The
choices facing U.S. decision makers as to where they should locate European manufacturing plants are almost endless.
Geography, labor costs, political stability, and financial incentives are all critical factors that must be weighed.
However, despite the dozens of variables, light can be shed on the issue. When Expansion Management polled top site selection consultants, labor issues emerged at the top of the list.
Jan Scheers, of Brussels-based Plant Location International, emphasized that worker issues in-volve more than wages.
"You must look beyond the
headlines and numerical
statistics, and closely examine
each specific situation.
Generalities about labor avail-
ability can be very misleading."
-- Jan Scheers, Plant Location International
|
"Availability
in terms of numbers, as well as the level of skills, are often critical," Scheers said. "For instance, in the UK, Denmark, the Netherlands and Ireland, where overall unemployment rates are low, the availability of skilled labor may be in short supply. "And that holds true in France and Germany."
"You must look beyond the headlines and numerical statistics, and closely examine each specific situation," he said. "Generalities about labor availability can be very misleading."
Jean Claude Goldenstein, who heads JCG International in New Rochelle, N.Y., cites labor costs, along with financial support and availability of an appropriate site -- "specifically that of an existing structure since most firms do not want to build from the ground up" -- as all playing essential decision making roles.
"The main criteria remains labor," Goldenstein said. But, there are equally important issues regarding flexibility.
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"Some countries are much more difficult
when it comes
to hiring and
particularly firing,
than others."
--Jean Claude Goldenstein, JCG International
|
"Some countries are much more difficult when it comes to hiring and particularly firing, than others. For manufacturers where output can rise or fall seasonally, clearly understanding a given site's labor policy can be absolutely essential."
Marc Lhermitte, general manager of the Ernst & Young International Location Advisory Service, feels cash and tax incentives can be equally critical determinants.
"Since most countries offer both, companies need to determine what mix suits them best," he said.
Successful plant locations
Alain Martinez Fortun, a consultant, points to AlliedSignal's five-year-old, $250 million plant in Lorraine, France as a successful location.
Fortun says proximity to Belgium and Luxembourg City has benefited operations at the industrial polyester fibers production facility.
"This area has a strong industrial tradition, one from which we had tremendous choice in terms of selecting the workers we needed," he said. "Indeed, at opening, we hired 325 out of 9,000 who applied.
"That meant the plant had, and still has, the skills it needs to produce high quality fibers for its European tire manufacturing customers."
Armstrong Insulation Products AG, located in Psassnau in the Canton of Lucerne, Switzerland, another example of a successful plant location, is equally pleased with its Swiss experience.
According to Stephan Rudolf, operations manager, the plant, which opened in January, 1995, benefited from the area's supply of skilled labor.
"While labor definitely is expensive, its productivity is also extremely high," he said. "And that productivity is a key reason we can operate with just 45 people.
"While it's true labor would be cheaper in Spain or Portugal, the fact that management can easily work with them, and have a great deal of flexibility in terms of job duration and roles, is much more important," Rudolf said. "Wages alone are hardly the only important factor."
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