Kiev, Ukraine; Istanbul and Bratislava, Slovakia were the top three ideal locations for cost-driven manufacturing activities, according to the Logistics Cities report.
The report examines both mature and emerging logistics and industrial centers across Europe and ranks them based on two main criteria: distribution and manufacturing.
From a distribution perspective, cities in Belgium, the Netherlands and Germany dominate the report’s top 10. These cities form part of the Blue Banana, a corridor of cites located at the economic heart of Europe.
“What is termed as the Blue Banana are the most densely populated and richest areas in the region, which makes them a logical choice for companies seeking to reach the largest number of customers as quickly and readily as possible,” Erik Barnekow, director of EMEA Industrial and Logistics at Colliers International, said. “They also benefit from proximity to major European seaports and airports, the largest consumer markets and a vast, and relatively skilled, workforce pool.”
The report reveals that Liege, Belgium and Lille, France offer a particularly good compromise between market access maximization and cost reduction. Northern Italy also offers good growth potential for distribution activities, especially given the expected increase in freight traffic through northern Adriatic ports, with Milan and Bologna both in the top 20.
Outside Western Europe, Prague and Bratislava obtained the best score for distribution. The report expects Central and Eastern European hubs to gain further importance across the European distribution landscape as the center of Europe gradually shifts east.
The manufacturing perspective, where cost was held as the key determinant of location decision, is dominated by cities in Central and Eastern Europe and neighboring countries to the east such as Ukraine.
Kiev occupies the highest spot in this ranking, followed by Istanbul, Bratislava, Katowice, Poland and Sofia.
Istanbul stands out for relatively lower labor costs compared to most of the other cities and good levels of infrastructure, which will see further improvements as a series of ongoing and planned projects in the region reach completion.
Turkey and Russia will gain further importance as trade links with the Far and Middle East.
The report also notes the UK’s industrial transformation, most notably in the East Midlands region where the production base has shifted away from coalmining to car assembly. Sunderland is now a car assembly platform due largely to investment from Nissan.
“The ongoing success of the Nissan plant in the northeast of England has seen it increase its share of global production and move up the value chain to produce vehicles at the premium end of the scale,” Barnekow said. “Southern Europe is the only region with no clear competitive advantage in our analysis, be it in manufacturing or distribution. However, as highlighted by the report, this might change as some of these countries are seeing their cost competitiveness improve, partly on the back of structural reforms currently being implemented.”