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What does the relocation of the production of foreign companies bring?

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The lack of labor is a key challenge faced by many foreign companies, and the increase in labor costs affects the relocation of the production of certain industries from Western and Southern Europe to other regions where labor costs are significantly lower. It is also expected that companies will continue to strengthen the localization of their production due to geopolitical tensions, and especially the localization of production is expected in the automotive industry, which is still feeling the consequences of the pandemic, according to the latest research by the company “Horvat”, conducted in 19 countries of the world and 13 different industry.

Could Serbia be the next address where such companies could relocate their production?

Absolutely no. And I would not really agree with the fact that such companies will move because of the lack of labor, especially in the field of the automotive industry. Because, to the greatest extent, even in 90 percent of cases, the labor force, that is, production, is robotized in such plants – states Ljubodrag Savić, professor at the Faculty of Economics in Belgrade.

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Another important thing, he adds, is that such companies assemble models in Germany, but their components come either from the Far East or from our areas where labor is cheaper.

It is not worthwhile for them to relocate the entire production, there is no need for that, because they should also relocate the entire work equipment. So far it’s like that, and we’ll see if it will be the same in five years. Probably then everything will be made by robots – he notes.

Nevertheless, some foreign companies have dared to move parts of their production to us.

There are several reasons for that, but such companies relocate only the simplest type of production. The largest number of these factories are component manufacturers. They come to us, because Serbia is first of all a civilized country, which has a network of highways and quality infrastructure and enough energy sources. In our country, the price of the toll is lower, as are the prices of gas and oil – enumerates prof. Savić. He adds that Serbia also has a workforce that is different, because a worker from Germany will not work for 300 euros.

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