Why Factory Relocation to Eastern Europe and the Balkans is a Wise Move?

Trade, labor, and logistics-related problems are disrupting business operations in faraway locations like Asia. Factory Relocation to Eastern Europe and the Balkans – formerly known as ‘Offshoring’ and ‘Reshoring‘ – has therefore emerged as a comprehensive solution for these issues. This practice allows companies to relocate closer to Western Europe to counter shortages, high shipping times, and rising prices.

Consumers have also grown conscious about the ‘Made in China’ tag, pushing manufacturers to move their plants elsewhere. Slovakia, Poland, Croatia, and more are manufacturing goldmines with skilled labor, low costs, simple supply chains, and incentives.

In today’s blog, we’ll explain why factory relocation to Eastern Europe and the Balkans is the perfect move for your business. Let’s get started!

Benefits of Factory Relocation to Eastern Europe & the Balkans

Factory relocation to a country in East Europe or the Balkan region comes with numerous benefits. Major companies are already reaping those benefits. For instance, Samsung operates a major television manufacturing plant in Galanta, Slovakia, while Bosch has several plants in Romania, producing automotive components, power tools, and other consumer goods.

Electrolux, a top home appliance leader, operates plants in Poland. Skoda Auto, a VW Group subsidiary, is a major Czech car manufacturer. Several other companies are also benefiting from the region’s cost efficiencies.

Now, you might wonder what exact benefits we are eyeing at. Well, let’s take an in-depth look at the advantages of shifting your operations to Eastern Europe and the Balkan states:

1. Brilliant Cost Efficiency

Countries in Eastern Europe and the Balkans have significantly lower labor costs than the Western Europe countries, the U.S., and similar to the ones in Asia such as China and India. However, the laborers are comparatively more skilled.

For instance, Poland has an average monthly wage of around €1,200 and it’s the nation with the highest number of annual STEM (Science, Technology, Engineering, and Mathematics) graduates in recent times. Meanwhile, Germany has an average monthly wage of around €4,000.

Moreover, the real estate costs and general operational expenses are also lower in these countries. This allows companies to access brilliant cost efficiency and cut down their expenses, and it’s highly crucial in times of crisis.

2. Abundance of Skilled Workforce

Countries like Poland, Czech Republic, Hungary, Romania, Croatia, Albania, and others boast an abundance of skilled workforce for companies to employ. Around 80 to 95% of the population aged between 25 to 64 in these countries have completed higher secondary education.

Moreover, technical expertise is available for inexpensive rates with ease. These regions offer a robust talent pool to support advanced manufacturing, research and development, and technological innovation units of any company.

Additionally, this talent helps companies tackle problems with local knowledge by understanding them from ground level and rectifying them promptly.

3. Strategic Location for Supply Chain Optimization

Many businesses faced shortages, price hikes, and disruptions during the global COVID-19 pandemic and the Suez Canal incident.This forced companies to ponder about bringing their manufacturing units near Europe.

The countries in Eastern Europe and the Balkans provide easy access to both European and global markets, making them an ideal location for logistics. They offer incredible proximity to key transportation routes leading to reduced shipping times and improved supply chain efficiency.

Volkswagen, Hyundai, and Nestle are moving manufacturing to the Balkans and Eastern Europe to reduce shipping times, costs, and stock shortages.

4. Favorable Regulations & Business Environment

These countries have lucrative government-backed incentives, favorable regulations, and subsidies to attract companies and help their economy grow. For example, the Special Economic Zones (SEZs) in Poland offer tax exemptions on income tax for a period of 10 to 15 years, and Hungary has the lowest corporate tax rate in the EU at 9%.

The incentives and exemptions are even more wonderful with certain investments. This allows companies to explore friendly conditions and a flattering business environment.

5. Availability of Advanced Infrastructure

Moreover, these regions have developed industrial parks and zones equipped with modern facilities and amenities to boost operational efficiency. Factories can access advanced infrastructure tailored to their specific manufacturing needs at fair prices.

Furthermore, there is infrastructure-related support in place. Poland offers fully serviced plots in Special Economic Zones (SEZs) with infrastructure support, Hungary provides industrial parks with developed infrastructure and facilities at competitive rates, and Bosnia and Herzegovina issues free or subsidized lands for manufacturing units with certain investments.

6. Cultural and Economic Stability

Eastern Europe and the Balkans have shown steady economic growth and improving economic indicators in recent years. Countries like Poland, Hungary, Romania, and others have rapidly growing manufacturing, logistics, and IT and development sectors.

Interestingly, Poland was the only country in the world to avoid recession during the 2008 financial crisis. Alongside economic stability, these countries offer cultural balance which makes integrating corporate culture with local customs and practices easy.

7. Competitive Edge

Relocation to Eastern Europe and the Balkans can give you an edge over your competitors with improved manufacturing capabilities, enhanced operational efficiencies, and an optimized supply chain. These regions also have high potential for research and development activities.

Major automotive manufacturers like Volkswagen and Audi have utilized the benefits offered by these regions to boost their business and leave competition behind. Additionally, it has become a growing trend among businesses to move their operations to these regions for better performance.

How to Proceed with Factory Relocation to Eastern Europe & the Balkans?

Factory relocation is a tedious process that takes time. If not managed right, the process can temporarily disrupt your operations, leading to unwanted downtime and financial losses. However, when you seek help from business relocation managers and consultants, you can avoid these consequences and get the best of your decision. If you want to proceed with moving your manufacturing unit or logistics hub to these regions, we strongly recommend taking the help of an expert. The overall process will include the following steps:

• Assessing the needs of your business
• Choosing a strategic location
• Developing an impeccable plan for relocation, execution and implementation, & 
• Post-relocation operational help

Experts can help you reduce downtimes, avoid disruption, and complete relocation as planned. You can boost the efficiency and growth of your business while avoiding potential issues, to make the most out of this strategic business move.

Final Take

Factory relocation to countries in Eastern Europe and the Balkan region has innumerable key benefits to offer. This particular decision to relocate your operations can help improve operational efficiency, boost growth, and keep it thriving.

Eastern European countries attract manufacturing plants due to their cultural and economic stability, ideal for long-term business goals and adaptability.It’s the perfect time to consider moving your operations here. Are you planning to relocate your business to the Balkans or Eastern Europe?

At CE Interim, we can help. Our team of skilled professionals delivers comprehensive, end-to-end solutions, guaranteeing a seamless and stress-free process. Additionally, we manage every detail, allowing you to concentrate on your core business activities.

Partner with us for a successful relocation tailored to your needs. Contact us today to learn more about how our interim managers can help simplify your factory relocation move