According to a study by the commercial real estate services firm Cushman & Wakefield, the Czech Republic has the most favorable conditions for expanding manufacturing, ranking fourth in the global index. Better conditions are only found in China, the United States, and India.
The Czech Republic’s success was mainly caused by its low level of risk, excellent location, and low operating costs. This year, the ability to restart the economy after the coronavirus crisis was also evaluated and Czechia succeeded in this parameter too.
Since 2016, when the Czech Republic was first included in the ranking, it has been one of the most suitable destinations for manufacturing companies and their operations.
“The fact that the Czech Republic has long been among the countries suitable for the manufacturing sector is positive news for our economy. The Czech Republic’s strategic position in the middle of Europe with good transport infrastructure, advanced business, economic and political environment with low risk and also low labor, energy, and construction costs,” said Ferdinand Hlobil of Cushman & Wakefield.
When it comes to assessing risk rankings, the Czech Republic placed seventh this year and fourth last year. From European member states, it was only surpassed by Germany.
In addition to the criteria usually assessed, the evaluation also focused on the ability to recover from the coronavirus crisis. In this regard, Czechia ranked in the second quarter of the countries best prepared for a restart. “It was alongside Canada and the USA, Austria, the United Kingdom, and Sweden. On the other hand, nearby Poland and Hungary did not reach such levels of ability to recover, they are only in the third quarter,” the study added.
The crisis caused by the coronavirus pandemic has highlighted the pitfalls of global connectivity. A logical solution to the problems might seem to be the return of production to the original countries, but in a broader context, it is not realistic, according to Hlobil.
To increase their resilience in the case of another wave of the pandemic, manufacturers are focusing on how to ensure that materials or components supplies are not interrupted. Currently, only a few companies are considering relocating production back to Europe to reduce dependence on Asian countries.
“If it happens, the Czech Republic is in a good position to be the final destination thanks to the appropriate conditions, which have not been changed by the coronavirus crisis so much,” he said.
Cushman & Wakefield’s Manufacturing Risk Index rates each country based on 20 variables, which are then the basis for three weighted rankings assessing production conditions, costs, and risks.
Title image: Workers melt parts of the frame of the Skoda Octavia at the Skoda Auto car factory in Mlada Boleslav, Czech Republic on Wednesday, March 15, 2006. (AP Photo/Petr David Josek)