“I lunched with the President of the Czech Republic [Miloš Zeman] and I asked him what are you going to do about the labour situation. We are bringing workers into the Czech Republic from Poland just for the labour front" -Varroc Lighting SVP global product development Todd Morgan at CEE Forum in Prague

“I lunched with the President of the Czech Republic [Miloš Zeman] and I asked him what are you going to do about the labour situation. We are bringing workers into the Czech Republic from Poland just for the labour front" -Varroc Lighting SVP global product development Todd Morgan at CEE Forum in Prague

Varroc Lighting says it has expanded its Ostrava plant in Czech Republic by 150% as it looks to capitalise on the boom in manufacture still prevalent in Central and Eastern Europe (CEE), although recruitment remains challenging.

In common with its Visegrad neighbours of Slovakia, Hungary and Poland, Czech Republic is having to compete fiercely for access to labour adding to wage inflation, while emerging countries such as Moldova are offering even more competitive salaries.

"Ostrava, we expanded 150%, we have around 80% capacity already filled," Varroc SVP global product development, Todd Morgan, told just-auto on the sidelines of last week's CEE Automotive Forum in Prague.

"Labour is difficult, it is not getting easier. I spend 30% of the day...working on HR topics and looking for additional capacity. We have a development centre in India so we are bringing people on for one to two year assignments. This has helped retention quite a lot.

"This [Czech Republic] is not a low-cost country, there is no question about it. It is more about the quality of engineering talent."

Varroc is embarking on ambitious expansion drive, with new plants opening in Morocco and Brazil next year, while the component manufacturer will also have an office in Poland in the near future with a target of recruiting 50-60 engineers. Further details are expected to be released about the project towards the end of this year.

Just how important the issue of recruitment and staff retention is can be gauged by Morgan's access to significant political operators in the country.

"I lunched with the President of the Czech Republic [Miloš Zeman] and I asked him what are you going to do about the labour situation," added Morgan. "We are bringing workers into the Czech Republic from Poland just for the labour front.

"His response was if you pay your people more you won't have a labour problem. They [Czech Republic] are not going to be a low-cost country for ever."

Jaguar Land Rover's imminent arrival in neighbouring Slovakia has generated huge enthusiasm in the region and the UK manufacturer will become Varroc Lighting's largest customer next year.

Such an important development could help to smooth out any potential re-emergence of any downturn, although Varroc remains confident it can ride out any storm as it did during the last recession.

"We are in the automotive business – cycles are part of our business," added Morgan. "We weathered 2008 very well and in fact continued to hire because our portfolio was quite diverse.

"During the crisis the government was giving incentives – we [now] see a shift in incentives which is more around R&D. Business is going very well- the bottleneck is engineering capacity. You have to get creative."

The supplier is a member of the Varroc Group family of automotive-components businesses. Founded in 1990, Varroc Group is a global automotive component manufacturer and supplier of exterior lighting systems, powertrains, electronics, body and chassis parts to passenger car and motorcycle segments worldwide.

Varroc Group has 35 manufacturing facilities, 11 engineering centres, 10,000 employees and 760 engineering experts in ten countries.

The company is also the number one two-wheeler automotive component supplier in India.

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