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RE-SHORING ON THE RISE

C&W Manufacturing Index 2015
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Poland ranked in 12th place

According to global real estate adviser Cushman & Wakefield, a rising number of global manufacturers are considering re-shoring or on-shoring plant and facilities in Europe as global operational costs rise.

While countries from Asia Pacific continue to dominate the top half of Cushman & Wakefield’s ‘Where in the World? Manufacturing Index 2015’, highlighting the importance of the region as a global manufacturing powerhouse, there remains some underlying volatility.

China, the world’s largest manufacturer by output is experiencing rising labour costs, reducing its cost competitiveness. This is not only increasing the attractiveness of lower cost regions of Malaysia and Vietnam but also strengthening the prospects for manufacturers considering relocating operations back to Europe.

Concerns surrounding supply-chain management, brand perception and where a product is produced have risen up the manufacturer’s agenda. This is adding to the attraction of locating operations in home markets.

Simon O’Reilly, Partner and Head of Account Management for EMEA at Cushman & Wakefield, said: “From a European perspective, the outlook for manufacturing has certainly improved.  Rising global operating costs have reduced the cost competitiveness of some Asian locations and this is increasing the attraction of re-shoring operations for a number of manufacturers.  Turkey is well positioned to tap into a number of global markets while the UK is becoming more attractive to high-end manufacturers and remains a go to destination for R&D and innovation.”

Certain European locations have climbed up the index ranking the 30 largest countries by manufacturing output, defined by the UNCTAD (United Nations Conference for Trade and Investment). Turkey is leading the way and has jumped three positions to 8th in the main index, while Poland and the Netherlands have followed suit landing in the 12th (advancing from 13th place) and 17th positions, respectively.  The UK now occupies 15th place.

Joanna SinkiewiczJoanna Sinkiewicz, Associate in the Industrial Department of Cushman & Wakefield, commented: “Manufacturers seeking new locations now tend to consider many other factors in addition to low manufacturing costs. Supply chain management is a very important aspect of project feasibility. Poland, which lies in the very heart of Europe and offers a fairly well-developed road infrastructure as well as access to the sea, is quite an attractive destination for investors from North America, the Nordics and Western Europe despite slightly higher operating costs in comparison with other countries. Poland’s competitive edge is its proximity to markets, which helps to save on transportation costs. In addition, Polish products are of much better quality than those produced in the Far East.

Manufacturing in Europe seems much easier and cheaper given the neighbourhood of markets and customers’ growing expectations for high-quality products. In recent years we have been involved in several high-profile transactions with manufacturers such as Polaris, Delta Packaging and ABM Greiffenberger, which certainly helped Poland climb up the index.

I believe that new plants and facilities will appear on the Polish industrial map next year while established manufacturers will continue to expand.”

Download the report

Index criteria and weighting

Our report uses 36 data sources which make up three key parameters identified as being crucial to manufacturers during site selection or expansion. These parameters are Costs, Risk and Conditions. Through on-going discussions with a number of major manufacturers our base scenario takes the example of a Highly Automated manufacturer, weighting these parameters as follows. Costs (40%), Risks (20%) and Conditions (40%).

Our main index

Ranks the 30 largest countries by manufacturing output, defined by the UNCTAD (United Nations Conference for Trade and Investment).

Our growth index

Ranks the top 15 manufacturing locations by growth which are less established in terms of output