The automotive sector in Eastern Europe is currently experiencing a boom, driven by the steady increase in the number of vehicles produced here. The global trend of relocating production plants to Eastern Europe, initiated by the first automotive concerns back in the 1990s, continues. In 2004, approximately 1,500,000 vehicles were produced in the new EU member states, and by 2007, this number is expected to double. Numerous suppliers, following the manufacturers, have headed east and located their headquarters in supplier parks in the immediate vicinity of the plants. Suffice it to cite significant recent examples: TPCA in Kolin, Czech Republic (opening: 2005, production capacity: 300,000 vehicles per year), PSA in Trnava, Slovakia (opening: 2006, production capacity: 300,000 vehicles per year), and Hyundai-Kia in Zilina, Slovakia (opening: 2006, production capacity: 300,000 vehicles per year).
The East is tempting
The new EU member states have become an attractive production location for many reasons. Wage costs here are significantly lower than in Western Europe, amounting to roughly one-fifth of the funds allocated for wages in Germany. Relocating production to Eastern Europe is particularly beneficial for suppliers; personnel expenses account for 25% of total costs – thus, for example, in Slovakia, a supplier can produce 22% more cost-effectively solely due to wage savings than in the western part of Germany.
The article comes from the magazine “Logistyka” 5/2006.