Mister79
March 14th, 2009, 03:07 PM
Manufacturing: The Rise of the Maghreb
Airbus and Renault are among a wave of companies building plants along the Mediterranean's southern shore
Casablanca/Algiers - After the fall of the Berlin Wall, Japan's Sumitomo Electric Industries joined a crowd of automotive suppliers setting up low-cost plants on Europe's eastern rim. It opened factories from Poland to Bulgaria and today has a dozen facilities in the region. But now, Sumitomo is shifting production south of Europe—to the ancient Moroccan port of Tangier and to Bou Salem, a market town set among wheat fields in northern Tunisia. As costs rise in Eastern Europe, the company says, it's getting harder to make a profit. North Africa, by contrast, offers far lower wages and plenty of eager workers.
Sumitomo isn't the only company beating a path to the Maghreb, a swath of four developing countries along the Mediterranean's southern shore. Led by Morocco and Tunisia, the region of 84 million people is attracting serious investment—more than $30 billion over the past five years—to build everything from auto and aerospace factories to five-star resorts and call centers for multinationals.
Even Algeria and Libya, long shunned on the international stage, are starting to revive their stagnant economies. Both are opening up to foreign investment and, with pipelines under the Mediterranean, have become important suppliers of natural gas to Europe as it seeks alternatives to politically unstable Russia. The Maghreb countries all "have very different politics, but they're on track, moving in the same direction," says André Azoulay, a former French bank executive who is an economic adviser to Morocco's King Mohammed VI.
The Maghreb—"place of the sunset" in Arabic—is likely to keep expanding in spite of the global economic turmoil. Growth forecasts for 2009 range from 3.7% in Tunisia to more than 5% in Libya. Euler Hermes, a consultancy that analyzes investment risk, now rates Tunisia and Morocco as safer than Hungary, Romania, and Bulgaria. "While the [Maghreb countries] will certainly be adversely affected by the downturn, they are robust enough to survive," says Euler Hermes analyst Andrew Atkinson.
BUSINESS-FRIENDLY GOVERNMENTS
The Maghreb's appeal is obvious. It's in the Continent's backyard: Tangier lies just eight miles from Spain across the Strait of Gibraltar. The region's governments are relatively stable and business-friendly. And it's cheap, with factory wages averaging $195 to $325 a month. Compare that with the average $671 monthly paid by French automaker Renault at its Dacia Logan factory in Romania.
Those numbers help explain why Renault is building an assembly plant in Tangier that will be one of its biggest anywhere. The factory is expected to employ 6,000 workers, and Moroccan officials say it could attract suppliers that would provide jobs for 35,000 more. Although the global crisis has delayed the plant's inauguration by as much as a year, Chief Executive Carlos Ghosn says Renault remains committed to the venture, which will build low-cost Logan cars for the Maghreb and beyond. "We are optimistic about these markets," he says.
Europe's aerospace industry is just as bullish on the region. Next year, Airbus plans to open a $76 million factory in Tunisia with 1,500 workers. And the industry's suppliers already employ more than 10,000 in the Maghreb, making fuselage panels, high-pressure pipes, and much more. France's Groupe Safran, for instance, has six facilities in the Maghreb employing almost 1,400 people. Inside its airy, brightly lit factory near the Casablanca airport, women in white jackets painstakingly weave electric wires into cables destined for Boeing (BA) and Airbus jets. The joint venture with Boeing and Morocco's flag carrier Royal Air Maroc employs 600 people earning an average of $315 a month. The workweek is 44 hours, considerably longer than in most of Europe. And with no unions, it's easier for managers to match production with orders by getting employees to work overtime. "We are competitive not only on salary but on flexibility and responsiveness," says Hamid El-Andaloussi, the head of Safran's Moroccan operations.
http://www.businessweek.com/magazine...3038640646.htm
Airbus and Renault are among a wave of companies building plants along the Mediterranean's southern shore
Casablanca/Algiers - After the fall of the Berlin Wall, Japan's Sumitomo Electric Industries joined a crowd of automotive suppliers setting up low-cost plants on Europe's eastern rim. It opened factories from Poland to Bulgaria and today has a dozen facilities in the region. But now, Sumitomo is shifting production south of Europe—to the ancient Moroccan port of Tangier and to Bou Salem, a market town set among wheat fields in northern Tunisia. As costs rise in Eastern Europe, the company says, it's getting harder to make a profit. North Africa, by contrast, offers far lower wages and plenty of eager workers.
Sumitomo isn't the only company beating a path to the Maghreb, a swath of four developing countries along the Mediterranean's southern shore. Led by Morocco and Tunisia, the region of 84 million people is attracting serious investment—more than $30 billion over the past five years—to build everything from auto and aerospace factories to five-star resorts and call centers for multinationals.
Even Algeria and Libya, long shunned on the international stage, are starting to revive their stagnant economies. Both are opening up to foreign investment and, with pipelines under the Mediterranean, have become important suppliers of natural gas to Europe as it seeks alternatives to politically unstable Russia. The Maghreb countries all "have very different politics, but they're on track, moving in the same direction," says André Azoulay, a former French bank executive who is an economic adviser to Morocco's King Mohammed VI.
The Maghreb—"place of the sunset" in Arabic—is likely to keep expanding in spite of the global economic turmoil. Growth forecasts for 2009 range from 3.7% in Tunisia to more than 5% in Libya. Euler Hermes, a consultancy that analyzes investment risk, now rates Tunisia and Morocco as safer than Hungary, Romania, and Bulgaria. "While the [Maghreb countries] will certainly be adversely affected by the downturn, they are robust enough to survive," says Euler Hermes analyst Andrew Atkinson.
BUSINESS-FRIENDLY GOVERNMENTS
The Maghreb's appeal is obvious. It's in the Continent's backyard: Tangier lies just eight miles from Spain across the Strait of Gibraltar. The region's governments are relatively stable and business-friendly. And it's cheap, with factory wages averaging $195 to $325 a month. Compare that with the average $671 monthly paid by French automaker Renault at its Dacia Logan factory in Romania.
Those numbers help explain why Renault is building an assembly plant in Tangier that will be one of its biggest anywhere. The factory is expected to employ 6,000 workers, and Moroccan officials say it could attract suppliers that would provide jobs for 35,000 more. Although the global crisis has delayed the plant's inauguration by as much as a year, Chief Executive Carlos Ghosn says Renault remains committed to the venture, which will build low-cost Logan cars for the Maghreb and beyond. "We are optimistic about these markets," he says.
Europe's aerospace industry is just as bullish on the region. Next year, Airbus plans to open a $76 million factory in Tunisia with 1,500 workers. And the industry's suppliers already employ more than 10,000 in the Maghreb, making fuselage panels, high-pressure pipes, and much more. France's Groupe Safran, for instance, has six facilities in the Maghreb employing almost 1,400 people. Inside its airy, brightly lit factory near the Casablanca airport, women in white jackets painstakingly weave electric wires into cables destined for Boeing (BA) and Airbus jets. The joint venture with Boeing and Morocco's flag carrier Royal Air Maroc employs 600 people earning an average of $315 a month. The workweek is 44 hours, considerably longer than in most of Europe. And with no unions, it's easier for managers to match production with orders by getting employees to work overtime. "We are competitive not only on salary but on flexibility and responsiveness," says Hamid El-Andaloussi, the head of Safran's Moroccan operations.
http://www.businessweek.com/magazine...3038640646.htm