New business opportunities for metal processors in Eastern Europe
10.05.2016
The biggest opportunity for exporters in Eastern Europe lies in predicting and generating rapid solutions according to the more and more demanding expectations of the companies in Western Europe. Even so the competition in the field is strong, Eastern Europe still has the advantage of an ideal combination between the reduced cost of acquisition, short delivery terms and a high adaptability degree on qualitative expectations.
Western Europe looks for flexibility
The general economic uncertainty and the increase of credit costs determine a lot of western European companies to massively reduce their stocks and to send out only last minute orders for components and metal structures. This strategy allows them to save relevant resources related to the production activity and to keep under control all operational costs. As this will be the trend for the next couple of years, too, the buyers will continue to send their orders in the last second and expect to get back the right quality of components in a short period of time. Another tendency is that the payment terms are usually extended, which makes it difficult for a lot of suppliers to cope with the market situation.
Under these terms and conditions companies from Eastern Europe can benefit from the advantage of the neighborhood allowing them to deliver the products in shorter time than their competitors from Asia and other faraway regions.
Therefore:
Being able to deliver quickly the ordered products makes it easier for the companies active in Eastern Europe to become reliable suppliers for Western Europe
Implementing flexible logistic systems or identifying partners with high stock capacity might be good strategies to be implemented in the next years
Connecting ERP systems between buyers and suppliers should increase the flexibility degree allowing the deliveries to be organized according to clients’ expectations
Implementing new adaptable production concepts might unease dealing with small orders received on constant bases
Maintaining the relationship with the customers and a constant monitoring of the orders’ frequency and terms, plus getting involved in European profile associations are essential now in establishing long terms relationships with Western European companies.
The evaluation of suppliers becomes stricter and stricter
All buyers are now more interested in analyzing the total cost of ownership more than the cost of acquisition as such. This means that not only the price of a technical solution is considered but also the energy cost for running it into becomes relevant. The quality and the risks related to a product are also important criteria in the buying decisions now. All these aspects put an extra pressure on exporters from developing countries. Even those able to respond to all these high expectations will have to deal with strong competition.
More and more companies acting in the metal processing field will tend to automate as many activities as possible in order to reduce the labour costs while increasing the quality of the final products. Therefore companies in Eastern Europe are considered to have higher chances in comparison with their competitors from Asia, Brazil and Middle East.
As a conclusion:
Marketing investments can bring relevant benefits to industrial producers from Eastern Europe because they allow them to communicate their capacity of responding to high standards of quality and flexibility as expected by the Western European buyers. Presenting all these aspects in a constant and clear manner should help in a better positioning of the Eastern Europe in comparison to the mass production delivered from Asia and other similar developing regions
Design and qualified work are making the difference
Innovation in the field of metal processing was mainly focused on reducing the material consumption and improving the quality of the final product. The companies active in the field used massive energy resources for optimizing the production processes. New tendencies in the energy sector plus the new standards related to the environmental protection oblige to creation of new types of systems with high impact on both products’ design and industrial processes.
Therfore:
The interest for environmental protection becomes another important advantage Eastern Europe might have in comparison with its competitors
Design services and the focus on production processes with high impact on energy consumption are to become USPs when communicating to Western European buyers
Eastern European countries can find new opportunities due to reduction of capacities in the metallurgic industry from Western Europe
There are a lot of small and medium sized foundries all over Europe. Some of them have gone bankrupted as a consequence of the financial crisis. Others will continue to follow this trend in the next years, as they will be unable to continue their activity in a profitable manner.
Only the big foundries have chances to survive. Under such conditions exporters from neighbor countries have better chances to gain a market share based on their production capacity and flexibility to adapt themselves to the new demands coming from the processing sector.
Therefore:
Cooperation with Western Europe will become possible/easier for Eastern European countries if the producers here will become more active in communicating their capacities and willingness to adapt themselves on the demand and expectations of the Western buyers
The job losses in Western Europe bring new opportunities for Eastern Region
The young generation in Western countries is not interested anymore in working in the metal processing sector forcing companies in the field to either hire more and more people from Eastern Europe or to outsource capacities into this region.
This tendency reflects not only the unqualified jobs but also the qualified ones.
In conclusion:
The active integration into the specialized associations and a constant monitoring of the market needs might help in bringing together the cooperation necessities and offers
CSR will make the difference in the industrial sectors, too
Corporate Social Responsibility (CSR) will become a norm more and more present in the industrial area, too. As a result, a relevant number of Western European companies will be more willing to do business with partners abroad with whom they consider themselves compatible, as they are embracing the same values and envision the future in similar manners.
Therefore:
Integrating CSR in the organizational culture and an efficient communication of activities related to it represents one more important advantage of the Eastern European companies in comparison to the ones from Asia and other similar developing regions
