Who Will Be the Next Low Cost Country?

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Wed, Apr 16 - 4:56 am EST | 10 years ago by
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    Wages have been increasing in a number of traditional Low Cost Country (LCC) locations.

    Eurostat, the European Union’s statistics office, reports the following increases in industrial wages:

    • Czech Republic: 6.7%
    • Slovakia: 8.1%
    • Poland: 11.1%
    • Romania: 21.6%
    • Germany: 1.5%
    • France: 3%

    Around Shanghai, China, wages in some industries are approaching European levels.  (Source: Automotive News Europe). My post yesterday discussed reasons for setting up global R&D operations; cost savings is no longer one of them.

    So will the next Low Cost Country please step forward?

    Some companies, like Renault, have plans to build manufacturing plants in Morocco and other Northern Africa countries. This could be the start of a good thing for the whole continent.  I have often wondered why the recent success of many emerging countries has seemed to by-pass Africa. I have a few pet theories of my own, but I have never read anything on this topic.

    What do you think? Will the next LCC be in Africa or somewhere else? If you were in charge of a labor-intensive manufacturing facility and needed to save costs where would you move to?

    Image from eia.doe.gov 

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      • http://www.erblaw.com Chris

        It’s fascinating to see how companies deal with these issues. I have one company with headquarters in Berlin, manufacturing in Poland, and now a raw materials processing subsidiary in Siberia, That’s a lot of vertical integration for a small company. Another potential German client is now looking at Pennsylvania’s various tax-advantaged zones for a different take on low-cost production – lower costs than Europe, and a shorter distribution network to the customers.

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