How to set up a factory abroad: the story of PKC and Serbia

2019-02-04

Category: International growth

Keywords: Client case, international expansion, International Growth, Internationalization

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How to set up a factory abroad: the story of PKC and Serbia

PKC Group is one of Excedea’s long-term clients in Finland. The cooperation includes several factory setups and market analyses in the Balkans, China, South America, Lithuania and Belarus. In this article, we examine how Excedea supported PKC Group in establishing a greenfield factory that now employs 1550 people in Serbia and what other business expansion projects we have carried out together.

When starting the factory site search project with Excedea, PKC already had in mind 6 European countries where the next factory could be established. Choosing the new factory location is not a piece of cake – it requires extensive analysis. Excedea analysed workforce size, availability and cost, logistics, customs, available subsidies and competition in all of the selected countries. As an outcome of the country comparison, two countries, one of them Serbia, were selected for closer examination.

The next question was: “Where exactly should the factory be located in either of these countries?”. Several greenfield and brownfield locations suiting PKC’s criteria were analysed and visited in both countries and negotiations with the government representatives were conducted. Smederevo in Serbia was selected as the most interesting alternative logistically, also the labour costs were acceptable. Historically Smederevo city was the location for steel and railroad cars factory, so the people were accustomed to factory work (were punctual and did not have the tradition of disappearing for a few weeks to help out their family during the harvest time). However, the former main employers in the city were on their knees and unemployment was high – a perfect situation for PKC.

Excedea supported PKC in negotiating a considerable subsidy for employing and a favourable lease contract for a greenfield factory. Once the deal was signed with the state and the city and while greenfield factory planning was ongoing, operations in Smederevo were started in a furniture shop turned into a temporary pilot factory/training centre. As the greenfield factory opened doors, trained employees moved over. Today 1550 employees manufacture wiring harnesses for commercial vehicle industry in Smederevo, and Excedea is supporting PKC in expanding the factory.

Why Excedea?

According to Jani Kiljala (President, Wiring Systems, Europe and South America, PKC Group), PKC chose Excedea as its partner after having witnessed in an earlier Chinese market analysis project Excedea’s capability to dig deeper than other consulting companies – Excedea was able to bring the voice of the experts into the market analysis*.

The first joint project between PKC and Excedea was a comprehensive Chinese market analysis delivered in just four weeks. Excedea’s international project management team and Senior Advisors network made it possible to interview high profile Chinese experts within the industry and to create a reliable view of the current market and its expected future development.

Cooperation throughout the years and countries

PKC Group has been cooperating with Excedea since 2012. The map below shows our projects coverage.

excedea_excfiles_pkc_serbia

Check other Excedea references here.

If your company needs support in production relocation, contact Mikael Orkomies, the Senior Partner at Excedea.

About PKC Group

PKC Group is the global supplier of electrical distribution systems for the transportation industry. PKC designs, manufactures and integrates tailored electrical distribution systems and related architecture components, vehicle electronics, wires and cables especially for trucks and buses, light and recreational vehicles, construction equipment and agricultural and forestry equipment. From 2017 PKC Group is a member of the Samvardhana Motherson Group.

Samvardhana Motherson Group is a global group, providing full system solutions to the automotive industry, from design, simulation and prototyping to tooling, moulding, painting and final assembly of highly integrated modules. The group was founded in 1975 and is today one of the world’s leading automotive component makers. The product portfolio of the Group comprises electrical distribution systems (wiring harnesses), automotive rear vision systems, moulded plastic parts and assemblies, injection moulding tools, moulded and extruded rubber components, interior and exterior polymer modules like cockpits /IPs, door trims, bumpers, automotive modules such as lighting systems, air intake manifolds, pedal assemblies, HVAC systems for passenger and commercial vehicles, air conditioning systems and roof hatches for buses, clutch for car AC compressors, cabins for off-highway vehicles, machined metal products, cutting tools, aluminium die casted products, sheet metal parts, thin film coating metals, IT services and wireless power. The Group has also invested in technologies that provide manufacturing support including compressors, paint coating equipment, auxiliary equipment for injection moulding machines, intelligent cooling solutions and automotive manufacturing engineering services. The Group has also expanded its presence in new areas that include Aerospace, Defence and Security, Logistics and Medical Diagnostic Equipment. Samvardhana Motherson Group is ranked 23rd among the largest automotive suppliers worldwide, employing over 130.000 people in more than 250 facilities across 41 countries on all continents. In the fiscal year 2017/18, the Group generated revenues of approx. USD 10.5 billion. For more information please visit www.motherson.com.

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