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Despite the bruised economy and a lack of predictability on the market, Romania remains an investor target for improving competitiveness. Ana Maria Nitoi talks to new German Ambassador to Romania Andreas von Mettenheim
German manufacturing companies saw Romania in the mid 2000s as a location to either outsource or expand production due to its low wage labour force and proximity to west Europe.
It has been a host country for relocations of factories – including car parts manufacturers and, recently, mobile phones and the aerospace industry.
In the long term, some large German manufacturers have seen Romania as a place to build up low-wage, low-skilled production, with a view to graduating to more precision engineering, which requires greater professionalism but fewer workers.
However in the last year, German companies have not had the cash flow necessary to relocate. This could also mean the losses of jobs at home, which is politically sensitive and could result in social unrest as unemployment rises. At present these firms do not need a larger capacity of production, nor are they willing to take a risk on relocating research, development and high-skilled manufacture to Romania.
But in the last 18 months Romanian salary expectations have fallen, which means the country could again become a target for outsourcing.
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