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back to index backEUROtalk March,  2005


Morocco, The Automotive Gateway to Europe

Morocco is fast becoming a leader in automotive manufacturing. In the past five years, major automotive supplier companies from the U.S., Japan, and Europe have selected Morocco as their new manufacturing platform to serve their European, African, and Middle Eastern markets.

According to the Moroccan Department of Investment, Delphi Automotive Systems, Lear, Yazaki, Sumitomo Electric Industries, Polytech Netting, Valeo and Volkswagen, among others, all chose Morocco for its strategic location, diverse markets, competitive operating costs and progressive business environment. Just six miles across the Straits of Gibraltar, automotive supplier companies are able to reach their customers in Europe with lower-cost distribution methods rather than expensive and lengthy overseas shipping.

Morocco, an emerging market at the crossroads of Europe, Africa and the Middle East, forms an $11 billion import market Just as the North American Free Trade Agreement forged an important partnership between the United States, Mexico and Canada, so too does Morocco's historic signing of free trade agreements with both the European Union and most recently the U.S. As a result, U.S., European and other foreign companies who decide to locate distribution and value-added manufacturing facilities in Morocco will be able to take advantage of these trade relationships and strategic access to two of the largest automotive production markets in the world.

Flour Global Services, an internationally recognized site selection firm, conducted a benchmark study comparing manufacturing locations in Morocco with other countries in the region, including Spain, Portugal, Cyprus and Tunisia. The study shows

Morocco is the gateway to the Mediterranean region with:

An ample supply of skilled and highly educated workers

Competitive operating costs

Geographic proximity to the growing European and Mediterranean markets

Political and economic stability

An attractive environment for foreign direct investment

Free-trade agreement with the European Union

State-of-the art industrial park locations with multimodal access and developed infrastructure

Plus, the Moroccan and United States governments recently completed negotiations to form a fair-and free-trade agreement, opening doors to increased trade and investment between U.S. and Moroccan companies. It was ratified overwhelmingly by the U.S. Congress The trade agreements, coupled with operating costs lower than in Europe and most Eastern European countries (for example, labor is one-sixth the cost of Western Europe and two-fifths the cost of Poland), positions Morocco as the next major destination for the automotive supplier industry, especially as Eastern European countries assimilate into the European Union and lose their cost differential over time.

Morocco's automotive supplier industry, which includes both foreign and Moroccan- owned businesses, is producing wire harnesses, interior accessories and electric circuits, among other components, for both the export and domestic OEM industries. While the domestic market is small relative to the global automotive industry, investment in the Moroccan automotive industry has seen growth as high as 183% with a seven-fold increase in the number of foreign-owned companies in the past five years. Polydesign, a subsidiary of Detroit-based Polytech, indicates it plans to expand its operations in Morocco, which were established in 2001, by making the location its future European headquarters for sales, R&D, engineering, logistics and program management (http://www.polytechnet.com/files/companies.asp).

SOMACA, the Moroccan automotive OEM jointly owned by Renault, Renault Maroc, Fiat Auto and Peugot, is producing vehicles for both the Moroccan and export markets, with Renault planning to start production of its L-90 vehicle from the end of 2005. In an interview that appeared in the publication ISTITMAR (published by the Moroccan Department of Investment), SOMACA Managing Director Larbi Bellarbi stated the free-trade agreements with Europe and the U.S. are major assets. ….[the trade agreements] should turn Morocco into an assembly site in the automobile sector on an international scale,” he said.

Recognizing the importance of expanding its image worldwide, the Moroccan government is making a concerted effort to promote the strategic advantages it offers to the global automotive industry. In recent years, trade and investment promotion programs have been or will be conducted in the world's major automotive centers in Asia, Europe and Detroit. The next one is scheduled on March 31, 2005 at the Michigan State University Executive Education Center in Troy, Michigan. Speakers include officials from CSM Worldwide (a global automotive forecasting firm), the Original Equipment Suppliers Association, and officials from automotive supplier companies already active in Morocco including Polytech (information available through www.moroccogatewayadvantage.com).

John Sisson, Principal of the site location firm Location Management Services, who is speaking at the March 31 program, suggests that Morocco is an ideal location for US automotive suppliers to locate value added production for their European operations. From my personal observation and benchmarking Morocco against other emerging country locations, I have no trouble in recommending that my U.S. automotive clients include Morocco, with its competitive operating costs, ample supply of labor, free-trade agreements, and strategic location, as one of their evaluation locations. Having free-trade agreements in place with both the U.S. and European Union gives it a competitive advantage that very few other locations have. In fact, Morocco really is the Gateway Advantage,” he says.


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