June 21, 2013

Will Eastern Europe be a car manufacturing super power?

In 2012, Eastern European automotive manufacturing reached the 59% of Germany's output, which is higher than France' and Italy's production all together.


The Eastern European automotive industry

has a long way behind. Many OEM and Tier 1-2 suppliers have established production facilities in the Eastern part of the EU, while the Western European car manufacturing was stagnating, the CEE production increased rapidly in the last decade. Eastern Europe provides Western style infrastructure, wide-spread supplier fundaments, low labour costssupportive governments and regulations, and last but not least: access to the world's #1 market: the European Union.

Sponsored

The Hungarian automotive industry

is traditionally stronger on supplier level than on OEM level. However, in the recent years, companies like Daimler, Audi, Opel, Suzuki launched new production lines and facilities, and the (OEM) output is expected to increase dramatically in upcoming years.

Trends on corporate level

Schaeffler Hungary has 3 plants in Hungary, the largest one in Debrecen, Eastern Hungary. The FAG Hungary manufactures rolling bearings for automotive industry, employing 1,200 people in the city. The  company's recent 6 million EUR investment goals to develop new products and manufacturing processes in its Eastern Hungarian plant.

The boosting Central- and Eastern European automotive industry can be surprising when you look at the European picture:

If you liked this article, don't forget to share it!

June 7, 2013

Will Eastern Europe provide lower labour costs than China?

We compared Central and Eastern European labor costs to a leading manufacturing location in China, Shenzen. The result is surprising.

In 2011, the Eastern part of European Union provided 116% (Bulgaria) to 487% (Prague) of Shenzen labor costs. We think, it's quite comparable. And the top of all that: labor costs in Shenzen doubled from 2010 to 2011 (wage inflation was 'only' 62% in Shanghai from 2010 to 2011). 
We have no statistics about 2012 or 2013 labor rates in China, we leave it to your imagination...

CEE regional average labor costs in the % of Shenzen labor costs, 2011
Bulgaria: 116%, Romania: 167-197%, Hungary (without Budapest): 210-244%, Poland: 242-285%, Slovakia (without Bratislava): 245-298%, Czech Republic (without Prague): 315-372%, Budapest: 320%, Bratislava: 414%, Prague: 487%
Graphics: Manufacturing Hungary Blog

In absolute terms, average monthly labor cost in Shenzen in 2011 was 513 USD or 369 EUR (and 257 USD in 2010). Average monthly labor cost in Bulgaria was 431 EUR in 2011, 775-900 EUR in Hungary (without Budapest), 905-1529 EUR in Slovakia and 1800 EUR in Prague, Czech Republic.

Average monthly labor costs (cost ranges) by locations. 
Bud= Budapest, Bts = Bratislava, Prg = Prague
Graphics: Manufacturing Hungary Blog

Sources: labor rates - China, Bulgaria, Romania, Hungary, Slovakia, Poland, Czech Republic
Yearly average exchange rates; taxes and social security rates

The word you are looking for: nearshoring!

If you liked this article, don't forget to share it!

sponsored