile fibers, pesticides, pharmaceuticals, plastics, and a wide range of fuels. Electrical engineering is another important component of Austria's industry and specializes in the production of precision and optical equipment and generators. Food also constitutes an important industry, ranging from milk produced in the mountains of western Austria to Viennese pastries.

Efforts to Improve Competitiveness

Like many other countries that had concentrated on industrial production and where industrial value added constituted an important element of national production as well as of national exports, Austria had to reevaluate its performance during the 1980s. The government commissioned a special report on the need for structural adjustment, and a number of steps were taken to make Austria more competitive worldwide.

Steps to increase competitiveness include privatization, greater incentives for research, and greater readiness to make decisions about curtailing subsidies where they are not warranted (especially for nationalized industries) and could drain resources from other potentially more competitive industries. Although industrial subsidies are harder to calculate than agricultural subsidies because of their greater range (from direct payments to accelerated depreciation allowances and the like), the government during the 1980s made special efforts to reduce those subsidies and encourage competitiveness. Some of these measures appear to have been at least in part effective, although they were not always carried out as fast as originally planned.

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