Sharing best practices for the low carbon future iipnetwork 1615 M Street, NW, Suite 280, Washington, DC 20036 USA | info@iipnetwork | Twitter/iipnetwork CASE STUDY A Review of Industrial Restructuring in the Ruhr Valley and Relevant Points for China Robert P. Taylor, Senior Advisor, Institute for Industrial Productivity July 2015Table of contents 1. ABOUT THIS REPORT .......3 2. OVERVIEW .........3 Introduction to the Ruhr Valley .......3 The dilemmas faced in the 1960s and 1970s ...........4 Successful navigation through radical economic shifts .......5 3. SUMMARY OF THE RESTRUCTURING POLICY PHASES IN THE RUHR ..........7 The 1960s to mid-1980s:The pressure to change ..8 The mid-1980s-1990s:“Let’s do things differently”...........9 2000 to now:Moving into the new millennium ...11 4. SUGGESTED TOPICS OF INTEREST FOR CHINA’S INDUSTRIAL RESTRUCTURING ....15 Overview of differences and similarities ...15 Ideas on further exchange between Chinese and German experts ..........17 5. CONCLUSIONS ON LESSONS FOR CHINA FROM THE RUHR VALLEY’S EXPERIENCE22 LIST OF REFERENCES .24 Selected websites:.25 淘宝店铺 “Vivian研报” 首次收集整理 获取最新报告及后续更新服务请在淘宝搜索店铺“Vivian研报” 或直接用手机淘宝扫描下方二维码A Review of Industrial Restructuring in the Ruhr Valley and Relevant Points for China 1. ABOUT THIS REPORT Over five decades, the economy of the Ruhr Valley in Germany has undergone a dramatic restructuring, away from its original coal and steel-based economy to a more diversified service economy.The process was difficult, but the restructuring has been more successful than in some other regions around the world that are facing similar challenges.Although the industrial restructuring that China is now facing is, in some ways, different, there also are similarities in the aspirations to develop the service economy as heavy industrial growth slows―to soften social hardships and job loss, and to proceed with industrial restructuring in such a way as to help stem the tide of the country’s worsening environmental pollution. This report provides an overview of the Ruhr’s experience, as seen from an outsider.It seeks to put the story of economic restructuring in the Ruhr in a context that makes sense for Chinese readers. Following the overview section, the report provides a summary of the restructuring policy phases in the Ruhr’s recent history.It then provides recommendations on a number of specific topics of the Ruhr’s experience that may be most relevant for concerned Chinese to explore in detail, through recommended future Chinese-German exchanges.The report thus provides only a first step in an effort to help enable lessons from the Ruhr Valley’s rich experience to be understood and brought to bear in the truly massive industrial restructuring that China will see over the next decade and beyond. 2. OVERVIEW Introduction to the Ruhr Valley The Ruhr Valley of northwestern Germany has been a center for European coal and steel production since the middle 1800s.The Rhine River forms the western border of this region, which includes three rivers running east to west into the Rhine (the Lippe, the Emscher and the Ruhr).With underground reserves of coking, semi-anthracite, steam and gas coals, and excellent logistics to the Rhine and ocean, the Ruhr quickly developed into a major industrial, largely-urbanized region.Its population grew from just 400,000 people in 1850 to 3.8 million people in 1925.The Ruhr was a center for military industry during the Second World War.After the war, coal and steel production rebounded through the 1950s. Today, the Ruhr is home to 5.2 million people.It spans an area of over 4400 square kilometers, including a series of municipalities, such as Essen, Duisburg, Dortmund, Bottrop, Bochum, Hamm and others.These municipalities grew around coal mines and heavy industry plants. The Ruhr is a geographic region with certain economic, demographic and historical continuity.It is not an administrative region.The Ruhr is part of the State of North Rhine-Westphalia (NRW), the largest of Germany’s 16 states with a population of almost 18 million people. Within the Ruhr region there are 11 district-level municipalities and 4 rural districts, comprising the next level of government administration. In Germany’s federal system, both the states and the municipalities enjoy considerable independence and autonomy. The Ruhr region has gone through a dramatic and difficult economic transition over the last 50-60 years.Facing pressure from lower-cost producers, the coal and steel-based economy went through a sharp decline, causing massive job losses in those traditional sectors.At the same time, environmental conditions had become intolerable by the middle of the last century, requiring attention and investment to improve air, water and soil conditions.The last five decades have brought many difficulties and much change. Today the Ruhr region is primarily a service economy.There were no universities in the Ruhr in the 1950s.Now there are over 220,000 students enrolled in the region’s new universities and technical schools.Air pollution problems have largely been solved.Major investments have been made (and continue) to return key rivers back to more natural, unpolluted states.Many environmentally- degraded, old industrial sites have been successfully cleaned up and redeveloped, and more brownfield development projects are planned.Certainly challenges remain, and people in the Ruhr feel that the transition is not yet complete.Efforts to continue to develop new economic opportunities and jobs remain a top priority.But the region has seen much progress compared to some other regions in the world that faced similar pressures for economic restructuring.And certainly, there is much to learn from the various policies adopted and experiences gained in this historic region. The dilemmas faced in the 1960s and 1970s Beginning in the late 1950s, the Ruhr’s underground coal mines, with an average depth of 650 meters, had increasing difficulties competing with less-expensive coal from other areas.Moreover, demand for coal began to fall overall due to the rise of oil as a fuel.Coal mines began to close under the economic pressure and the number of coal mining jobs fell sharply.Then, in the mid-1970s, demand for the Ruhr’s steel production also began to fall quickly, due the increasing availability of less-expensive steel on the global market. In 1956, the coal mines of the Ruhr produced 124 million tons of coal, employing almost 500,000 people (Hospers 2004).In the 1930s, the steel plants of the Ruhr produced one-sixth of the world’s steel (Schepelmann 2010) and, in 1958, the Ruhr’s steel plants employed about 220,000 people (Rehfeld 2014).In the 1950s, the coal, steel and related industries together employed 70% of the labor force in the Ruhr (Schepelmann 2010).As these core industries began to contract sharply in the 1960s and 1970s, the entire Ruhr region faced a dire economic crisis.By the 1990s, about two-thirds of the coal, steel and related industry jobs were gone. At the same time, environmental conditions had deteriorated to reach levels that would be considered totally unacceptable today.Industry and urban infrastructure was founded on early and middle 20th century technology, with little regard to environmental issues.The worldwide environmental protection movement had not yet really begun.Air pollution from heavy industry was poorly controlled.Water pollution was severe, and was exacerbated by a naturally high water table, falling ground levels due to mining, and difficulties in evacuating standing water.Toxic waste from heavy industry polluted urban soil. Campaigning for national election in 1961, Willy Brant, who would become one of West Germany’s most famous Chancellors, declared that “the sky above the Ruhr must turn blue again.”At the time, this goal seemed to many to be a dream that looked very difficult if