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June 15, 2017

Czechs push labour quality rather than pure price

Czech Republic officials insist they will make it clear labour in the country will be difficult to source if overseas investors believe they can hire staff purely on economic grounds.

Czech Republic officials insist they will make it clear labour in the country will be difficult to source if overseas investors believe they can hire staff purely on economic grounds.

The region is part of a large swathe of Central and Eastern Europe, encompassing the other Visegrad countries of Slovakia, Poland and Hungary, but also embracing Serbia and Slovenia, which have witnessed a stampede of suppliers heading across their borders in recent years.

Partly this is due to OEMs setting up in the region, but with wages often around one quarter of those in Germany, it has undoubtedly been staffing wage efficiencies which have also attracted some.

However, the Czech Republic, where supplier, Yanfeng Automotive Interiors (YFAI) has just established its latest plant in Planá nad Lužnicí with the help of a government grant of EUR7.2m (US$8.1m), maintains it is specifically addressing those companies looking for price compared to quality.

“The [Czech] government is committed to increase investment so product value is high and wages can grow,” Czech Invest CEO, Charles Kucera told just-auto on the sidelines of Yanfeng’s Planá nad Lužnicí inauguration last week.

“As we are an industrial economy, we have to invest into high-tech machinery. We are having discussions so companies understand it will be hard to find labour here if they are only here for cheap labour; it is probably not the right place.

“Companies require someone who is willing to negotiate and willing to talk because everybody knows during investment, operational issues will come and they need a player with whom they see fully the issues.”

The Czech Invest chief added when it came to Japanese manufacturing companies choosing European locations, the Czech Republic was fourth in the queue, while despite the country being eight times smaller than France, it still attracted significant investment.

The importance of Yanfeng’s opening was demonstrated by a plethora of senior Czech Republic government officials in attendance, while the event was given an extra boost by the presence of Chinese Ambassador to Prague, MA Keqing, who emphasised the country’s role in Beijing’s One Belt One Road policy.

“This [inauguration] represents the confidence of Chinese companies represented by YFAI for investing in the Czech Republic,” said the Ambassador at the event. “It also confirms the good prospects of booming economic co-operation between our two countries.

“The two sides seized the opportunity presented by the One Belt One Road initiative, which has already borne real fruit. Bilateral trade has managed steady growth exceeding US$11bn in 2016, which amounts to 20% of China’s total trade with 16 countries in Central and Eastern Europe.

“Czech exports to China increased 18% year on year [and] Czech investment in China increased US$1.8bn. China has become the most important overseas market for some famous Czech companies such as Skoda.

“Beijing, Shanghai and Chengdu have 16 flights here and in 2016, Chinese tourists made 355,000 visits to the Czech Republic. Sino-Czech cooperation is promising. In Beijing, China hosted the Belt and Road Forum in May. Heads of State and government from 29 countries including the Czech Republic attended.”

As well as Yanfeng’s Planá nad Lužnicí plant, the supplier also opened an Automotive Business Centre in Bratislava a few weeks ago and the inauguration of its Technical Centre in Trencín, Slovakia.

In addition to these locations, the components producer also has a plant in Žatec manufacturing door panels, floor consoles and other interior parts in the Czech Republic as well as production sites in Papa, Hungary and Námestovo, Slovakia.

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