- 30 percent of companies based in Western and Southern Europe plan to withdraw staff or sites in the next five years
- Overall, personnel capacities are more likely to be increased than reduced worldwide, but this is mainly the case in India, North America and China
Internationally active companies in the manufacturing industry are planning to relocate their capacities regionally. While almost one in three companies at locations in Western and Southern Europe will be reducing personnel capacity within the next five years, the so-called "workforce" in North America, for example, will be increased by 71 percent of the companies for which the market is relevant. India is gaining even more ground as a production, development and sales market: Eight out of ten of the companies surveyed for which India is an attractive location are planning to increase or expand capacity there (79 percent). China and other Asian countries are also expanding strongly. Eastern Europe is also still in demand due to favorable personnel costs combined with staff availability and unbureaucratic working conditions compared with Western and Southern Europe: 58 percent are planning to expand capacity here. These are the findings of an international study by management consultants Horváth on the strategic and regional positioning of manufacturing companies.
"In the coming years, significant relocations of production sites and value chains from Western and Southern Europe to North America and Asia are imminent - with China losing relevance as an extended workbench and being replaced as such by countries such as India, Vietnam or Indonesia," says study leader and Horváth partner Ralf Sauter, responsible for the Industrial Goods & High Tech division. "As a sales market with regional value creation, however, China will become even more important for companies in the future. Sixty-one percent of companies want to expand their activities here, and only eleven percent want to scale down."
Industry plans overall growth - framework conditions in Germany and Central Europe to be improved at full speed
Overall, the companies continue to expect global growth and, in connection with this, an expansion of personnel capacities. However, as the study clearly shows, this expansion will not take place at Central European locations. "If Germany and Central Europe want to retain important industrial value-added components in the region, the framework conditions must be improved at full speed, particularly with regard to raw material availability, energy costs and skilled workers. Once companies have migrated, there is no turning back any time soon. The exodus of industry is irreversible." The study confirms this assessment. Too high personnel costs are cited as the main motive for workforce relocation. The second most important motive is to bundle production and sales regionally in the sense of a 'local-for-local' approach, for regulatory as well as cost reasons. The third most important reason is the lack of skilled workers.
About the Study
For the international Horváth study, more than 430 board and management members from globally operating companies were asked in spring 2023 about their strategic and regional orientation in the next five years, including more than 230 industrial companies. The majority of the companies surveyed generate at least one billion euros in annual sales and employ more than 1,000 people.
