The growing importance and factors of production inside the EU
Nearshoring production back to Europe has become a popular option for western European companies looking to streamline their supply chains and improve their flexibility. With its highly skilled workforce, excellent infrastructure, and favorable business climate, Central Eastern Europe has become a hub for nearshoring production in recent years. In this article, we will explore the benefits of nearshoring to Central Eastern Europe and why it is a smart choice for companies looking to improve their competitive advantage.
Firstly, one of the main benefits of nearshoring production to Europe is the proximity to the company’s home base. This means that companies can have greater control over the manufacturing process and can quickly address any issues that may arise. Additionally, being in the same time zone makes communication easier, which can be critical when working on complex manufacturing projects that require frequent updates and feedback.
Another advantage of nearshoring to Central Eastern Europe is the quality of the workforce. CEE has a highly skilled labor force that is well-educated, motivated, and experienced in advanced manufacturing techniques. This means that companies can tap into a wealth of knowledge and expertise, which can lead to improved product quality, reduced production times, and increased innovation.
Central Eastern Europe also has a modern and reliable infrastructure that makes it easy to transport goods and raw materials. The region has an extensive network of roads, railways, airports, and seaports, which makes it easy to move goods quickly and efficiently. This can be especially important for companies that need to transport large or heavy items, as well as those that operate on a just-in-time manufacturing model.
Furthermore, Europe is known for having a stable and predictable business environment.
According to a report by the consulting firm EY, the number of companies that have reshored production to Europe has increased significantly in recent years. The report found that 60% of European companies have reshored or plan to reshore production, with 71% citing proximity to the home market as a key factor in their decision-making process.
The region has a strong legal framework, stable political systems, and a highly developed financial sector, which makes it an attractive location for foreign investment. This stability can be critical for companies looking to invest in a long-term manufacturing project, as it provides a level of certainty that can be difficult to find in other parts of the world.
In the wake of the pandemic, Western European companies have begun moving production from the Far East back to Europe. The impact of nearshoring can already be felt in Hungary, Synermont CEO Krisztián Kavas told us. The contract manufacturing company has seen quick success, with orders flooding in from around the continent, from Austria to Sweden.
"Keep your friends close and your suppliers closer" is a popular business saying that emphasizes the importance of building strong relationships with local suppliers.
Two years ago, in the middle of the COVID-19 pandemic, after working for over 10 years in the automotive industry, we made the decision to found our company Synermont.
