The main reason for the decline in industrialism in Europe (as well as in the United States) over the past 50 years is globalization. This trend has intensified over the least two decades or so, but it has been in existence for longer.
The major economic force behind the changes in Europe’s economy has been globalization. This is the process by which the economies of the countries of the world become much more closely tied to one another. But how has this led Europe to be less industrialized?
First, it has done this by exposing Europe to greater levels of competition. In roughly the last twenty years, Europe has started to have to compete with countries such as China, Vietnam, and Bangladesh for industrial jobs. Previously, Japan had been a major new source of competition. Second, European workers demand higher wages than workers in these poorer countries do. This means that Europe cannot compete with such countries for industrial jobs. Finally, Europeans tend to have access to better education than people in many poorer countries. This means that European countries had workforces that could transition to more skilled work and to work that is done more with the brain than with the hands or with machines.
What all this means is that Europe no longer has an advantage in most kinds of industrial work. European workers have an advantage with respect to skilled and white collar work, but have a disadvantage with respect to industrial work. Therefore, the increase in globalization has moved industrial jobs to poorer countries while richer countries like those of (particularly Western) Europe have moved on to jobs in the service sector.