E15 warned readers this week that northern Africa is the Czecho-Slovak auto sector’s surprising new competitor. Its headline, ‘Autoland moving from Europe to the desert‘ may be overly dramatic. But the truth is that north African countries can offer cheaper and more flexible labor — and it’s attracting increasing levels of foreign investment. The articles gives the example of JTEKT, a Japanese conglomerate that’s just invested hundreds of millions of euro into a new factory in Morocco. The article also quotes Martin Jahn, (ex-CzechInvest and Škoda Auto boss) who warns components such as cables and even car batteries can and will be produced in northern Africa.
E15’s conclusion is that Czecho-Slovakia’s “autoland is threatened by the Detroit scenario.” It’s a fear that began to emerge over 20 years ago, as international automobile components manufacturers made huge investments in the Czecho-Slovak region. What would happen, asked observers, when today’s investors moved to tomorrow’s cheaper locations? Karel Stransky (Colliers) is one expert who’s warned recently that CEE countries are no longer the only game in town for cheap, skilled labor. Investors have lots of options these days. Still, it’s probably a bit soon for total panic mode. Germany’s automobile industry survived the rise of competition in CEE by concentrating on high value points in the production process. But the article makes it clear that the days of CEE relying on its low labor costs are over.
