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Electronics Production | April 11, 2008

Advantages & Disadvantages in producing in Eastern Europe

Companies should consider a lot of things before moving production to Eastern Europe.
Nokia will lay out €200 million to its former employees in Bochum, Germany, to be able to move production to Romania. Renault has Romanian workers on strike demanding a higher wage. Moving your production to Eastern Europe is not always as easy, cost-effective and straight forward as you might think.

Cluj, the Romanian town that now houses Nokia’s production facility, has pitched with qualified personnel, property tax exemption, low wages and more. An offer that the Finnish mobile phone manufacturer could not turn down.

The high economic growth of 6% will continue over the next years – as recent figures suggest. Wages should stay as low as they are now, reports Business-Wissen.

But this is the point, where most experts will differ in opinion. “If investments are concentrated, will the laws of Supply & Demand fall in place, like everywhere else“, said Reiner Perau, head of division in the German Industry & Commerce for the CIS, South-East Europe and Turkey to Business-Wissen.

Romania, as well as the Baltic region and Bulgaria – has been very successful in attracting big players over recent years. The ratio between wages in the EU-member states (2004) and those countries that joined 2007 was 3-1 reports Business-Wissen. (A worker in Poland eared an average of 4-5 €, while a worker in Romania just earned €1).

The biggest disadvantage however should be the lack of qualified personnel in these countries. The majority of companies that invested in Romania have a manufacturing intensive production. Another problem is the corruption that is spreading through Eastern European countries.
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November 15 2018 5:25 pm V11.9.0-2