invest in macedoniaautomotive automotive components...

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Invest in Macedonia

AutomotiveComponentsSector inMacedonia

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Contents

Macedonia - The New Hub for Automotive Components Production..........................................3

Why Macedonia........................................................................................................4

Favorable Location.......................................................................................4

Availability of Workforce.................................................................................5

Operating Costs and Taxes...............................................................................7

Free Trade Agreements................................................................................11

Tailor – Made Training Programs and Supportive Government.....................................11

Good Track Record and Investment Opportunities..................................................12

Supplier Base..............................................................................................14

What They Say.......................................................................................................16

Invest in the Technological Industrial Development Zones (TIDZs)..........................................17

Invest Macedonia - At Your Service................................................................................19

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Macedonia – The New Hub for Automotive Components ProductionTo gain a competitive advantage in a highly uncompromising automotive market driven by cost-cutting, take advantage of our strategic location with its proximity to assembly plants in Central and Eastern Europe and Turkey, and duty-free access to the European market. Macedonia is sure to be the ideal location for organizations looking to set up or relocate their business, with its winning combination of a cost-competitive environment, educated and accessible workforce, and the unbeatable incentives offered in the Free Economic Zones.

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ctor

in M

aced

onia

MACEDONIA

BGR

TUR

ROU

HUN

SVK

CZE

POL

AUTCHE MDA

UKR

SRB

KOSMNE

BIH

HRV

SVN

ITA

GRC

ALB

LJUBLJANA

ROME

SARAJEVO

TIRANA

SOFIA

BUCHAREST

KISHINEV

BUDAPEST

BRATISLAVA

VIENNA

PRAGUE

BELGRADE

ZAGREB

1 factory

Legend:

more than1 factory

SKOPJE

1,500km

1,000km

500km

Why Macedonia?

Favorable LocationMacedonia’s closeness to the rapidly growing automotive manufacturing base in Central and Eastern Europe and Turkey, which have become a regional superpower in the automotive industry, makes it an ideal location. The geographical proximity to these markets allows low distribution costs and“just-in-time” product delivery from Macedonia.

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Availability of WorkforceCentral European economies increasingly experience over-investment, leading to tight labor markets, rapidly growing costs and outbound labor migration. Macedonia offers a particularly cost competitive operating environment for automotive components manufacturing. The operating costs for the automotive components sector in Macedonia are among the lowest in Central and Eastern Europe due to its excess capacity and low average wages.

With nearly half of the population under 30 years of age, companies operating out of Macedonia can rely on an ample source of trained and qualified professionals to contribute to the growth of their business.

Number of Graduates in High Schools in Technical Fields*

Source: State Statistical Office of the Republic of Macedonia, Invest Macedonia* Mechanical Engineering, Electrical Engineering and ICT, Technological Engineering and Metallurgy, Textile and Leather Processing, Transport

Source: State Statistical Office of the Republic of Macedonia, Invest Macedonia ** Mechanical Engineering, Electrical Engineering and ICT, Technological Engineering and Metallurgy

Number of Graduates in Colleges and Universities in Technical Fields**

No.

of

stud

ents

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Readily Available Labor Force

Excess capacity of technically educated personnel secures ample workforce supply for the potential automotive industry investors.

Unemployed Persons with Technical Skills

b. with a college and university education

Source: Employment Service Agency of the Republic of Macedonia, 2009

132

339

294

799

1,281

Mechanical Engineering

Electrical Engineering

Textile and Leather Engineering

Chemical Engineering

Metallurgy

a. with a high school education



Textile and Leather Engineering


Metallurgy

Source: Employment Service Agency of the Republic of Macedonia, 2009

738

3,617

11,001

11,767

21,298

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Excellent Language Skills

Every child in Macedonia begins to learn English in the first grade of primary school. Two foreign languages are mandatory in high school as well: English, and either German, French, or Russian. English is also taught for two years at University level. Regional languages (Serbian, Croatian, Bulgarian, Albanian, Greek, and Turkish) are widely spoken.

Operating Costs and TaxesMacedonia offers a particularly cost competitive operating environment for automotive components manufacturing. The operating costs for the automotive components sector in Macedonia are among the lowest in Central and Eastern Europe.

Labor Costs

Macedonia has a sustainable supply of young, highly skilled labor at a competitive cost.

The average gross salary in 2008 was €428 per month across all sectors (see Graph 1), while in manufacturing the average gross salary was €335 per month (see Graph 2). Excess capacity and low average wages put Macedonia in an excellent position compared to other Central and Eastern European economies.

Source: State Statistical Office of the Republic of Macedonia (Education 2008/2009)

Foreign Languages Studied Students in Primary Schools,% of Total

Students in Secondary Schools,% of Total

English

French

German

Italian

Russian

Turkish

91%

22%

13%

-

1%

-

94%

32%

21%

2%

2%

1%

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7,5%8,4% 8,6%

11,7%13,1%

15,3%

16,9%18,6%

20,9%Graph 1: Average Monthly Gross Salary in Selected Countriesof Central and Eastern Europe in 2008

Source: The Vienna Institute for International Economic Studies (wiiw), Calculations* average gross monthly salary in manufacturing industry

Average gross monthly salary

€ change y-o-y in %

Graph 2: Gross Monthly Salary in Manufacturing

Source: State Statistical Office of the Republic of Macedonia

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Construction Costs

Numerous Macedonian construction companies can build factories quickly to international standards and at the most competitive prices in Europe. The average cost of constructing a factory building shell is around €170-225/m2. The sale price of state-owned construction land for industrial and production facilities varies depending on the location, from €5/m2 to €40/m2.

Transportation Costs and Delivery Times from Skopje

With Macedonia’s world-class transportation infrastructure, it takes less than a day to deliver goods to Central and Eastern Europe and Turkey, and a maximum of two days to Western Europe.

Utility Costs

Utility prices for industry are among the lowest in Europe:

Electricity

Water

Natural gas

€3.85/100 kWh

€1.07/m3 (Skopje area)

€0.385/nm3

Source: Energy Regulatory Commission of the Republic of Macedonia; PE Vodovod Skopje

Source: Kuehne-Nagel, ViaMichelin, 2009

Destination Distance, km Cost in € (20t truck)Days Borders

Munich, GERMANY

Frankfurt, GERMANY

Stuttgart, GERMANY

Cologne, GERMANY

Vienna, AUSTRIA

Milan, ITALY

Gebze, TURKEY

Aksaray, TURKEY

Pitesti, ROMANIA

Ostrava, CZECH R.

Budapest, HUNGARY

1,370

1,700

1,600

1,900

1,200

1,500

850

1,470

730

1,300

800

1,200

1,300

1,400

1,450

1,200

1,300

1,000

1,400

950

1,400

850

2

3

3

3

1-2

2

2

2

1-2

3

1

2

2

2

2

2

2

2

2

2

2

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Taxes

• 0% tax on retained earnings

• 10% corporate & personal income tax

• Real estate taxes at 2% - 5%

• VAT at 18%, with 5% on specific items

• Double taxation treaties with many European countries

Corporate Income TaxMacedonia

Hungary

Romania

Poland

Slovakia

Croatia

Czech R.

Turkey

Ukraine

10%

16%+4%

16%

19%

19%

20%

20%

20%

25%

General VAT RatesMacedonia

Turkey

Czech R.

Romania

Slovakia

Hungary

Ukraine

Croatia

Poland

18%

18%

19%

19%

19%

20%

20%

22%

22%

Personal Income Tax (highest rate)

Macedonia

Czech R.*

Romania*

Slovakia

Ukraine

Poland

Turkey

Hungary

Croatia

10%

15%

16%

19%

30%

32%

35%

36%

45%

PriceWaterhouseCoopers (Taxes at a glance 2009), National Investment Promotion Agencies* Flat rate

Macedonia

Pension insurance

2008

Current

2010

2011

32%27.9%

24.7%22%

9.2%

7.5%

7%

6%

1.6%

1.4%

1.2%

1%

21.2%

19%

16.5%

15%

Health insurance Employment insurance

Compared to Other CountriesMacedonia

Turkey

Poland

Croatia

Czech R.

Slovakia

Hungary

Ukraine

Romania

27.9%

33.5%

31.2-34.1%

37.2%

45%

48.6%

49%

40.4%-53.3%

41.2%-52.4%PriceWaterhouseCoopers (Taxes at a glance 2009), National Investment Promotion Agencies

Social Security Contributions

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Free Trade AgreementsMacedonia’s free trade agreements offer duty-free access to markets in the EU27 countries, South Eastern Europe, Ukraine and Turkey.

Tailor-Made Training Programs and Supportive GovernmentMacedonia’s traditionally strong technical schools provide an excellent human resource base for the automotive components sector. The Government is willing to aid investors in the process of labor force training by participating in customized vocational trainings. Specifically, the educational system is willing to collaborate with incoming investors by providing tailor-made training that meets the skill prerequisite for the personnel the organization wishes to employ. Case in point, in anticipation of Johnson Controls’ requirements, which constructed a facility in the Technological Industrial Development Zone “Skopje”, the Department of Mechanical Engineering in Skopje trained students in Java and C++.

Skopje

Gostivar

Kicevo

OhridBitola

Tetovo

PrilepKavadarci

Negotino Strumica

StipVeles

Kocani

Kriva Palanka

Probistip

KumanovoKratovo

Berovo

Delcevo

Vinica

Radovis

Struga

Location of Technical Education Centers Legend:



Transport

Textile and Leather

Metallurgy Transport


ICT



Upper Secondary Schools

Universities and Faculties

Source: Ministry of Education and Science of the Republic of Macedonia

Technological Engineeringand Metallurgy

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Good Track Record and Investment OpportunitiesMacedonia has a history of automotive components manufacturing which started in the 1960s initially to supply the former Yugoslavian automotive producer Zastava.

Today, the automotive components sector is compiled of a number of companies. Quality products being produced in these factories, in compliance with automotive standards TS 16949 and ISO 9001 assures that the production in the Macedonian automotive components sector is exported.

The country is particularly suitable as a location for the manufacture of high value to weight and labor-intensive products such as safety systems (seat belts, airbags), electronics (controllers, sensors), precision engineered and plastic products, aluminum and zinc die-casting, and grey iron casting components.

Growth Index of Automotive Components Export from Macedonia (2002-100)

Source: ITC UNCTAD/WTO

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Export of Automotive Components by Type

16%Clutches and partsfor motor vehicles

16%Printed circuits

16%Electricaccumulators

28%Safety seat beltsfor motor vehicles

19%Motor vehicle parts*

4%Other

Source: ITC UNCTAD / WTO, data for 2007* not elsewhere specified

Export of Automotive Components by Country

4%France

16%SouthAfrica

3%Romania 3%

Turkey

3%Bulgaria

27%Russian Federation

27%Serbia

16%Slovenia

12%Germany

6%Croatia

Source: ITC UNCTAD / WTO, data for 2007

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Legend

Automotive Production Sites

Skopje

Ohrid

Prilep

Veles

Kocani

Resen

BogdanciDemir Hisar Nov Dojran

Struga

Probistip

Supplier BaseThe country has had a strong engineering and manufacturing tradition. There is sub-contract capability in a range of processes such as machining, forging, aluminum die-casting and plastic injection moulding.

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Company

Aluminium and ZincFoundry Resen

Aluminium pressure-die castings for the needs of automobile industry

MZT Learnica

Amak SP

Sipo

Velmaks

Eurotehnika

Prutex

Brako

Mlaz Prikolki

Vizabus

Sanos

Buskar

KGL Systems

Johnson Controls

HI-TECH Corpotarion

EIN-SOF

Elko Elektromehanika

STD

MZT Oprema za vozila

TE-TE Plast

Vesna SAP

Sigurnosno Staklo(Izostaklo)

RUEN InternationalTechnologies

Clutches (clutch cover, clutch disk and release bearing), gears and gear elements for three types of vehicles:passenger cars, heavy duty (trucks and buses) and tractors

Skopje

Skopje

Skopje

Skopje

Nov Dojran

Skopje

Skopje

Probistip

Prilep

Kocani

Factory for railway vehicles Veles Veles Freight and passenger cars

Printed circuit board components

Multi-layer printed circuit boards for automotive, communication and electronics

Automotive diagnostic software

Auto electrics

Shock absorbers for trucks and buses

Springs

MZT Hepos

MZT Eka

Netcetera

Skopje

Skopje

Skopje

Pneumatic and brake systems for locomotives, freight and passenger cars

Rail vehicle brake digital testing equipment, pressure and speed sensors

Software for railway traffic management

Moulds and plastic parts

Starter batteries

RDV Faber

Alatnica SVEMEK

Skopje

Skopje

Different kinds of tools and rear lights

Pneumatic and hydraulic parts by design: cylinders, valves, screws, implants, and other machine parts

Bent tempered and laminated glass for the needs of the automotive industry (all kinds of windscreens)

TCG Learnica

Resen

Skopje Clutch parts

Ohrid Eat belts and restraint systems, door latches and retention components, rear view mirrors, window regulators

Ohrid Seat belts and seat belts parts

Ohrid Seat belt parts

Ohrid Seat belt parts

Demi Hisar Textile for seat belts, aluminium and zin parts used for seat belts,all kind of springs with diameter of wire up to 5 mm

Veles Cargo trailers

Bogdanci Trailers, agricultural machines and freight vehicles

Skopje Minibuses, bus seats and accessories

Skopje Buses and coaches

Skopje Buses and coaches

Skopje Vehicle body upgrade

Ohrid Brake components and anti-vibration products for OEM

City Products

Foun

drie

sSe

at B

elts

and

Seat

Bel

t Pa

rts

Buse

s an

d M

inib

uses

and

Vehi

cle

Bodi

esU

pgra

deO

ther

Aut

omot

ive

Part

sM

achi

nePa

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Railw

ayVe

hicl

esan

dCo

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s

Companies operating in the sector are:

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What They Say

“The Macedonian government has been extremely committed and I would like to thank its officials for their work in supporting this effort.”

John BarthChairman and CEOJohnson Controls

“Our experience has been positive, Ministry, Invest Macedonia and others superb. This will be Johnson Matthey’s ‘mega-European plant’ for the next decades.”

Colin JaffrayDirector, Strategic PlanningJohnson Matthey Plc

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Invest in the Technological Industrial Development Zones (TIDZs)

The Technological Industrial Development Zones (TIDZs – Free Economic Zones) are established by the Government of the Republic of Macedonia to provide favorable conditions for the development of business activities by offering prepared industrial sites, pre-built factories with completed physical infrastructure, support services and tax, customs and other incentives.

Investment Incentives in the FEZs and Technology Parks

• No corporate tax for 10 years (10% thereafter)

• 5% personal income tax for 5 years (10% thereafter)

• No VAT and customs duties for export production

• Free connection to piped natural gas, electricity, water and sewage

• Immediate access to main international airport, railroad and vital road corridors

• Subsidy of up to €500,000 towards building costs

• Land lease for up to 99 years at attractive concessionary rates

• Green Customs Channel available at border for rapid export from the Zones to EU countries

• Benefit package for eligible investors will be approved within 10 business days

TIDZs Skopje 2 Stip Tetovo

Area (Ha)

InternationalAirports

RailwayStations

Thessalonica,Greece,220 km

InternationalPorts

95

Adjacent to Alexanderthe Great Airport,

Skopje

Trans-EuropeanNetwork

TransportCorridor 10

Skopje


140

Adjacent to Alexanderthe Great Airport,

Skopje

Trans-EuropeanNetwork

TransportCorridor 10


208

Skopje - 80km

Trans-EuropeanNetwork TransportCorridor 10 - 40kmLocal Station 1km


97

Skopje - 50km

Trans-EuropeanNetwork TransportCorridor 10 - 30kmLocal Station 5km

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TIDZ Skopje TIDZ Skopje 2 TIDZ Stip TIDZ Tetovo

ALB

GRC

BGR

KOS

SRB Bulgarian coast line ~ 550kmTurkey ~ 450km

Greek coast line ~ 100km

Skopje

Greek coast line ~ 100km

Austria ~ 1,000kmItaly ~ 1,000kmGermany ~ 1,250kmFrance ~ 1,750km

Albanian coastline ~ 150km

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Invest Macedonia - At Your Service

Invest Macedonia, the official government agency responsible for attracting and developing foreign investments is a full service agency prepared to guide you throughout the decision-making process. As an agency dedicated to making this process as beneficial and effortless as possible, we are eager to lead you through the initial inquiry phase, arrange a suitable itinerary to visit Macedonia, and culminate with an objective evaluation of the potential success of your project based on the current business climate.

Should you find Macedonia to be an appropriate location for your business needs, rest assured that Invest Macedonia will interact on your behalf with national and local government authorities. If your business requires you to find suitable local partners, we will aid you through the process and ensure that an open exploratory dialogue can take place. Meeting your business requirements is our primary goal. Invest Macedonia understands the ever changing business needs as an operation grows, and to that effect, we pledge to collaborate closely with you to facilitate that growth in Macedonia.

In addition, Invest Macedonia has Economic Promoters located in offices worldwide. Please feel free to contact our international representative offices, by clicking on Foreign Offices on our homepage, should you wish to arrange a meeting or have any specific questions regarding the business climate in Macedonia.

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Agency for Foreign Investmentsof the Republic of Macedonia

t: +389 2 3100 110f: +389 2 3122 098e: [email protected]

www.investinmacedonia.com

invest in macedoniaautomotive automotive components...

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