Is the West Still the Best for European Business?
The economic balance between the two halves of a once-divided continent is shifting, as firms up sticks and head east.
By Bogdan Asaftei in Bucharest, Botevgrad, Azambuja and Belgrade
For generations the industrial changes sweeping Western Europe bypassed Eastern Europe and the Balkans, leaving these agrarian economies almost unchanged. The communist attempt to build industrialised societies overnight, meanwhile, failed to deliver sustainable economic development.
Now this is changing, as much of Western Europe’s heavy industry, IT concerns and pharmaceutical firms abandon former bases in Britain, France and Portugal and relocate to Slovakia, or Romania. Saving money on wages, they bring new prosperity to former backwaters like Dej, in Romania, where there is now a shortage of labour. “We are facing many problems due to the [tight] labour market, which is why we are trying to open new production facilities in those regions where it is easier to find new workers,” says Tatiana Mursa, PR manager for Spain’s ACE Automotive Group in Romania.
There are losers as well as winners as a result of this shift. While Dej enjoys a boom, jobless workers in Azambuja, Portugal, cope with the silence that follows the closure and relocation of their automobile factory. “All my life was spent in the Opel factory, starting 25 years ago. But since the plant moved, all I have to show for it is a gold watch,” says former worker Carlos Almoster.
Nor is every part of the Balkans flourishing equally. While pockets of Romania, Slovakia and Slovenia have become niches for certain industries, other areas remain neglected, wondering why they have been passed over.
The question is also whether relocations will continue, enabling the benefits to be spread more widely, or whether the phenomenon has peaked. Some fear Western companies will soon leapfrog over Eastern Europe towards Asia in the quest for even greater economies of scale.
