Recently published research by global real estate services firm Cushman & Wakefield assessed 48 of the most suitable locations for global manufacturers to relocate or expand to has shown that the Czech Republic at the top of the list in Europe, and fifth globally.
China performed strongly thanks to increased government investment in technology, while the United States is the top place for manufacturers who wish to mitigate exposure to political and economic risks.
“While the Czech Republic is far from being the cheapest country for the manufacturing industry, considering not just the payroll costs for the local labour but also the costs of utilities, industrial development and administrative charges, it is rated as the best manufacturing destination in Europe primarily thanks to a high degree of security, relative political stability compared with countries in the east of Europe and also economic and corporate stability. In effect, the risks for investors are minimal. Its central position with strategic access to Europe’s main markets is a great advantage as well,” said Ferdinand Hlobil, Partner and Head of Industrial agency, CEE at Cushman & Wakefield.
Manufacturing index
Different manufacturers' individual requirements vary and so the research used a Manufacturing Risk Index. This Index scores each country against 20 variables which make up three final weighted rankings covering conditions, costs and risks. The data used came from a variety of sources including Oxford Economics, UNCTAD and the World Bank.
Looking at the data from a cost only scenario, the higher score being given to the countries where operational outlay - including labour costs - is lower, China comes out on top with Asian countries dominating the top ten with only Lithuania, Romania and Poland featuring from elsewhere.
The 'risk' factor takes into account geopolitical considerations and gives a higher score to countries with a lower risk of political and economic threat. The US and Canada come first and second here respectively, with Czech Republic taking third place, relegating China to fourth. More than half the countries in the top ten in the risk scenario were European.
Manufacturing Risk Index
Report author Lisa Graham, Cushman & Wakefield’s EMEA Head of Logistics and Industrial Research & Insight, said: “These rankings provide a critical insight into the rapidly-evolving manufacturing landscape and the decision-making factors behind locations. Global manufacturing has entered a new era, marked by the growing influence of technology in addressing productivity, labour shortages and safety in production and logistics.
We are seeing formerly low-cost locations such as China and India moving up through the value production chain through country-sponsored support of technological adoption. That is why Asian countries featured so prominently in our rankings. There are still concerns over intellectual property issues in the region which mean, that despite higher costs, countries in North America and Europe will continue to thrive as manufacturing bases.”
Rob Hall, Cushman & Wakefield’s Chair of EMEA Logistics & Industrial, said: “We are seeing an element of protectionism and nationalism putting global and regional and supply chains at risk. In Europe, the outcome of the ongoing Brexit negotiations will redefine regional production lines as well as reshape domestic and international flow of goods."
"Countries which invest in platforms that facilitate flows in and out of production lines will succeed. China’s seamless supply chain connections have resulted in substantial investment in infrastructure and multi-modal transport, including the New Silk Road rail and maritime projects, in addition to incentives. These factors are off-setting concerns regarding intellectual property.”
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