Automotive Components Sector in Macedonia

Transcription

1 Invest in Macedonia Automotive Components Sector in Macedonia 1

2 Contents Macedonia - The New Hub for Automotive Components Production...3 Why Macedonia...4 Favorable Location...4 Availability of Workforce...5 Operating Costs and Taxes...7 Free Trade Agreements...11 Tailor Made Training Programs and Supportive Government...11 Good Track Record and Investment Opportunities...1 Supplier Base...14 What They Say...16 Invest in the Technological Industrial Development Zones (TIDZs)...17 Invest Macedonia - At Your Service...19

3 Macedonia The New Hub for Automotive Components Production To gain a competitive advantage in a highly uncompromising automotive market driven by cost-cutting, take advantage of our strategic location with its proximity to assembly plants in Central and Eastern Europe and Turkey, and duty-free access to the European market. Macedonia is sure to be the ideal location for organizations looking to set up or relocate their business, with its winning combination of a cost-competitive environment, educated and accessible workforce, and the unbeatable incentives offered in the Free Economic Zones. 3

4 Why Macedonia? Favorable Location Macedonia s closeness to the rapidly growing automotive manufacturing base in Central and Eastern Europe and Turkey, which have become a regional superpower in the automotive industry, makes it an ideal location. The geographical proximity to these markets allows low distribution costs and just-in-time product delivery from Macedonia. CHE AUT PRAGUE VIENNA BRATISLAVA CZE BUDAPEST SVK 1,500km POL 1,000km MDA UKR KISHINEV HUN LJUBLJANA ZAGREB SVN HRV BELGRADE ROU 500km ITA BIH SARAJEVO SRB BUCHAREST ROME MNE KOS SOFIA BGR Legend: 1 factory TIRANA SKOPJE MACEDONIA more than 1 factory ALB GRC TUR 4 4

5 Availability of Workforce Central European economies increasingly experience over-investment, leading to tight labor markets, rapidly growing costs and outbound labor migration. Macedonia offers a particularly cost competitive operating environment for automotive components manufacturing. The operating costs for the automotive components sector in Macedonia are among the lowest in Central and Eastern Europe due to its excess capacity and low average wages. With nearly half of the population under 30 years of age, companies operating out of Macedonia can rely on an ample source of trained and qualified professionals to contribute to the growth of their business. Number of Graduates in High Schools in Technical Fields* Source: State Statistical Office of the Republic of Macedonia, Invest Macedonia * Mechanical Engineering, Electrical Engineering and ICT, Technological Engineering and Metallurgy, Textile and Leather Processing, Transport Number of Graduates in Colleges and Universities in Technical Fields** No. of students Source: State Statistical Office of the Republic of Macedonia, Invest Macedonia ** Mechanical Engineering, Electrical Engineering and ICT, Technological Engineering and Metallurgy 5

6 Readily Available Labor Force Excess capacity of technically educated personnel secures ample workforce supply for the potential automotive industry investors. Unemployed Persons with Technical Skills a. with a high school education 738 3,617 1,98 11,001 11,767 Source: Employment Service Agency of the Republic of Macedonia, 009 Mechanical Engineering Electrical Engineering Textile and Leather Engineering Chemical Engineering Metallurgy b. with a college and university education Mechanical Engineering 1,81 94 Electrical Engineering Textile and Leather Engineering Chemical Engineering 799 Metallurgy Source: Employment Service Agency of the Republic of Macedonia, 009 6

7 Excellent Language Skills Every child in Macedonia begins to learn English in the first grade of primary school. Two foreign languages are mandatory in high school as well: English, and either German, French, or Russian. English is also taught for two years at University level. Regional languages (Serbian, Croatian, Bulgarian, Albanian, Greek, and Turkish) are widely spoken. Foreign Languages Studied English French German Italian Russian Turkish Source: State Statistical Office of the Republic of Macedonia (Education 008/009) Students in Primary Schools, % of Total 91% % 13% - 1% - Students in Secondary Schools, % of Total 94% 3% 1% % % 1% Operating Costs and Taxes Macedonia offers a particularly cost competitive operating environment for automotive components manufacturing. The operating costs for the automotive components sector in Macedonia are among the lowest in Central and Eastern Europe. Labor Costs Macedonia has a sustainable supply of young, highly skilled labor at a competitive cost. The average gross salary in 008 was 48 per month across all sectors (see Graph 1), while in manufacturing the average gross salary was 335 per month (see Graph ). Excess capacity and low average wages put Macedonia in an excellent position compared to other Central and Eastern European economies. 7

8 Graph 1: Average Monthly Gross Salary in Selected Countries of Central and Eastern Europe in ,3% 16,9% 18,6% 0,9% 7,5% 8,4% 8,6% 11,7% Average gross monthly salary change y-o-y in % 13,1% Source: The Vienna Institute for International Economic Studies (wiiw), Calculations * average gross monthly salary in manufacturing industry Graph : Gross Monthly Salary in Manufacturing Source: State Statistical Office of the Republic of Macedonia 8

9 Utility Costs Utility prices for industry are among the lowest in Europe: Electricity Water Natural gas 3.85/100 kwh 1.07/m 3 ( area) 0.385/nm 3 Source: Energy Regulatory Commission of the Republic of Macedonia; PE Vodovod Construction Costs Numerous Macedonian construction companies can build factories quickly to international standards and at the most competitive prices in Europe. The average cost of constructing a factory building shell is around 170-5/m. The sale price of state-owned construction land for industrial and production facilities varies depending on the location, from 5/m to 40/m. Transportation Costs and Delivery Times from With Macedonia s world-class transportation infrastructure, it takes less than a day to deliver goods to Central and Eastern Europe and Turkey, and a maximum of two days to Western Europe. Destination Distance, km Days Borders Cost in (0t truck) Munich, GERMANY 1,370 1,00 Frankfurt, GERMANY 1, ,300 Stuttgart, GERMANY 1, ,400 Cologne, GERMANY 1, ,450 Vienna, AUSTRIA 1,00 1-1,00 Milan, ITALY 1,500 1,300 Gebze, TURKEY 850 1,000 Aksaray, TURKEY 1,470 1,400 Pitesti, ROMANIA Ostrava, CZECH R. 1, ,400 Budapest, HUNGARY Source: Kuehne-Nagel, ViaMichelin, 009 9

10 Taxes 0% tax on retained earnings 10% corporate & personal income tax Real estate taxes at % - 5% VAT at 18%, with 5% on specific items Double taxation treaties with many European countries Corporate Income Tax Personal Income Tax (highest rate) Macedonia 10% Macedonia 10% Hungary Romania 16%+4% 16% Czech R.* Romania* 15% 16% Poland Slovakia Croatia Czech R. Turkey Ukraine 19% 19% 0% 0% 0% 5% Slovakia Ukraine Poland Turkey Hungary Croatia 19% 30% 3% 35% 36% 45% PriceWaterhouseCoopers (Taxes at a glance 009), National Investment Promotion Agencies * Flat rate Social Security Contributions 008 Current Macedonia Turkey Poland Croatia Czech R. Slovakia Hungary Ukraine Romania Macedonia Pension insurance 1.% 19% 16.5% 15% Compared to Other Countries Health insurance 7.9% 33.5% 6% % 37.% 7% 9.% 7.5% 1.% 1% % Employment insurance 45% 48.6% 49% PriceWaterhouseCoopers (Taxes at a glance 009), National Investment Promotion Agencies 40.4%-53.3% 41.%-5.4% General VAT Rates Macedonia Turkey Czech R. Romania Slovakia Hungary Ukraine Croatia Poland 1.4% 4.7% 1.6% 3% 7.9% 18% 18% 19% 19% 19% 0% 0% % % 10

11 Free Trade Agreements Macedonia s free trade agreements offer duty-free access to markets in the EU7 countries, South Eastern Europe, Ukraine and Turkey. Tailor-Made Training Programs and Supportive Government Macedonia s traditionally strong technical schools provide an excellent human resource base for the automotive components sector. The Government is willing to aid investors in the process of labor force training by participating in customized vocational trainings. Specifically, the educational system is willing to collaborate with incoming investors by providing tailor-made training that meets the skill prerequisite for the personnel the organization wishes to employ. Case in point, in anticipation of Johnson Controls requirements, which constructed a facility in the Technological Industrial Development Zone, the Department of Mechanical Engineering in trained students in Java and C++. Location of Technical Education Centers Tetovo Kumanovo Kriva Palanka Kratovo Probistip Kocani Delcevo Legend: Upper Secondary Schools Mechanical Engineering Electrical Engineering Transport Gostivar Veles Stip Radovis Vinica Berovo Textile and Leather Metallurgy Transport Chemical Engineering Kicevo Prilep Negotino Kavadarci Strumica Universities and Faculties ICT Struga Ohrid Bitola Electrical Engineering Mechanical Engineering Source: Ministry of Education and Science of the Republic of Macedonia Technological Engineering and Metallurgy 11

12 Good Track Record and Investment Opportunities Macedonia has a history of automotive components manufacturing which started in the 1960s initially to supply the former Yugoslavian automotive producer Zastava. Today, the automotive components sector is compiled of a number of companies. Quality products being produced in these factories, in compliance with automotive standards TS and ISO 9001 assures that the production in the Macedonian automotive components sector is exported. The country is particularly suitable as a location for the manufacture of high value to weight and labor-intensive products such as safety systems (seat belts, airbags), electronics (controllers, sensors), precision engineered and plastic products, aluminum and zinc die-casting, and grey iron casting components. Growth Index of Automotive Components Export from Macedonia (00-100) Source: ITC UNCTAD/WTO 1

13 Export of Automotive Components by Type 16% Clutches and parts for motor vehicles 4% Other 8% Safety seat belts for motor vehicles 16% Printed circuits 16% Electric accumulators 19% Motor vehicle parts* Source: ITC UNCTAD / WTO, data for 007 * not elsewhere specified Export of Automotive Components by Country 1% Germany 6% Croatia 4% France 16% South Africa 3% Romania 3% Turkey 16% Slovenia 3% Bulgaria 7% Russian Federation 7% Serbia Source: ITC UNCTAD / WTO, data for

14 Supplier Base The country has had a strong engineering and manufacturing tradition. There is sub-contract capability in a range of processes such as machining, forging, aluminum die-casting and plastic injection moulding. Automotive Production Sites Struga Ohrid Prilep Demir Hisar Resen Veles Probistip Kocani Nov Dojran Bogdanci Legend 14

15 Companies operating in the sector are: Company City Products Foundries Aluminium and Zinc Foundry Resen MZT Learnica TCG Learnica Resen Ohrid Aluminium pressure-die castings for the needs of automobile industry Clutch parts Brake components and anti-vibration products for OEM Seat Belts and Seat Belt Parts Buses and Minibuses and Vehicle Bodies Upgrade Other Automotive Parts Amak SP Sipo Velmaks Eurotehnika Prutex Brako Mlaz Prikolki Vizabus Sanos Buskar KGL Systems Johnson Controls HI-TECH Corpotarion EIN-SOF Elko Elektromehanika STD MZT Oprema za vozila RUEN International Technologies Sigurnosno Staklo (Izostaklo) TE-TE Plast Vesna SAP Ohrid Ohrid Ohrid Ohrid Demi Hisar Veles Bogdanci Nov Dojran Kocani Prilep Probistip Eat belts and restraint systems, door latches and retention components, rear view mirrors, window regulators Seat belts and seat belts parts Seat belt parts Seat belt parts Textile for seat belts, aluminium and zin parts used for seat belts, all kind of springs with diameter of wire up to 5 mm Cargo trailers Trailers, agricultural machines and freight vehicles Minibuses, bus seats and accessories Buses and coaches Buses and coaches Vehicle body upgrade Printed circuit board components Multi-layer printed circuit boards for automotive, communication and electronics Automotive diagnostic software Auto electrics Shock absorbers for trucks and buses Springs Clutches (clutch cover, clutch disk and release bearing), gears and gear elements for three types of vehicles: passenger cars, heavy duty (trucks and buses) and tractors Bent tempered and laminated glass for the needs of the automotive industry (all kinds of windscreens) Moulds and plastic parts Starter batteries Machine Parts RDV Faber Alatnica SVEMEK Different kinds of tools and rear lights Pneumatic and hydraulic parts by design: cylinders, valves, screws, implants, and other machine parts Railway Vehicles and Components Factory for railway vehicles Veles MZT Hepos MZT Eka Netcetera Veles Freight and passenger cars Pneumatic and brake systems for locomotives, freight and passenger cars Rail vehicle brake digital testing equipment, pressure and speed sensors Software for railway traffic management 15

16 What They Say The Macedonian government has been extremely committed and I would like to thank its officials for their work in supporting this effort. John Barth Chairman and CEO Johnson Controls Our experience has been positive, Ministry, Invest Macedonia and others superb. This will be Johnson Matthey s mega-european plant for the next decades. Colin Jaffray Director, Strategic Planning Johnson Matthey Plc 16

17 Invest in the Technological Industrial Development Zones (TIDZs) The Technological Industrial Development Zones (TIDZs Free Economic Zones) are established by the Government of the Republic of Macedonia to provide favorable conditions for the development of business activities by offering prepared industrial sites, pre-built factories with completed physical infrastructure, support services and tax, customs and other incentives. Investment Incentives in the FEZs and Technology Parks No corporate tax for 10 years (10% thereafter) 5% personal income tax for 5 years (10% thereafter) No VAT and customs duties for export production Free connection to piped natural gas, electricity, water and sewage Immediate access to main international airport, railroad and vital road corridors Subsidy of up to 500,000 towards building costs Land lease for up to 99 years at attractive concessionary rates Green Customs Channel available at border for rapid export from the Zones to EU countries Benefit package for eligible investors will be approved within 10 business days TIDZs Stip Tetovo Area (Ha) International Airports Adjacent to Alexander the Great Airport, Adjacent to Alexander the Great Airport, - 80km - 50km Railway Stations Trans-European Network Transport Corridor 10 Trans-European Network Transport Corridor 10 Trans-European Network Transport Corridor 10-40km Local Station 1km Trans-European Network Transport Corridor 10-30km Local Station 5km International Ports Thessalonica, Greece, 0 km Thessalonica, Greece, 0 km Thessalonica, Greece, 0 km Thessalonica, Greece, 80 km 17

18 Austria ~ 1,000km Italy ~ 1,000km Germany ~ 1,50km France ~ 1,750km Albanian coast line ~ 150km ALB KOS SRB GRC Greek coast line ~ 100km Bulgarian coast line ~ 550km Turkey ~ 450km BGR Greek coast line ~ 100km TIDZ TIDZ TIDZ Stip TIDZ Tetovo 18

19 Invest Macedonia - At Your Service Invest Macedonia, the official government agency responsible for attracting and developing foreign investments is a full service agency prepared to guide you throughout the decision-making process. As an agency dedicated to making this process as beneficial and effortless as possible, we are eager to lead you through the initial inquiry phase, arrange a suitable itinerary to visit Macedonia, and culminate with an objective evaluation of the potential success of your project based on the current business climate. Should you find Macedonia to be an appropriate location for your business needs, rest assured that Invest Macedonia will interact on your behalf with national and local government authorities. If your business requires you to find suitable local partners, we will aid you through the process and ensure that an open exploratory dialogue can take place. Meeting your business requirements is our primary goal. Invest Macedonia understands the ever changing business needs as an operation grows, and to that effect, we pledge to collaborate closely with you to facilitate that growth in Macedonia. In addition, Invest Macedonia has Economic Promoters located in offices worldwide. Please feel free to contact our international representative offices, by clicking on Foreign Offices on our homepage, should you wish to arrange a meeting or have any specific questions regarding the business climate in Macedonia. 19

20 Agency for Foreign Investments of the Republic of Macedonia t: f: e: