Tag Archives: Manufacturing industry

Adoption of The Euro Pays Off for Slovakia Manufacturing

Slovakia Manufacturing

In 2009, Slovakia made one of its best economic decisions by adopting the Euro. Since then, Slovakia has experienced a steady economic growth from both the services and manufacturing sectors. Unemployment rates dropped and now hover around 8%. Today, 40 Slovak enterprises earn their rank in the 500 most important European companies.

The Slovak manufacturing industry produces more than 30% of the country’s GDP. Since Slovakia tends to pay lower wages than surrounding countries like Germany and the Czech Republic, the costs of production are also significantly lower for foreign investors. Companies like Volkswagen and KIA have become some of the biggest enterprises in Slovakia, having opened plants here to cut costs.

Automotive Manufacturing

As one of the largest automotive companies worldwide, Volkswagen has a major headquarters in Bratislava. This plant produces about 1 million units per year, and just last year, the company spent 150 million euros to build an on-site logistics center. Now, Slovakia is a power force for European car production.

Germany is the number importer to Slovakia; Volkswagen ships in about 90% of assembly parts by train daily. In 2016, exports from Germany to Slovakia valued close to 16 billion euros. Volkswagen Slovakia has now sold more the 6 billion Euros worth of vehicles.

KIA Motors Slovakia is another prestigious automobile company. The plant in Zilina manufactures engines and assembles finished vehicles. They’ve produced more than 300,000 units annually since 2014, and by 2016 exceeded 1.5 million Euros in sales. The plant currently provides employment for about 5000 people, but that number is expected to rise with predicted for expansions.

Equipment, machinery, and activities related to automotive account for more than 40% of the nation’s total manufacturing.

Technology Manufacturing

Most Eastern and Central European countries focus in the automotive, metallurgy, and engineering industries which makes technology a rare exception.

As has been mentioned, foreign investment is of vital importance to the Slovak economy.  Samsung is one of the few technology companies in Slovakia. While Samsung is most famous for their cell phones, they are also a power player in other electronics. In fact, Samsung is the largest producer of LCD screens in the world. Their main plant in Voderady manufactures these LCD screens. Since they do not produce finished electronic products, Slovakia is still a major importer for electronics. Currently, the subsidiary of the South Korean company in Slovakia invoices more than 3 billion euros and employs hundreds of people.

The combined efforts of KIA and Samsung have placed South Korea as the sixth largest trading partner to Slovakia. Korean imports have reached around 5 billion Euros.

Manufacturing Metals

U.S. Steel Košice, a subsidiary of the American U.S. Steel company, is currently the largest Slovak manufacturer in the metallurgical sector. Last year, U. S. Steel Košice nearly broke 3 billion dollars in sales. While it is an important company to the Slovak economy, it does not touch the metal manufacturing of the rest of Europe. With all subsidiaries, U.S. Steel is the 15th largest steel producer in the world.

Changing to the Euro opened many opportunities resulting in the creation of jobs, foreign investments, and an increase in exports. Since then, Slovakia economy has steadily risen.

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The Czech Republic Has Been a Manufacturing Industry Leader for Decades

Czech Republic flag

When the Austro-Hungarian empire split up, Czechoslovakia became an independent nation and immediately established itself as a manufacturing industry world leader. Today, manufacturing is still paramount to the Czech Republic. Nearly 40% of all working citizens have jobs in the industry, and manufacturing comprises 35% of the Czech economy.

With a centralized location in Europe, excellent transportation infrastructure, a wealth of natural resources, and trade agreements linking the East and West, it is no wonder Czech Manufacturing attracts a lot of direct foreign investment. It’s the perfect trading buddy for Germany, Russia, and the rest of Europe.

Mining:

Before we can talk about any other manufacturing industry sector, we must pay homage to the resources that make it all possible. The Czech lands have a wealth of natural resources, mostly including raw mineral deposits. Unfortunately, Iron ore must be imported. However, black coal and limestone mines in the Ostrava region make manufacturing in the homelands cheaper and easier. Leading mining companies include Arcelor Mittal, Evraz Vítkovice Steel, and Třinecké.

Automotive:

As with much of central Europe, the most important sector in Czech Republic manufacturing is the automotive industry. More the 50% of all Czech exports are automotive products, and the industry employs more than 120 thousand people. The largest producers of automobiles in the region are Škoda Auto (Volkswagen group) TPCA (Toyota/PSA joint venture) and Hyundai Motor Manufacturing Czech.

Chemicals:

The Czech chemical sector consists of various niches including basic chemistry, crude oil processing, pharmaceuticals, rubber production and plastics. Since chemical production requires raw materials, water and energy sources, and qualified human’s resources, the chemical industry is often considered an economic indicator. With these ingredients in place, chemical manufacturing dominates the northern Bohemia region, along the Morava River. Major contributors include Chemopetrol Litvínov, Paramo Pardubice, (Petrochemical production) Spolana Neratovice, Lovochema Lovosice, (Basic Chemicals), Kaučuk Kralupy nad Vltavou, and Barum Otrokovice (Rubber industry).

Barriers:

Despite having such an excellent infrastructure and capacity for manufacturing, foreign investors and workers still have difficulty breaking into the Czech market. This is partially due to the language. Although English is widely spoken in business, the saturation of English speakers is considerably lower in the Czech Republic than other European nations. Moreover, Czech is a considerably difficult language to learn.

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Hungary Has Been Building a Manufacturing Empire in Europe

Hungary Manufacturing

40 years ago, Hungary was not even a spot on the map for the manufacturing community because of their lack of resources and small economy. However today, Hungary is a key trading partner for Germany, France, Italy, Austria, Romania, Slovakia, Poland and the Czech Republic. Each year more companies choose to expand to Hungary strategically. Multi-million dollars, multi-national enterprises like Knorr-Bremse, Thyssen-Krupp, Suzuki, Bosch, and Mercedes-Benz all have a strong presence. What is causing this manufacturing explosion? A centralized location, low production costs, skilled workers and most importantly, political incentives for large firms.

Government Incentives

The primary contributor to this Hungarian manufacturing boom is the government incentive for foreign investment. Refundable and non-refundable incentives are available to investors with great potential to create jobs, level wealth inequality, and drive innovation through research. The Hungarian government provides support opportunities for investments greater than EUR 10 million. These incentives include cash subsidies, tax incentives, low-interest loans, and land for free and reduced prices. Such offerings are hard to refuse for multi-national companies looking for a centralized location in Europe.

Skilled Workers

The Hungarian workforce is known for being well-educated, highly skilled, and hardworking. They tend to work long hours and take fewer vacation days than other European workers. In addition, about two-thirds of the labor force has completed a secondary, vocational, or technical degree. In particular, Hungary produces great talent in IT, engineering, mathematics, economics, and physics—the fields that fuel technology and innovation. Lastly, nearly 90 percent of graduating students speak fluent English, which makes for easier acquisition and transition.

State of the Art Electronics

Electronics manufacturing and research is another key driver of innovation and economic growth. As the largest producer of electronics in Central and Eastern Europe, Hungary is a leader in information security, mobile technology, and related research. This sector employs around 112,000 people and produces 26% of the region’s electronics. It is home to six of the top ten electronic manufacturing services including Foxconn, Sanmina, Zollner, Flextronics, Jabil, and Videoton. Their power in electronic manufacturing is a partial contributor to the growing economy.

Competitive Automotive

Automotive manufacturing is a core industry which generates nearly 21% of all Hungarian exports and employs more than 100,000 people. Stakeholders include Mercedes-Benz, Audi, Suzuki, Opel, and Daimler. Győr is even home to the second biggest engine factory in the world. The automotive sector is so fortified that a few smaller, local automotive companies have emerged and become stable among the giants. With a strong presence in auto-production, many educational institutions have partnered with the auto sector to establish research and development.

Having all the components to drive manufacturing—investment, location research, and ideal workers—Hungary’s efforts are both massive and intensive and thus far have shown great results in just a couple of decades. (Although still far behind the top global manufacturers like the United States, China, Japan, and Germany.) They’ve overcome their lop-sided economy and lack of resources, and will likely soon be competing in the big leagues as more and more corporations secure their plants in central Europe.

This article brought to you by The Cleveland Deburring Machine Company. CDMC can provide a deburring solution for gears, sprockets, aerospace and defense, automotive deburring, power transmission, powdered metals, fluid power and custom deburring applications. Our no-charge application evaluation includes a detailed report and process description in as little as 3 to 5 business days. Contact CDMC today for a deburring machine that’s right for you.

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