Cost Benefits of Relocating Factory to the Balkans

Over the years, a growing trend has emerged where factories are being relocated to the Balkan region due to extensive Cost Benefits of Relocating Factory, including operational cost benefits, tax incentives, and long-term savings opportunities. This move has gained immense popularity in the wake of growing operational complexities in Western European countries.

These regions also offer other key advantages that make them an ideal location for manufacturing plant relocation. Subsequently, a large number of Western European and global companies are choosing Balkan countries like Serbia, North Macedonia, Slovenia, and Slovakia, to name a few, for their production base to make their operations economic, environment-friendly, and convenient.

In today’s blog, we will explore the cost benefits offered by the Balkan countries when relocating a factory to these regions.

\So continue reading if you are looking for ways to minimize operational costs, ensure higher savings, and improve operational excellence, all while getting access to an immense pool of cross-cultural talent.

What are the Cost Benefits of Factory Relocation to the Balkans?

The Balkan countries offer plenty of cost benefits, which we will disclose in the subsequent sections of this blog. Shifting operations to these countries can save businesses money and enhance sustainability for long-term benefits.

Explore the cost advantages Balkan countries offer for factory relocations.

Reduced Operational Expenses

The Balkan countries offer significantly lower operational expenses due to their lower utility costs for electricity, water, and gas compared to Western Europe or the U.S.

For instance, the average cost per kWh is approximately €0.07 to €0.11 in the Balkans but it’s €0.20 to €0.30 in Western Europe.

Furthermore, these countries have affordable industrial real estate and lower rental prices for facility setup.

The average cost per square meter in Balkan countries is €20 to €50 per year while it’s €70 to €120 per year in Western Europe. The Balkan region features key transport routes and ports linking factories across the EU. This particular facility helps reduce shipping costs and makes international trade economical.

Skilled Workforce at a Lower Labor Cost

The Balkan countries have an abundance of skilled workforce at fairly lower wages compared to the ones in Western Europe. For instance, the average monthly wages in countries like Serbia, Bulgaria, and Albania are €500 to €600 while they are €2,500 to €3,500 in Germany, France, Italy, and other Western European countries.

This provides a clear edge to companies operating in labor-intensive industries. The strong educational systems and technical prowess of the talent in these regions also allow companies to improve the quality of production, research and innovation, and enhance sustainability to keep the company aligned with long-term goals while reducing labor expenses.

Favorable Tax Rates & Incentives

The Balkan countries generally have lower corporate tax rates compared to Western Europe to attract more business investments. Countries like Serbia, Slovakia, Romania, and Poland have corporate tax rates of 10-15%. However, this number is between 20 to 25% in Germany, France, and Italy.

Balkan countries provide tax breaks to attract foreign investment and boost economic growth. This gives companies extensive cost benefits while providing abundant savings opportunities. Interestingly, in some Balkan countries, governments even offer subsidies and grants to promote capital investments and job creation.

Strategic Location For Savings Opportunities

The Balkan region has access to key markets in West, Eastern, and Central Europe, as well as Asia. This level of connectivity significantly reduces transportation and shipping costs for companies serving in these regions. Countries like Slovakia and Serbia have favorable trade agreements with the European Union (EU) to provide easier access to the EU market without high tariffs. This allows companies to boost business growth and expand their operations without cost-related limitations.

Better Infrastructure at Lower Costs

The Balkan countries have modern infrastructure, thanks to the recent developmental investments in new highways, ports, and logistics centers. They are also developing well-equipped industrial zones and business parks to attract manufacturing projects and investments.

Relocating to the Balkans offers cost savings, shared facilities, and strong operational support for companies. On the contrary, finding such facilities in Western Europe is considerably expensive.

Government Support

Balkan countries provide robust government support to attract foreign investments and boost economic growth.

This allows businesses to have a streamlined procedure to set up their production units with a simplified administrative process. Serbia, Slovakia, and Slovenia offer business-friendly environments with reduced red tape and compliance costs.

Long-Term Savings Options

Relocating factories to the Balkans offers cost-saving benefits in labor, utilities, and operations for companies.

They also enhance the efficiency and sustainability of your business process to boost revenue and growth. Companies can offer more competitive pricing due to lower production, operational, and shipping costs by relocating their factories to these countries. This further improves their market positioning, and customer experience, and amplifies growth potential.

High Initial Investment vs Cost-Benefits For Factory Relocation to the Balkans

Plant relocation to another country often entails high initial costs for expenses, facilities, transition time, and production disruptions.

Balkan countries provide cost benefits for relocating factories with lower expenses, tax incentives, and market proximity.

Your company must evaluate these longstanding benefits against the initial investments to analyze if the plant relocation will be worth the time, money, and effort. If you’re unable to conclude, seeking help from an interim manager will lead you to a decision.

Understanding plant relocation objectives, site selection, investment needs, and effective transition assistance are their expertise. Additionally, they can significantly lower the required time, resources, and effort with their expertise and experience to make the decision highly beneficial.

Final Word

The Balkan countries offer incredible cost-benefits to relocate a factory and operate near the European market. It’s time to make savings on your production, operations, and logistics while enhancing the efficiency of processes and systems. That’s the secret to achieving operational excellence, which inevitably translates to better customer experience, more revenue, and boosted business growth.

To assess and evaluate if manufacturing plant relocation to the Balkans will be a wise decision for your business, you can seek guidance from interim management companies. They can analyze if your production base needs a relocation and if the transition will be worth it. Interim managers use relocation checklist for a smooth transition, saving costs and minimizing disruptions.

When looking for an expert interim management company that can guide you through the plant relocation process, look no further than CE Interim.

We are the leaders in cross-cultural interim management solutions. As a key part of Valtus Alliance, we have a strong presence in the EU, Central/Eastern Europe, and the Middle East. Let us help you navigate the path to operational efficiency and sustainable growth.

Consider filling out our Contact Form and our representatives will get back to you in no time. Let’s build a sustainable manufacturing plant relocation checklist for your business and execute it with superior expertise.