It is an interesting time to be a manufacturer in Europe, with three mighty forces at work, shaping where our widgets are made: the three Cs of currency, costs and carbon.
Currency volatility gives us a rising euro, a sinking dollar and struggling sterling. For manufacturers in the UK, the 15% fall in sterling against the euro over the past year is good news. For those in euroland, life is getting painful, particularly those who manufacture in euros but sell in dollars. For example, EADS, Europe’s largest aerospace and defence manufacturer, is having a serious rethink about where it manufactures.
The euro-dollar combination does however provide the opportunity to go on a spending spree and buy up manufacturing capacity in North America. This may be a once-in-a-lifetime opportunity to get a bargain in the world’s biggest market.
Rising labour and raw material costs in China, as well as the steady appreciation of the renminbi, are making offshore manufacturers think again. Europe comes back into contention as there is now less of a price differential. Add in possible quality and delivery concerns, and manufacturing in Europe suddenly looks increasingly attractive.
Environmental considerations are top of most agendas and reducing a product’s carbon footprint brings the concept of production close to consumption back into vogue. The ‘made in Europe’ tag has often been used to help establish a high-value proposition and as European consumers get greener it gains more value by the day.
Let’s hope that another C (the credit crunch) doesn’t make things even more complicated for the European manufacturer.
Douglas Clark is director of Tenon techlocate, a site search and location marketing consultancy which is part of the Tenon Group PLC, a top 10 firm of accountants and business advisers.