18th October 2016

Dotyk.cz: Traditional Czech industry retreating, making space for assembly plants

Dotyk.cz writes that part of Vitkovice Holding, CKD Praha DIZ, Kovosvit MAS, one of the successors of Skoda Plzen Pilsen Steel and the aircraft producer Let Kunovice, are five traditional brands of the Czech industry that are currently facing an existential crisis. Maybe we are watching live the end of the transformation of the Czech economy after 1989. Those who have not adapted to the new business environment are now struggling to survive. The role of foreign-owned companies has strengthened, but it is often the type of owners who were given the name montovna (assembly plant) by the locals. Montovna means that value added remains in the country of origin of the owner.

Around one million jobs disappeared, Dotyk.cz writes. Thanks to the inflow of foreign capital into green field projects and expansion of the service sector in the country, the transformation of the Czech industry (and economy), has not resulted in mass unemployment or social unrest. Exception is the area surrounding the industrial town of Ostrava in the Northern Moravia and Silesia region that has been struggling. Still, the country as a whole is approaching to the level of the so-called natural employment, the article says (more details on that here (in English)). Looking at the wage level, its growth has been rather slow and foreign investors still see Czechs as a cheap labour (18th highest average wage among 25 EU member states included in the analysis, data from 2015/2016).

Basic condition for successful transformation, is concentration of,manufacturing, but also R&D and sales of final products inside the Czech Republic, the article says. Read full article (in Czech), view infographic.

Czech Vice PM for R&D & Innovation Pavel Bělobrádek said at a conference organized by the Confederation of Industry and Trade of the Czech Republic that although the Czech industry has been experiencing growth, human resources in industry are at a critical level. 

Read also an article saying that revenues of companies in the Czech metallurgy and casting industry fell by around 20% compared with the pre-crisis year of 2008 (in Czech).

Members of the American Chamber of Commerce in the Czech Republic