While U.S. companies may now find it easier to site facilities in Europe by setting up pan-European locations and back these up with regional offices, the fact remains: the Swedes are no closer to being like the Italians then the French are to the Czechs.
The type of industry and facility being sited, however, may narrow the search down a bit.
“The key factors considered by new entrants into Europe will vary depending on the size, experience and activities of each company,” said Adam Breeze, director of Tenon Techlocate, a UK-based inward investment consulting firm. “For larger manufacturing projects, cost, productivity and connectivity are always key issues. For high-tech projects, we are finding that the most important factors are access to brain power, proximity to good business networks and ease of entry.”
Ease of entry is more important than ever before. The locations that make it easiest to invest, will succeed. This means not only slashing red tape and removing any obstacles, it means creating a solutions-savvy team of business advisers that take care of every angle.
Europe remains a major destination for U.S. firms seeking to expand abroad, although many projects are currently on hold, said Bill Pijpers of BCI, a subsidiary of Buck Consultants International in Nijmegen, The Netherlands.
The prime market for Americans remains London, although real estate costs are very high there.
The enlargement of the European Union (EU) next year will further enhance locations in central Europe such as the Czech Republic, Poland and Hungary, which are trying to attract manufacturing projects. These countries offer significant cost advantages without sacrificing access to customers and suppliers.
Consequently, more firms are looking outside of London. Locations in Surrey and Kent, which are within the Greater London area have become particularly popular. Even Cardiff, Wales, has made the short list of some companies, with Central London only two hours away.
Other firms look elsewhere where core competencies may be a major factor.
For example, the first stop for many logistics firms is The Netherlands, a country that has turned logistics into a science.
“While there are a lot of people performing logistics in a number of locations, there are really only a handful of locations that do it exceptionally well,” said Howard Silverman, a consultant with Corporate Affairs International (CAI) in Montreal.
He pointed to The Netherlands, where the Dutch have not only been successful in marrying the country’s geographic location and the outstanding seaports of Rotterdam and Amsterdam with logistical services, but have also made it an attractive place for manufacturing operations.
Belgium can also offer many of the same benefits since it is also nestled in a strategically and geographically advantageous location with the Port of Antwerp, a major deep-sea harbor.
“Our key asset is we are located at the center of what we refer to as the European Banana,” said Alex Van Breedam, CEO of the Flanders House of Logistics.
To sell the point, the Flemish have formed the Flanders House of Logistics to educate people about Flanders logistics offerings.
However, when it comes to low-cost manufacturing sites, companies are beginning to look further east to countries like the Ukraine, Romania and Bulgaria.
But given today’s political climate, however, a concern for terrorism and homeland security, Silverman takes a backhanded look at European site selection. Citing a recent study by the Italian Trade Commission, he said that since the terrorist attacks of Sept. 11, 2001, and the war in Iraq, there has been a definite change in the way U.S. companies are looking at sites.
“We are seeing a whole new dimension for patriotism,” he said. “Companies are asking, ‘Do we expand opportunities in foreign markets or do we repatriate those opportunities back to the United States.’ ”
Adding to the mix is the U.S. economy, which has been through an extremely tumultuous period. The need to maximize efficiencies and properly leverage assets has led to numerous plant closings and layoffs, both in the United States and abroad.
“U.S. multinational companies will invest where they feel they have allies,” Silverman said. “I feel this is justifiable.”
The basic adage amongst American firms has always been to go where they can make the most money. They will always consider market size, the tax system, cost of labor, political stability, manpower, the availability of quality suppliers, financial incentives and transportation issues.
“But while it would seem that economic patriotism must sometimes take a backseat to the realities of the global business environment, there is a heart to the corporate world that is motivated out of loyalty and pride in its roots,” Silverman noted.
Karen E. Thuermer is a freelance business writer based in Alexandria, Va.
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