JESSE SNYDER

Hey, come build a plant in sunny Macedonia

Automotive News | January 17, 2013 - 4:49 pm EST

DETROIT -- Viktor Mizo is all smiles and speaks fluent English as he explains why the Republic of Macedonia would be an excellent spot to build an auto parts plant.

Mizo can rattle off his country's virtues -- low wages averaging about $500 a month, 97 percent literacy, universal English-language instruction and business incentives that European Union members "just can't give anymore" -- faster than you can take his business card.

As CEO of the Directorate for Technological Industrial Development Zones, Mizo and three staffers were at the Automotive News World Congress this week to drum up investment.

Macedonia is serious about the automotive industry. At Automotive News Europe in Munich, I started getting calls from the country's minister of investment in 2006 urging me to visit him in Skopje. Then he would admit no auto plants had come yet.

Seven years later, Macedonia has 50 parts plants, including Johnson Controls, and 2,500 auto jobs -- and Mizo has a directorate, staff and a travel budget.

It wasn't Mizo's considerable charm that held my attention, but a sense of déjà vu. The laundry list of Macedonia's advantages and one-sentence dismissals of specific rival countries — if I closed my eyes and swapped place names, I might as well be back in Ladislav Glogar's office in the Czech Republic in 2004.

Glogar, then chairman of supplier Autopal, was a week into the European Union's 10-country expansion and in overdrive mode wooing German automakers. Glogar simultaneously touted Czech wages as a fifth of Germans' while discounting even lower Indian and Chinese wages. He had a lovely "cost of distance" argument about the fragility and recovery time of long supply lines.

Almost a decade later, Czech auto parts making is booming. And Mizo and his counterparts from Morocco and Tunisia to Moldova want some of it.

Mizo keeps it punchy.

"Now Czech wages are too high to be a low-cost country.

"Wages are low in Moldova, but it has no middle managers so for a 1,500-worker plant you must hire 25 ex-pats.

"Tunisia's too politically unstable.

"Morocco can supply Spain and Portugal, but for Central Europe it's too far west."

Macedonia is a Vermont-sized nation of 2 million on Greece's northern border. To Mizo, that's just down the shiny multilane highway from Germany. To Glogar, of course, Macedonia is 1,000 miles away while the Czech Republic borders Germany.

Forget the arguments. Here's my take.

Just nine years after the EU expanded eastward, the new EU is developing a strong middle class, and the low-wage auto-parts frontier has shifted to eastern Europe and north Africa.

The same powerful economic forces of auto manufacturing that helped create the developed world keep spreading further afield. If you look closely, you can watch the nation-building influence of the auto industry at work, even as far afield as Macedonia.

Jesse Snyder is senior writer for Automotive NewsJesse Snyder is senior writer for Automotive News

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