The more things change, the more they stay the same. For U.S. business executives contemplating expanding their operations overseas, those words take on added meaning.
Ask anyone who has operated a manufacturing plant or distribution facility in both the United States and Europe, and they will likely all focus on the many differences — both culturally and legally — between doing business on the two continents. In fact, the differences are many.
Despite the many advances achieved by the European Union, particularly the establishment of a single common currency (the euro), the countries that make up the EU are still exactly that — separate sovereign nations.
And even if the EU becomes a single, unified political entity, or becomes an economic (but not political) alliance of all European countries, the process by which U.S. companies decide in which country to establish operations will not be all that different from the choices presented in a U.S.-only site search.
In fact, the countries in Eastern and Western Europe offer companies the same basic choices that Southern and Northern states do in the United States.
Just like in the U.S., where certain regions offer a decided cost advantage over the rest of the country, so too is that the case in Europe. Much of what is considered “New Europe” is made up of countries where wage rates and benefits are considerably lower than in the more economically developed countries of Western Europe. The situation is similar when comparing wages between Southeastern states and, say, the Northeast or West Coast states.
Similarly, there are general differences in the overall level of education between regions in Europe, just as there are in the United States, and those countries (or states) with the highest level of education generally also have wage rates that are higher.
Just as one might choose California’s work force, despite its higher price, over that of another state, so too might one choose Germany’s high-tech work force over that of an Eastern European nation, despite the significant additional labor costs.
The same is true for bureaucracy and red tape, which drive up the cost of doing business in a particular locale. Whether these regulations are a good thing or a bad thing depends upon your political perspective. The point is this: Just as there are states in the United States that through laws and regulations make doing business there more expensive, so too are there countries in Europe with regulations that add to your overall operating costs.
The similarities go on and on. Sure, France, Germany and the United Kingdom are more expensive to operate in than, say, Bosnia, but they also offer larger markets and a more highly skilled work force than do their less expensive counterparts.
Despite the language and cultural differences, the site selection for your operation may come down to whether you want a capital-intensive operation or labor-intensive operation. If it is capital-intensive, you are more likely to opt for the more expensive work force in Western Europe while, if it is more labor-intensive, the Eastern European nations offer a solid option.
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