#MFG Global: Central & Eastern Europe – Ripe Opportunity for U.S. Manufacturers

Hubert Sawicki, AMT Consultant – CEE reports: 

central_eastern_europe-300x241As evidenced by discussions at the recent European machine tool show, EMO Milano, U.S. manufacturers are increasingly interested in the Central and Eastern Europe markets of Poland and Romania. Both markets represent significant potential for American companies.

As the sixth most populous country in the EU (boasting a population of 38 million potential consumers), Poland is one of its fastest growing manufacturing markets. In fact, a recent report from the Boston Consulting Group found that Poland is poised to become the manufacturing hub of Europe for three primary reasons:

• labor cost is 4 to 10 times cheaper than in other countries;
• manufacturing is cheaper by about 30%;
• Polish goods are of a far superior quality compared to other countries, making them much more competitive. This applies mainly to the appliance, metal products, automotive and furniture sectors.

According to the U.S. Department of Commerce, Romania is another EU market with excellent potential, a strategic location, and an increasingly solid business climate. A population of 21 million, an expanding economy, a well-educated workforce with more than 50,000 IT specialists and access to the Black Sea and Asia are attracting U.S. investors in the banking, energy, biotechnology, manufacturing, electronic components, and telecommunications industries, among others. One weakness that represents opportunity for American manufacturers is infrastructure. Romania’s substantial industrial base is in need of a serious upgrade.

AMT’s CEE office is also exploring opportunity in the Kazakhstan market, which is currently not a large user of quality machine tools, but could be in the not far off future. A new rail line that opened at the end of last year could eventually turn Kazakhstan into a transit hub between China and the Middle East. I recently had the opportunity to speak and participate in the 3rd Kazakhstan industrial forum at the invitation of the Association of Kazakhstan Engineering Industry (AKEI). The event was held in the new capital city of Astana and was attended by nearly 500 participants. During the forum, I discussed the prospect of U.S. manufacturers as suppliers, the need for international technical standards, and the principles of fair trading coming to Kazakhstan with its accession to the WTO beginning in 2016.

Kazakhstan, as it transitions to become a regional economic leader in Central Asia, doesn’t intend to be dependent on either Russia or China and is very open to economic ties with Europe and the United States. Meetings with the American Chamber of Commerce and U.S. Commercial Service in Kazakhstan confirmed this. The jury is still out on the potential of this market, however. When exploring opportunities in this country, manufacturers should also assess the implications of Kazakhstan sharing the same customs union as Russia and the unstable political environment.

AMT’s CEE office is focused on bringing groups of potential manufacturing technology users from these markets to IMTS 2016, with the help of AKEI and the Romanian Federation of European Producers of Abrasives (FEPA) – the voice of the Romanian machine tool industry. FEPA is strongly supported by the U.S. Commercial Service in Bucharest. IMTS is still months out, but CEE is working to make sure Central and Eastern European customers are well-represented at the Show.

Categories: Global Services

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