1 BRUSSELS 29 JUNE 2006 SESSION 3

2 JÜRGEN NUSSER, DELEGATE CONSULTATIVE COMMISSION ON INDUSTRIAL CHANGE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE GENERAL DIRECTOR, BDS VICE PRESIDENT, EUROMETAL SESSION 3: RELOCATION - A DOUBLE-EDGED SWORD EESC/CCMI CONFERENCE BRUSSELS, 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 3 OFFSHORING MEANS THAT WESTERN EUROPEAN PRODUCERS ESTABLISH OWN NEW PRODUCTION LINES OUTSIDE WESTERN EUROPE TO PRODUCE PARTS, PRODUCTS OR SERVICES TO SUPPLY THEIR CUSTOMER BASE IN WESTERN EUROPE AS WELL AS IN OTHER PARTS OF THE WORLD. RELOCATION: AN ONGOING DEBATE IN EUROPE OUTSOURCING MEANS THAT WESTERN EUROPEAN GROUPS OR COMPANIES STOP PRODUCING PARTS OF THEIR PRODUCT OR SERVICE INPUTS IN WESTERN EUROPE AND INSTEAD PROCURE THESE INPUTS FROM CENTRAL OR EASTERN EUROPEAN COUNTRIES. RELOCATION OUT OF WESTERN EUROPE OUTSOURCING OUTSIDE WESTERN EUROPE == OFFSHORING OUTSIDE WESTERN EUROPE OFFSHORING OUTSIDE WESTERN EUROPE ==

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 4 VICE PRESIDENT RELOCATION - MOBILISATION LARS BERGE-KLEBER RELOCATION - A DOUBLE-EDGED SWORD

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 5 RELOCATION - A DOUBLE-EDGED SWORD RELOCATION OFFERS CONSIDERABLE OPPORTUNITIES FOR THE ECONOMIC DEVELOPMENT OF THE DESTINATION REGIONS AS WELL AS FOR RELOCATING COMPANIES REGARDING THEIR GLOBAL COMPETITIVENESS AND THEIR ACCESS TO NEW MARKETS WITH LOCAL INTEGRATION RELOCATION GENERATES CONSIDERABLE CHALLENGES FOR THE ECONOMIC DEVELOPMENT OF THE SOURCE REGIONS (SOCIAL SYSTEM, EMPLOYMENT STRUCTURES) AS WELL AS FOR RELOCATING COMPANIES (STRATEGIC POSITIONING AND OPERATIONAL MANAGEMENT) OPPORTUNITIESOPPORTUNITIES CHALLENGESCHALLENGES

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 6 JEAN-LOUIS COTTIGNY RELOCATION - A DOUBLE-EDGED SWORD COMMITTEE ON EMPLOYMENT AND SOCIAL AFFAIRS EUROPEAN PARLIAMENT RESTRUCTURING AND EMPLOYMENT

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 7 CHANGES OF INDUSTRIAL STRUCTURES (OUTSOURCING AS A SPECIFIC WAY OF VERTICAL DESINTEGRATION)CHANGES OF INDUSTRIAL STRUCTURES (OUTSOURCING AS A SPECIFIC WAY OF VERTICAL DESINTEGRATION) GOOD MARKET PERSPECTIVES AND GOOD BUSINESS ENVIRONMENT (ACCESS TO NEW MARKETS)GOOD MARKET PERSPECTIVES AND GOOD BUSINESS ENVIRONMENT (ACCESS TO NEW MARKETS) INVESTMENT INCENTIVES IN THE NEW MEMBER STATESINVESTMENT INCENTIVES IN THE NEW MEMBER STATES AVAILABILITY AND RELATIVE LOW COST OF LAND, PREMISES AND OFFICESAVAILABILITY AND RELATIVE LOW COST OF LAND, PREMISES AND OFFICES AVAILABILITY OF SKILLED LABOR FORCESAVAILABILITY OF SKILLED LABOR FORCES TAX DIFFERENCESTAX DIFFERENCES DIFFERENCES IN LABOUR COSTSDIFFERENCES IN LABOUR COSTS COMPETITIVE SOURCING OF RAW MATERIALS, SEMIS, ETCCOMPETITIVE SOURCING OF RAW MATERIALS, SEMIS, ETC TAKING ADVANTAGE OF NEW CHANCES BUSINESS MOTIVES FOR RELOCATION:

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 8 BÉLA GALGÓCZI RELOCATION - A DOUBLE-EDGED SWORD SENIOR RESEARCHER RELOCATION: `DOUBLE EDGE SWORD` – IMPACT ON SOURCE AND TARGET COUNTRIES ?

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 9 GERMAN COMPANIES HAVE STARTED THEIR FOREIGN INVESTMENTS TO ENHANCE THEIR ACCESS TO NEW MARKETS AND/OR TAKE ADVANTAGE OF FAVOURABLE PRODUCTION CONDITIONS EVEN BEFORE THE WAVE OF GLOBALISATION ASKED FOR AN ACCELERATION OF SUCH ACTIVITIES - A LOGICAL FOLLOW-UP OF AN EXPORT ORIENTED ECONOMY ECONOMIC ACTIVITIES WORLD-WIDE TODAY RELOCATION TO OTHER ECOMOMIC REGIONS TO MAINTAIN COMPETITIVENESS ON GLOBAL MARKETS LEADS TO A REDUCTION OF DOMESTIC INDUSTRIAL STRUCTURES AND - LONGTERM - TO THE TRANSFER OF KNOW HOW RELOCATION ENDANGERING NATIONAL STRUCTURES RELOCATION - A DOUBLE-EDGED SWORD

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 10 SHESHABALAYA ASHUTOSH SHESHABALAYA RELOCATION - A DOUBLE-EDGED SWORD BUSINESS CONSULTANT RELOCATION: IS THERE A WAY FROM ZERO SUM TO WIN-WIN

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 11 INNOVATION IN TECHNOLOGY AND ECONOMIC PROCESSES HAS LARGELY PUSHED GERMAN COMPETIVENESS AND MUST BE UNDERSTOOD AS THE MOST IMPORTANT DRIVING FACTOR ALTHOUGH THE DIRECT AND INDIRECT EFFECT ON EMPLOYMENT STRUCTURES IS OFTEN UNDERESTIMATED - I.E. CONSTANT MODERNISATION REGULARLY MEANS RATIONALISATION KILLING JOBS INNOVATION: ALSO A DOUBLE-EDGED SWORD HIGH SOCIAL STANDARDS INCLUDING LABOUR COSTS PROVE TO BE A MORE AND MORE LIMITING FACTOR REGARDING THE PRESERVATION OF LABOUR INTENSIVE INDUSTRIES WITH LOW ADDED VALUE POTENTIALS SOCIAL STANDARDS: A DIFFICULT ACHIEVEMENT RELOCATION - A DOUBLE-EDGED SWORD

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 12 DANNY VAN ASSCHE RELOCATION - A DOUBLE-EDGED SWORD ADVISOR ON SOCIAL AFFAIRS RELOCATION AND EMPLOYMENT

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 13 RELOCATION IS ABOUT STRATEGIC IMPACT, AND NOT JUST COST CUTTING! SOURCE: BCG ANALYSIS LOWHIGHHIGH DEGREE OF OUTSOURCING/OFFSHORING STRATEGICIMPACT COSTREDUCTION COST REDUCTION LONG TERM VALUE CREATION LONG TERM VALUE CREATION COMPETITIVEADVANTAGE COMPETITIVE ADVANTAGE KEY DRIVERS LABOR COST SAVINGS LABOR COST SAVINGS ECONOMIES OF SCALE ECONOMIES OF SCALE COST VARIABILITY COST VARIABILITY KEY DRIVERS HIGHER REVENUES HIGHER REVENUES IMPROVED CUSTOMER IMPROVED CUSTOMER SERVICE SERVICE INCREASED INCREASED PRODUCTIVITY PRODUCTIVITY REDUCED TIME TO REDUCED TIME TO MARKET MARKET KEY DRIVERS BETTER MANAGEMENT BETTER MANAGEMENT OF BUSINESS CYCLE OF BUSINESS CYCLE VOLATILITY VOLATILITY INCREASED INCREASED STRATEGIC STRATEGIC FLEXIBILITY FLEXIBILITY COLLABORATIVE COLLABORATIVE OPPORTUNITIES OPPORTUNITIES ENHANCED GLOBAL ENHANCED GLOBAL FOOTPRINT FOOTPRINT LEVEL OF ORGANISATIONAL READINESS INTENSITY OF PARTNERSHIP MODEL

14 RELOCATION - CHALLENGES AND OPPORTUNITIES SESSION 3: RELOCATION - A DOUBLE-EDGED SWORD OPEN DISCUSSION OF ISSUED RAISED OPEN DISCUSSION OF ISSUED RAISED EESC/CCMI CONFERENCE BRUSSELS, 28/29 JUNE 2006

15 JÜRGEN NUSSER, DELEGATE CONSULTATIVE COMMISSION ON INDUSTRIAL CHANGE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE GENERAL DIRECTOR, BDS VICE PRESIDENT, EUROMETAL SESSION 3: RELOCATION - A DOUBLE-EDGED SWORD EESC/CCMI CONFERENCE BRUSSELS, 28/29 JUNE 2006 JÜRGEN NUSSER JÜRGEN NUSSER JÜRGEN NUSSER THANK YOU FOR YOUR ATTENTION

16 THE PRESENTATION RUNS AUTOMATICALLY UNTIL THE SYMBOL APPEARS IN THE BOTTOM LINE AND ASKS FOR A MOUSE CLICK TO PROCEED TO THE NEXT SLIDE. OTHERWISE THE PRESENTATION CAN BE NAVIGATED BY HYPERLINKS PLACING ACTIVATED BUTTONS IN THE BOTTOM LINE: NEXT SLIDE PREVIOUS SLIDE BACK TO LAST SLIDE SEEN GO TO SLIDE (HELP) GO TO OTHER PRESENTATION... GO TO FIRST SLIDE GO TO FINAL SLIDE OTHER FUNCTION THIS BUTTON COVERS HYPERLINKS IN THE BOTTOM LINE HELPHELP

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 17 MOVING THE PRODUCTION PROCESS TO EASTERN EUROPE IS THEREFORE NOT A MARGINAL SAVING BUT A STRATEGIC STEP TO REDUCE LABOUR COSTS MOST EU 15 COUNTRIES EXCEEDING IT BY A FACTOR OF 5 TO 10 LABOUR COST IN EU 10 IS A DRIVING COMPETITIVE FACTOR

EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES EESC/CCMI CONFERENCE BRUSSELS 28/29 JUNE 2006 RELOCATION - CHALLENGES AND OPPORTUNITIES 18 EU-10 STATES COMPETE TO ATTRACT BUSINESS RELOCATION IS ENHANCED BY LOW TAX RATES 0,0