{"id":18643,"date":"2024-06-10T00:00:00","date_gmt":"2024-06-10T00:00:00","guid":{"rendered":"https:\/\/reinvantage-dev.eonserver.com\/?p=18643"},"modified":"2024-06-10T00:00:00","modified_gmt":"2024-06-10T00:00:00","slug":"the-future-of-manufacturing-in-cee-transitioning-to-a-high-tech-added-value-era","status":"publish","type":"post","link":"https:\/\/reinvantage-dev.eonserver.com\/?p=18643","title":{"rendered":"The future of manufacturing in CEE: Transitioning to a high-tech, added value era"},"content":{"rendered":"\n<p><strong>The countries that navigate the transformation to high-tech manufacturing most effectively are likely to emerge not merely as regional leaders, but global leaders.&nbsp;<\/strong><\/p>\n\n\n\n<p>Central and Eastern Europe (CEE) has long been a manufacturing powerhouse. However, the region, once known for traditional, labour-intensive production, is now on the cusp of a major transformation driven by automation, supply chain reconfigurations, and a pressing need for new skills. Embracing this transformation is essential for the region\u2019s economic growth.&nbsp;<\/p>\n\n\n\n<p>The four Visegr\u00e1d countries (Czechia, Hungary, Poland, Slovakia) and Slovenia belong to the top 30 most competitive manufacturing exporters in the world according to United Nations Industrial Development Organisation (UNIDO), while the Observatory of Economic Complexity (OEC) economic complexity index ranks Slovakia, Hungary, Slovenia and Czechia in the top 20 most knowledge-intensive product exporters in the world.&nbsp;<\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-background has-cyan-bluish-gray-background-color has-cyan-bluish-gray-color is-style-wide\"\/>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/emerging-europe.com\/news\/seeds-of-change-modernisation-and-sustainability-in-cees-agricultural-sector\/\">Seeds of change: Modernisation and sustainability in CEE\u2019s agricultural sector<\/a><\/li><li><a href=\"https:\/\/emerging-europe.com\/made-in-emerging-europe\/the-estonian-delivery-robots-set-to-take-over-the-world\/\">The Estonian delivery robots set to take over the world<\/a><\/li><li><a href=\"https:\/\/emerging-europe.com\/voices\/in-emerging-europe-the-ai-revolution-is-happening-right-before-our-eyes\/\">In emerging Europe, the AI revolution is happening right before our eyes<\/a><\/li><\/ul>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-background has-cyan-bluish-gray-background-color has-cyan-bluish-gray-color is-style-wide\"\/>\n\n\n\n<p>Automation meanwhile, in the form of robotics, advanced machinery, and artificial intelligence (AI), is fundamentally altering CEE factories.&nbsp;Slovenia and Czechia are currently the regional leaders in the CEE transition towards high-tech manufacturing. Both countries are among those with the highest densities of industrial robots in the world (globally, Slovenia ranks 11th\u2014ahead of Denmark, Czechia 18th\u2014ahead of France), according to the International Federation of Robotics.&nbsp;<\/p>\n\n\n\n<p>However, the surge in automation is having both positive and disruptive effects. On the one hand, it increases productivity and creates opportunities for higher-value manufacturing\u2014something that several think tanks across the region, such as the Vienna Institute for International Economic Studies (wiiw) have <a href=\"https:\/\/emerging-europe.com\/news\/learning-from-the-asian-tigers-cee-needs-an-industrial-policy-for-a-new-growth-model\/\" target=\"_blank\" rel=\"noreferrer noopener\">long advocated<\/a> as imperative to ensuring the region does not become stuck in what has been dubbed \u2018the middle-income trap\u2019.&nbsp;&nbsp;<\/p>\n\n\n\n<p>On the other hand, there are concerns about potential job displacement, especially for low-skilled workers.&nbsp;&nbsp;<\/p>\n\n\n\n<p>These concerns, however, are broadly unfounded, according to a major 2022 study by Ronald Bachmann and Myrielle Gonschor from the RWI Leibniz Institute for Economic Research in Germany and Piotr Lewandowski and Karol Mado\u0144 from Poland\u2019s Institute for Structural Research (IBS).&nbsp;<\/p>\n\n\n\n<p>Automation is not leading to a loss of jobs, instead reducing the risk of layoffs and increasing the chances of finding jobs, especially in economies where initial labour costs were lower, such as the Central European states of Poland, Slovakia, and Hungary.&nbsp;&nbsp;<\/p>\n\n\n\n<p>The <a href=\"https:\/\/projectuntangled.eu\/wp-content\/uploads\/2022\/01\/Untangled_The_Impact_of_Robots_on-Labour_Market_Transitions_in-Europe_11.01.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">study<\/a> looked at how the increase in robot installation influenced worker flows, such as layoffs and new hirings, and therefore employment and unemployment levels in European economies.&nbsp;<\/p>\n\n\n\n<p>\u201cThe general message that comes from our research is that adoption of robots in Europe hasn\u2019t led to a rise in unemployment,\u201d Gonschor said. \u201cThe number of industrial robots per 1,000 workers quadrupled from 2000 to 2017, and the effects on employment have been seen as mixed. But it turns out that robots aren\u2019t stealing our jobs \u2013 they\u2019re changing them.\u201d&nbsp;<\/p>\n\n\n\n<p>\u201cContrary to the narrative of job losses driven by experience in the US market, in Europe robots are a complement to humans\u2019 work, not a substitute for it,\u201d added Lewandowski. \u201cThis is clearly visible in Central and Eastern European economies, where the effects are even stronger as investment in automation created new jobs. That may be because in those countries robots were often installed in greenfield investments, linked to the integration of these economies into global value chains.\u201d&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Supply chain shifts&nbsp;<\/h5>\n\n\n\n<p>The Covid-19 pandemic and the recent geopolitical tensions in the region\u2014notably Russia\u2019s invasion of Ukraine\u2014have exposed vulnerabilities in the globalised supply chains that CEE manufacturing heavily relied upon.&nbsp;&nbsp;<\/p>\n\n\n\n<p>According to the European Bank for Reconstruction and Development (EBRD), the likelihood of supply chains being mentioned during firms\u2019 earnings calls has more than doubled between 2018 and 2022, rising from 30 per cent in 2018 to 61 per cent.&nbsp;<\/p>\n\n\n\n<p>In response, companies are rethinking their strategies, moving towards regionalisation and building resilience. A recent EBRD survey found that more than 80 per cent of investment promotion agencies (IPAs) across the EBRD regions regard this reshaping of global value chains as an opportunity for their country. &nbsp;<\/p>\n\n\n\n<p>\u201cMoreover, many are actively seeking to attract foreign investors that are looking to diversify their supply chains, particularly companies that are active in green transition sectors,\u201d the bank said in its 2023-24 Transition Report.&nbsp;&nbsp;<\/p>\n\n\n\n<p>This shift towards regionalisation opens fresh opportunities for CEE manufacturers. Shorter supply chains can mean reduced logistics costs, faster response times, and improved resilience to disruptions.&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">The skills imperative&nbsp;<\/h5>\n\n\n\n<p>The high-tech transformation of CEE manufacturing nevertheless demands a workforce equipped with new skills. Workers need to transition from manual tasks to operating and maintaining sophisticated machinery, programming, and analysing data. There&#8217;s a critical shortage of engineers, IT specialists, and data scientists in the region.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Addressing this skills gap is crucial for CEE countries to remain competitive in high-value manufacturing. Governments, educational institutions, and businesses need to collaborate on upskilling and reskilling programs. Investment in STEM education (science, technology, engineering, and mathematics) and the development of vocational training programs are essential.&nbsp;<\/p>\n\n\n\n<p>\u201cLeaders in the region should know it\u2019s their people who will implement the changes needed to future-proof businesses,\u201d said Adam Kraso\u0144, CEO at PwC CEE, last October on publication of PwC\u2019s Global Workforce Hopes and Fears Survey, which revealed that CEE employees are less likely to believe the skills their job requires will change significantly in the next five years compared to their global counterparts.&nbsp;<\/p>\n\n\n\n<p>PwC\u2019s latest Global CEO Survey, <a href=\"https:\/\/emerging-europe.com\/news\/as-optimism-about-the-global-economy-returns-ceos-in-cee-view-transformation-as-vital-to-survival\/\">published last month<\/a>, meanwhile found that CEOs in CEE increasingly see transformation as vital to the survival of their businesses beyond the next decade. Almost half (48 per cent) of CEOs in CEE don\u2019t see their companies surviving the coming decade under their current business model.\u00a0<\/p>\n\n\n\n<p>\u201cThe CEE results of our survey suggest to me that business leaders in our region are aware of a need to respond to rapid change,\u201d said Kraso\u0144.&nbsp;<\/p>\n\n\n\n<p>The future of manufacturing in CEE hinges on successfully managing this transformation to a high-tech model. Embracing automation, ensuring supply chain resilience (which includes making the most of the race to nearshore), and investing in the workforce of tomorrow are imperative. &nbsp;<\/p>\n\n\n\n<p>The countries that navigate this transformation most effectively are likely to emerge not merely as regional leaders in advanced manufacturing, but global leaders. The Visegr\u00e1d Four and Slovenia appear to have a head start, but there&#8217;s time yet for other emerging Europe nations to catch up.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-background has-cyan-bluish-gray-background-color has-cyan-bluish-gray-color is-style-wide\"\/>\n\n\n\n<p><em>Photo by <a href=\"https:\/\/unsplash.com\/@simonkadula?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash\">Simon Kadula<\/a> on <a href=\"https:\/\/unsplash.com\/photos\/a-factory-filled-with-lots-of-orange-machines-8gr6bObQLOI?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash\">Unsplash<\/a>.<\/em><\/p>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-background has-cyan-bluish-gray-background-color has-cyan-bluish-gray-color is-style-wide\"\/>\n\n\n\n<p><strong>Unlike many news and information platforms,&nbsp;<em>Emerging Europe<\/em>&nbsp;is free to read, and always will be.&nbsp;There is no paywall here.&nbsp;We are independent,&nbsp;not affiliated with nor representing any political party or business&nbsp;organisation.&nbsp;We want the very best for emerging Europe, nothing more, nothing less. Your support will help us continue to spread the word about this amazing region.<\/strong><\/p>\n\n\n\n<p><strong>You can contribute&nbsp;<a href=\"https:\/\/emergingeurope.krtra.com\/t\/NlQnFuOA2C9c\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>. Thank you.<\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><a href=\"https:\/\/emergingeurope.krtra.com\/t\/NlQnFuOA2C9c\"><img decoding=\"async\" src=\"https:\/\/emerging-europe.com\/wp-content\/uploads\/2020\/04\/copy-of-add-a-heading.png\" alt=\"emerging europe support independent journalism\" class=\"wp-image-50811\"\/><\/a><\/figure><\/div>\n\n\n\n<hr class=\"wp-block-separator has-text-color has-background has-cyan-bluish-gray-background-color has-cyan-bluish-gray-color is-style-wide\"\/>\n","protected":false},"excerpt":{"rendered":"<p>The countries that navigate the transformation to high-tech manufacturing most effectively are likely to emerge not merely as regional leaders, but global leaders.&nbsp; Central and Eastern<span class=\"excerpt-hellip\"> [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":18644,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[7015,15,238,21,6883,6320,356,7017,9,7013,6580,6593,61,7019,7018,6631,6632],"class_list":["post-18643","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-adam-krason","tag-czechia","tag-ebrd","tag-economy-politics","tag-european-bank-for-reconstruction-and-development","tag-featured","tag-hungary","tag-manufacturing","tag-poland","tag-pwc-global-ceo-survey","tag-slovakia","tag-slovenia","tag-technology-innovation","tag-unido","tag-united-nations-industrial-development-organisation","tag-vienna-institute-for-international-economic-studies","tag-wiiw"],"_links":{"self":[{"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=\/wp\/v2\/posts\/18643","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18643"}],"version-history":[{"count":0,"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=\/wp\/v2\/posts\/18643\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=\/wp\/v2\/media\/18644"}],"wp:attachment":[{"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/reinvantage-dev.eonserver.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}