EN | DE | IT
Case Study: German Automotive Supplier Captures Value and Finds Peace of Mind in Albania

Background:

A German Tier 1 automotive supplier, with manufacturing plants in countries such as Czechia, Poland, and Ukraine, faced rising labor costs and workforce shortages in their European locations. The geopolitical instability in Ukraine compounded their challenges. Moreover, their predominant customers were based in Germany and Czechia, necessitating them to maintain a Just-in-Time delivery model with a rapid turnaround time from customer orders to deliveries.

The Challenge:

1. Identify a new manufacturing location within continental Europe with significantly lower labor costs.
2. Minimize operational hassles like workforce recruitment and retention.
3. Sustain rapid order-to-delivery timelines of 5-7 days.
4. Ensure political stability and security of the region.

The Solution:After considering multiple countries in the Balkans, the German supplier decided on Albania, drawn by several compelling factors:

1. Labor Force Advantage: Albania's reputation for an eager and trainable workforce, coupled with the lowest wages in the region, presented a compelling labor solution. The country's potential for easy recruitment and lower turnover rates promised to address the company's workforce challenges effectively.
2. Economic Attraction: Beyond free trade with the EU, Albania's law on inward processing allows companies to operate VAT and duty-free when processing inputs into finished products exclusively for the export market.
3. Geographic Proximity: Albania's strategic location ensures swift product deliveries to Germany. With standard shipping around three days and expedited options within a day, it perfectly aligns with the company's Just-in-Time model. Additionally, daily direct flights of just two hours provide easy executive oversight.
4. Political Stability: As a NATO member, Albania offers significant political stability.

Implementation:The supplier moved swiftly. Within a span of just six months from their decision, they established their business in Albania and kickstarted operations. Initially beginning with a few hundred workers, the ease of hiring and training the workforce led to a smooth commencement of their manufacturing processes.

Outcome:

1. Operational Excellence: The proximity of Albania to their primary customers ensured that the supplier could maintain their swift delivery commitments. In emergency scenarios, they even had the capability to expedite products to Germany within a day.
2. Cost-Efficiency: With wages in Albania being less than half of those in Czechia, the move translated into notable profitability. This was especially valuable as they navigated the pressures of customer pricing.
3. Customer Satisfaction: Not only were internal operations streamlined, but the prompt delivery timelines ensured consistent customer satisfaction.
4. Peace of Mind: Previously beleaguered with the challenges of recruiting in Czechia, the supplier now had a stable, efficient, and cost-effective operation in Albania.

The Future:Encouraged by the success of their Albanian venture, the German supplier is looking ahead. They are planning to further scale their operations and shift more production to Albania, a decision that promises sustained growth and profitability.

For manufacturers contemplating a strategic move to Albania, this case study serves as a compelling testimony of the potential rewards waiting to be reaped. The right location can not only offer cost advantages but also deliver operational excellence and peace of mind.

‍