Gartner publishes a lot of interesting business research, mostly on topics revolving around IT. Take any IT business topic which I have looked for information on in the past 5 years and Gartner has published a white paper on it. Content management, customer relationship management, SAP, enterprise software, you name it, Gartner covers it.  My only problem is, they also charge for it. I only hear about Gartner reports when someone else quotes them, as did Cecilia Piaggio in an article about IT outsourcing in Argentina.

The article is full of interesting facts about doing business with Argentina. According to a popular saying, “Argentineans are Italians who speak Spanish but think they are English”. The country has the fastest growing economy in Latin America, close cultural proximity with the US and Europe and engineering wages significantly lower than in Hong Kong. Around 40,000 IT professionals work in the country; both Google and NEC have recently opened regional hubs in Argentina.

Unfortunately, Cecilia conceeds that engineering graduates from Argentina’s 50 universities cannot keep pace with demand. We all know what that means – expect salaries in Argentina to start rising.

The search for the next LCC continues…

Post from: EveryJoe

Looking for the next low cost country

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 

Post from: EveryJoe

Who Will Be the Next Low Cost Country?

More and more European companies are setting up or expanding their US holdings to take advantage of the exchange rates. In effect, the US has become a “low-cost country” (LCC) for businesses based in Euro.

Bernd Matthes, president of BorgWarner Transmission Systems reports “The cost advantage in the US is at least one-third compared to Europe.”

Other examples from the automotive industry:

• Alfa Romeo is looking for a location to produce vehicles in the US.
• Ditto for Volkswagen
• BMW will invest $750 million to expand it’s Spartanburg, SC facility to produce an extra 90,000 vehicles.

Exchange rates are extremely hard to predict, but the Dollar is not expected to make a strong return any time soon. That’s what these European companies are betting on.

How about your industry? What foreign investment have you seen coming into the US because of the low Dollar?

Data and Quote from Automobilwoche.

Post from: EveryJoe

US Dollar Down, Foreign Investment Up