BMW: Romanian Wages, 20% of Western European Level

BMW: Romanian Wages, 20% of Western European Level

BMW did consider building a plant in Eastern Europe, but the presence of important suppliers on markets in the West outweighed the advantages of the cheaper labor in the East, Ziarul Finanaciar reports.

"Compared to Romania, Germany pays very high wages. Salaries in Romania are less than 20% of those for a similar position in Germany or any other Western European countries," Ernst Baumann, a BMW board member, told ZF.

Compared with the Western European car market, car sales have registered significant growth in Romania, particularly on the premium segment, which registered an increase of over 50%.

"Premium car sales advanced due to the country's economic growth.

In Western Europe, BMW sales only registered declines in Germany, in line with the overall car market. Other markets posted increases of several percentage points, but when one takes into account the overall volume, the value is significant. Of course the situation is different in the West compared to Romania. Nevertheless, Europe continues to be BMW's largest market, accounting for over 60% of sales. All forecasts point to a rising premium segment, and BMW believes it will outpace this growth," explained Baumann.

With a total of seven plants in Germany, BMW considered building a plant in Eastern Europe, but the presence of suppliers in Western Europe outweighed the advantages of lower wage costs. However, there are BMW suppliers with production facilities in Eastern Europe, while the auto parts industry is witnessing significant growth in Eastern Europe.

Over the next decade, BMW does not expect to build a production facility in Eastern Europe, but could do it in the next 20 years. At present, nobody knows exactly how the markets in Eastern Europe will evolve. Nobody was expecting such rapid growth in countries like Russia or Romania. Therefore, we won't say 'no' to building a plant in Eastern Europe, but this is not part of our current plans," stated Baumann.

In the ten plants it owns globally, BMW's workforce numbers 108,000. This year, BMW will cut the number of positions by 8,000, but not the number of employees. "We will eliminate 8,000 positions, but won't replace the 8,000 employees. By reducing the number of positions, we hope to boost productivity, but we'll continue to pay attention to our employees," said Baumann.

All carmakers are starting to shift to premium segments: "The key to success is creating a new market segment. In order to continue to expand, we'll develop more niche models," said Baumann.

In 2007, BMW sales in Romania advanced by almost 65% and reached 2,727 units, while Mini posted an increase of 101% and sold almost 200 units.

"In 2008, we want to maintain a high growth rate and ultimately aim to produce 1.8 million cars in 2012," added Baumann.

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