Can Europe remain a knowledge economy without producing anything itself?

Last content review: October 2026.

Since spending a significant part of my time outside Europe and regularly visiting Asia and China, I have started looking at Europe from a different perspective.

What strikes me most in Asia is the speed at which things are built, invested in, manufactured and improved.

Europe still has excellent universities, research institutions, engineers and technology companies. The Netherlands also holds strong positions in several advanced technology sectors.

At the same time, however, the global industrial and technological balance is changing rapidly.

For me, this raises a fundamental question:

The screwdriver as a starting point

My view on this is not based solely on my current work in solar energy, energy storage and international distribution.

My technical career began in 1984 in the automotive industry. Over more than two decades, I worked in areas including manufacturing, industrial automation, prototype building, manufacturing engineering, industrialisation and production management.

I also worked on new vehicle models during the prototype phase before they entered series production.

That period strongly shaped the way I think about technical products.

I do not mean that literally.

Not every designer, engineer or salesperson needs to be a mechanic. The point is that you only fully understand a technical product when it is actually built, tested, manufactured, installed, used and maintained.

On paper, a design can look perfect.

Only when building it do you discover that a component is difficult to access. During production, a tolerance may prove too critical. During assembly, a particular operation may take unnecessarily long. During testing, a fault may appear that was invisible in simulation. During actual use, a component may turn out to be subjected to different loads than originally anticipated.

And that is precisely where new knowledge is created.

More about my technical background can be found on René Borro - technical expertise behind Rebor B.V.

Knowledge does not flow only from engineering to manufacturing

In the automotive industry, knowledge never flowed exclusively from engineering to manufacturing.

Engineering developed a product and manufacturing then had to build it, but equally important information flowed back from prototype building and production to engineering.

A production worker who performs the same assembly operation every day can identify where a design could be improved. A process engineer discovers how a product can be manufactured more reliably or more quickly. A quality issue can lead to a different material choice. A problem during series production can ultimately result in a design change.

The factory floor is therefore not the final stage of innovation.

The factory floor is part of the innovation process.

Or, more simply:

Why not all knowledge can be captured in a drawing or patent

An important part of industrial knowledge consists of what is often called tacit knowledge: experiential and practical knowledge that is difficult to fully document or transfer.

A technical drawing can define dimensions. A datasheet can contain specifications. Software can model processes. A patent can protect a technical invention.

But none of these automatically gives you all the knowledge required to manufacture hundreds of thousands or millions of units reliably, quickly and at competitive cost.

That knowledge also resides in people, machines, processes, suppliers and organisations.

• How do you optimise a production line?
• Where do defects occur, and why?
• What level of material variation is still acceptable?
• Which process step causes the highest rejection rate?
• How do you increase production speed without sacrificing quality?
• How do you increase yield and reduce scrap?
• Which design modification makes a product easier to manufacture?
• Which problems only become visible after thousands of products have actually been built?

A large part of this can only be learned by actually doing it.

Learning by doing is therefore not merely an individual learning process. It also takes place on an industrial scale.

The industrial ecosystem surrounding a factory

Harvard Business School professors Gary Pisano and Willy Shih use the term industrial commons to describe this phenomenon.

They use it to describe the network of technological know-how, operational capabilities and specialised skills surrounding industry. This network consists not only of a single manufacturer, but also of employees, engineers, suppliers, customers, research organisations and specialised companies.

This matters because advanced manufacturing rarely exists in isolation.

A factory needs suppliers. Suppliers need machines. Machines require software, materials, electronics, sensors and maintenance. All of this requires operators, engineers, machine builders and specialised service providers.

When all these parties continuously develop and manufacture products, a feedback loop emerges:

When you manufacture millions of products, you also create millions of opportunities to observe and improve processes.

What I see today in China and other parts of Asia

What I see today in China and other parts of Asia is, on a much larger scale, confirmation of something I already knew from the automotive industry.

Complete industrial ecosystems develop around manufacturing, with suppliers, production, engineering, machinery, software and R&D operating in close proximity.

This does not mean that every product from Asia is technologically superior. Nor does it mean that China's industrial position is solely the result of manufacturing expertise. Scale, investment, government policy, access to raw materials, energy prices, integrated supply chains and labour costs also play important roles.

However, recent analyses by the International Energy Agency show that manufacturing efficiency itself has become an important competitive factor.

For batteries, for example, the IEA estimates that higher manufacturing efficiency and automation in China explain more than 40% of the manufacturing cost difference between China and Europe.

That is an important finding.

It means that a significant part of the cost difference does not simply result from lower wages or cheaper energy, but from the ability to manufacture efficiently at scale.

Batteries show what scale and manufacturing experience mean

The battery industry provides a concrete example.

According to the IEA's Global EV Outlook 2026, China accounted for more than 80% of global battery cell production in 2025. Production of important active battery materials is also highly concentrated in China.

The IEA also reports that battery pack prices in China were, on average, approximately 35% lower than in Europe in 2025.

At the same time, the same analysis warns against drawing overly simplistic conclusions. Europe is also building new battery capacity, and manufacturing capacity grew relatively quickly in 2025.

But building a factory is not the same as having a competitive factory.

According to the IEA, new battery manufacturing facilities can take more than five years to approach their nominal production capacity. New manufacturers need to reduce scrap, stabilise product quality, optimise automation and develop production routines.

That distinction is essential to the discussion about European industrialisation.

The energy transition is also an industrial transition

This is particularly relevant within our own sector.

The energy transition does not consist solely of theoretical knowledge, climate targets or software.

To a large extent, it consists of physical technology:

• solar panels and solar cells;
• battery cells and battery modules;
• battery management systems;
• inverters and power electronics;
• semiconductors;
• electric motors;
• charging technology;
• energy management systems;
• heat pumps;
• transformers and grid technology;
• the manufacturing equipment used to produce these technologies.

At Rebor, we see every day how closely these components are interconnected.

A battery, for example, is not simply a collection of cells. The performance of an energy system is also determined by the BMS, inverter, communication protocol, firmware, energy metering, thermal management and the way all components interact in practice.

A specification on paper therefore never tells the whole story.

Especially in complex physical technologies, value is created through the interaction between research, design, manufacturing and practical application.

From research to prototype, practice and back again

At Rebor, we have experienced this interaction ourselves.

The development of integrated solar energy systems around Rebor includes Energiedak 2010, LOCI, research with SEAC and Unilin, SolarBEAT test installations, ASAP and other research and development projects involving solar energy and multifunctional building components.

These projects brought together research, product development, prototypes, manufacturing technology, field testing and practical applicability.

More about this development history can be found on our Research & Innovation page.

Not every research project ultimately becomes a commercial product, and not every prototype leads to series production.

But even when it does not, development, building and testing create knowledge that can be reused in subsequent products.

What happens when manufacturing disappears?

The debate about relocating manufacturing often focuses on jobs, production costs or strategic dependency.

But there is another question:

what happens to the knowledge ecosystem surrounding that manufacturing?

When manufacturing disappears structurally, demand for specialised local suppliers may also decline over time.

When suppliers disappear, process knowledge can disappear with them. Machine builders lose customers. There are fewer operators with specialist experience. Process engineers encounter fewer manufacturing problems to solve.

And when new companies can no longer industrialise prototypes and initial production runs locally, they may look for that capability elsewhere.

This emphatically does not mean that all R&D will then automatically leave as well.

Europe can retain high-level research activities without manufacturing every component itself.

But when design, prototype building, process development, suppliers and series production become increasingly geographically separated, there is a risk that the feedback loop between research and manufacturing becomes weaker.

Over the longer term, talent, investment and eventually parts of R&D may then develop around stronger industrial ecosystems elsewhere.

Europe does not need to manufacture everything itself

This is explicitly not an argument for autarky.

It would make neither economic nor practical sense to manufacture every solar panel, every battery cell, every chip and every technical component entirely within the Netherlands or Europe.

International trade, specialisation and global supply chains provide major benefits.

The relevant strategic question is therefore not:

The more interesting question is:

That distinction matters.

Not every commodity needs to be manufactured locally. But for technologies that will shape future energy supply, digitalisation, mobility, defence, infrastructure and industrial productivity, it may be strategically important to keep research and industrialisation sufficiently close together.

Europe itself now recognises the competitiveness problem

This debate does not exist in isolation.

Mario Draghi's report on the future of European competitiveness describes, among other things, the pressure created by slower productivity growth, high energy costs, international competition and the major investments required for the green and digital transitions.

The European Commission subsequently placed three major challenges at the heart of its Competitiveness Compass:

• closing the innovation gap;
• decarbonising the economy while remaining competitive;
• reducing strategic dependencies.

Europe therefore recognises that scientific knowledge alone is not enough. Innovation must ultimately be capable of being scaled, financed and commercially deployed.

And then there is regulation

Europe sets high standards for safety, the environment, consumer protection, working conditions, privacy and product quality.

Many of these requirements serve a clear societal purpose.

But regulation and compliance also consume resources.

Every company and every engineer ultimately has a finite amount of time, people and capital.

That does not mean regulation should disappear.

The choice between regulation or innovation is too simplistic.

The real question is whether rules are proportionate, workable and efficient, and whether their societal benefits justify the time, costs and delays they create.

The European Commission also wants to reduce administrative burdens

Interestingly, the European Commission itself now explicitly acknowledges that administrative and regulatory burdens can constrain the growth and competitiveness of European businesses.

The Commission has set a target to reduce administrative burdens for companies by at least 25% and for small and medium-sized enterprises by at least 35%.

According to the Commission's current planning, this should result in approximately €37.5 billion in administrative savings by 2029.

The Commission justifies this simplification partly on the basis that companies will then need to spend less time and money on bureaucracy, leaving more resources available for innovation, investment and growth.

In essence, this is the same resource-allocation question that entrepreneurs face every day.

Regulation can protect essential public interests.

But ultimately, this is also true:

From a knowledge economy to a manufacturing and knowledge economy

Perhaps we therefore need to rethink what we mean by a knowledge economy.

A knowledge economy is not simply an economy with excellent universities, large numbers of scientific publications, patents and highly educated people.

For complex physical technologies, it also requires the ability to transform knowledge into something that can actually be manufactured and scaled.

A prototype is therefore not yet a product.

A working product is not yet a production line.

A production line is not yet competitive mass production.

A great deal of knowledge is created precisely in the stages between them.

If we structurally move those stages outside Europe, we should therefore ask ourselves what part of the learning process we are moving with them.

The Netherlands has a great deal worth protecting

For the Netherlands, this discussion is particularly relevant.

Our strength does not necessarily lie in the mass production of every conceivable product, but it does lie in advanced technology, engineering, specialised machinery, systems integration and key enabling technologies.

TNO and NWO identify dozens of key technologies that are important to the future Dutch economy and societal transitions, including photonics, quantum technology, artificial intelligence and advanced materials.

Especially in technologies such as these, the connection between research, engineering, equipment, manufacturing and specialised suppliers can be strategically important.

After all, a successful high-tech ecosystem rarely emerges from a single patent, a single university or a single company.

It emerges from the combination.

What the battery industry can teach us

The battery industry illustrates why this discussion extends far beyond cheap labour.

According to the IEA, China's cost advantages result from a combination of:

• years of scaling;
• manufacturing experience;
• high manufacturing efficiency;
• automation;
• integrated supply chains;
• availability of components and materials;
• skilled workers;
• innovation;
• policy and financial support.

This matters because it shows that industrial competitiveness cannot be built with a single subsidy, a single factory or a single research programme.

It is an ecosystem that develops over many years.

And once manufacturing takes place at scale, manufacturing itself can further strengthen that ecosystem.

The screwdriver as a symbol

That brings me back to the screwdriver.

For me, it does not represent low-skilled manual work in opposition to high-value intellectual work.

Quite the opposite.

The screwdriver represents the connection between thinking and doing.

• between a CAD model and a prototype;
• between a laboratory and a production line;
• between an engineer and an operator;
• between research and application;
• between design and service;
• between a good idea and a product that can be manufactured reliably one hundred thousand times.

If we remove one element from that cycle, we need to understand what this does to the rest of the system over the longer term.

An open discussion

My perspective has been shaped by more than two decades in the automotive industry, manufacturing and industrialisation, followed by years in solar energy, product development and energy systems, and today also by the differences I observe while working, travelling and living outside Europe.

But there is no simple answer to this issue.

Europe does not need to manufacture everything itself. Regulation can protect important societal values. International specialisation can provide major economic benefits. And in some sectors, high-level R&D can exist without large-scale local manufacturing.

I therefore see this article primarily as an invitation to discussion.

Arguments that challenge this view are particularly interesting.

Because ultimately, that too is part of engineering and innovation: continuously testing assumptions against reality.

About the author

René Borro is director of Rebor B.V. His technical career began in 1984 in the automotive industry and has included manufacturing, industrial automation, prototype building, manufacturing engineering, international product development, industrialisation and production management.

From 2007/2008 onwards, his work shifted towards solar energy. These activities subsequently developed into building-integrated photovoltaics (BIPV), technical research, product development, international distribution, energy storage and energy system integration.

Sources and further reading

This article combines personal practical experience and analysis with current external sources. The conclusions and interpretations in this article are those of the author. The sources below were used to verify factual developments relating to manufacturing, competitiveness, batteries, innovation and European regulation.

Further reading at Rebor

Learn more about the combination of practical technical experience, product development and applied research behind Rebor:

• René Borro - technical expertise behind Rebor B.V.
• Research & Innovation in solar energy and energy systems
• Projects & References in integrated solar energy and BIPV
• Knowledge & Insights