A lot has been made in recent months about the state of the European continent and its relationship with the United States. In fact, a new dividing line seems to have been established: “Old Europe” and “New Europe.”

While this talk has primarily been political in nature, the labels Old Europe and New Europe are applicable to the state of the business relationship between the United States and Europe.

More than a decade after the fall of the Soviet Union, and with the ongoing expansion of the European Union, new markets are emerging for U.S. companies considering a manufacturing facility or distribution center in Europe.

Here is a look at some of the emerging markets in Europe, according to UK-based European site selection consultant Tenon Techlocate.

The Czech Republic

Strategically located, the Czech Republic offers access to the Central and Eastern European markets, as well as to EU countries.

The major sectors represented in the country are automotive, pharmaceutical, environmental technologies, electronics and precision engineering.

More than 1,200 foreign-backed companies have manufacturing facilities in the Czech Republic, employing more than 250,000 workers.

There is a high level of general education in the country, with a particular emphasis on science and technical subjects. There are more than 45,000 students at seven technological universities.

Grevie, Sweden-based Lindab is establishing a manufacturing facility in Prague. The company said the decision was based on strong growth in demand in Central and Eastern Europe, combined with improved logistics and a better cost situation.

Lindab’s new factory is scheduled to start production in 2004, hiring up to 300 employees. The factory will mainly manufacture labor-intensive products within Lindab’s ventilation program.

Estonia

Estonia is one of Europe's most dynamic emerging economies. The Estonian currency is fixed to the euro and is therefore one of the most stable in the region.

Tallinn International Airport offers travel to key business destinations across Europe and Russia through a number of international carriers.

In central and eastern Europe, Estonia ranks third just behind the Czech Republic and Hungary in terms of foreign investment attracted since 1991.

Estonia’s economy offers key opportunities for companies in a number of sectors including IT, electronics, machinery/engineering, wood processing, logistics/transport and food.

Denmark-based DFDS Transport is establishing a logistics center outside of Tallinn, the nation’s capital. The center, which will have a storage area of about 12,000 square meters, is necessary because the company is experiencing a shortage of space on its present premises, according to the company.

Washington-headquartered Microsoft is also expanding its operations in the Baltic region with the opening of an office in Estonia. Until now, the company’s operations in the country have been coordinated from the Riga, Latvia, office.

Hungary

Sharing a border with seven countries including Austria, Slovakia and the Ukraine, Hungary is positioned to serve both emerging and established markets.

A population of 10 million is among the best educated in the region with excellent universities and a fast-growing reputation as an R&D center of excellence.

Hungary has seen many international investors establish facilities here, in particular for electronic manufacturing and telecommunications.

Japan-based Suzuki Corporation announced it is planning to double production at its plant in Esztergom, Hungary, by the end of 2004. Boosting output in Hungary is an element in Suzuki’s plan to increase annual European sales from the current market of 250,000 to 350,000 by 2006, said Tadashi Kondo, CEO of the company.

Latvia

The information technology and telecommunications sectors are growing at a rapid pace in Latvia, with the IT market capacity in the country doubling every six months. Latvia is now looking to develop its sector in software development outsourcing through homegrown companies such as DATI, Eastern Europe’s largest private contract software developer.

Latvia has one of the highest percentages of scientists and engineers in Europe, available at highly competitive wage rates, contributing to the country’s development as a successful high technology and R&D center.

Lithuania

During the past few years, Lithuania has become a leading location for foreign investors. Its well-developed industrial base includes electronics, chemicals, machine tooling, metal processing, construction materials, food processing and light industry.

Lithuania has one of the best-educated work forces in Central and Eastern Europe. All five major cities in Lithuania now have their own universities, taking the yearly number of university graduates per 1,000 inhabitants to the highest in the region.

Norwegian-based electronics company Kitron ASA is relocating part of its production facilities to Kaunas, Lithuania’s second-largest city, and has opened a new plant there. The plant will produce a range of electronics products for medical, household and military applications. Products will be exported to Norway and Sweden.

Poland

The automotive industry plays an important role in the East European economy and Poland is home to some major auto manufacturing and component companies.

The work force is one of the youngest in Europe, with about 60 percent under the age of 40.

Japanese company NGK Insulators is establishing a Polish subsidiary in Gliwice with 150 employees. The plant will produce Diesel Particulate Filters for European automotive manufacturers. Production is expected to begin in January 2005.

Russia

Russia's conversion of former military enterprises to civilian production offers an opportunity to invest in concerns with a highly qualified work force and access to modern technology and equipment. Russia leads the world in many areas of fundamental research and development, from eye microsurgery to space technology, and these resources are now available to foreign partners.

The Russian automobile market, with annual sales estimated at around 1.2 million units, is expanding steadily.

Toyota Motor Corp. is studying building an automobile plant in Russia, aiming to start production in three to four years, in a bid to fully penetrate the Russian market and use the plant as a manufacturing base for Europe, according to reports the company.

Toyota established a sales company in Russia in 2001. It started marketing Land Cruisers and other autos made in Japan from 2002, selling 8,100 units in that year. The Russian plant will likely manufacture Toyota’s line of Land Cruiser sport utility vehicles, among others.

Slovakia

The Czech Republic and Slovakia amicably split in 1993. Since then, Slovakia has seen major increases in the level of its foreign direct investment. Around half of all investment has been in the manufacturing sector within which automotive components, consumer electronics and precision engineering, represented the lion’s share. The country excels in mechanical and electrical engineering and has an information technology sector which represents one of the most powerful engines of economic growth.

Phoenix-based ON Semiconductor is expanding its wafer-manufacturing facility in Piestany, with the opening of a second front-end wafer fab that will produce low-voltage MOS power devices.

The Piestany site also serves as a major center of corporate business and support functions, and provides customer support and service for all its European customers.

Turkey

Turkey, where Europe and Asia meet, has seen its electronics industry experience high growth during the past three years, and is currently the fastest growing manufacturing sector.

Bosch, a German electronics group, is expanding its business in Bursa, a move that it attributes to the positive economic and political development in the country. Since 1999, the company has nearly doubled the number of staff it employs in Bursa, from 1,500 to 2,800, with the figure set to increase to more than 4,000 by 2004.

The company will invest 240 million (euro) in the expansion of the new plant in Bursa.

—Ken Krizner, Managing Editor