Ukraine as extended production facility for global car and...
Transcript of Ukraine as extended production facility for global car and...
Ukraine as extended production facility for global car and components manufacturers
Elena Chepizhko
Head of Government & External Relations EUROCAR GROUP
2
Global factors that determine the low cost production
LOW COST
PRODUCTION
Low cost of production
YES
High added value:
YES, > 70%
Low logistics costs
YESPresence of own
manufacturing base /
proximity to sources of raw
materials
YES
High level of employment:
YES, 1=6
Integration into global value
chains
Potential
Ukraine can integrate into the global value chains as the “second China” in low cost production.
Global production using high-tech developments and the world's leading “know-how” under Industry 4.0 approachand participation in global value chains
3
Global automotive trends: Ukrainian choices
Alternative 1Global production using the resource base and low-skilled labor
Added value
up to 14%
Alternative 2Ukraine – the second China in lowcost production
Global production using high-tech developments and the world's leading “know-how” under Industry 4.0 approach
Added value
>50%
* World Bank data 2013
4
extended production facilities built under low costproduction principle
Exemplary case
74 factories around the world
37
5
Ukraine as low cost production site
Developers of automotive technologies (OEMs)
Extended production facilities
Germany
FranceUSA
Japan
China
South Korea
Slovakia
Turkey
China
Czech Republic
Romania
Ukraine?
6
Competitive advantages of UkraineLogistics
kilometers of railways
4
18
11
22k.
170 k.
international transport corridors
seaports (including Crimea)
river ports
kilometers of road
7
Competitive advantages of UkraineCosts
Low cost of labor and resources compared to most European countries
0,197
0,134 0,138 0,131
0,088
0,062 0,067
Germany Spain Portugal Slovakia Czech
Republic
Russia Ukraine
0,04
0,034
0,042
0,037
0,032
0,008
0,026
Germany Spain Portugal Slovakia Czech
Republic
Russia Ukraine
2683
1767
1100
833 825 767
220
Germany Spain Portugal Slovakia CzechRepublic
Russia Ukraine
Average monthly salary in industry(EUR)
Natural gas(EUR/KWh)
Electricity(EUR/KWh)
UkraineInvest data
8
Low rates of main taxes compared to most European countries
Competitive advantages of UkraineTaxation level
30
25
30
2119 20
18
Germany Spain Portugal Slovakia Czech
Republic
Russia Ukraine
19
21
23
2021
18
20
Germany Spain Portugal Slovakia Czech
Republic
Russia Ukraine
Germany Spain Portugal Slovakia CzechRepublic
Russia Ukraine
VAT rates(%)
Corporate tax rates(%)
Income tax rates(%)
0-45 19-4514,5-48
19-25
1513
18
UkraineInvest data
0
500
1 000
1 500
2 000
2 500
Germany Czech Republic Slovakia Turkey Ukraine
Labour Overhead Energy
9
Company data, EUROSTAT http://ec.europa.eu/eurostat/
4x lower than in Germany
Competitive advantages of UkraineProduction costs
Estimated costs per 1 fully built vehicle [EUR]
10
Tolling: Duty free components and technologies import
Competitive advantages of UkraineExport opportunity to the EU
Tolling: Fully built up vehicles (assembly, production of components): Duty Free (tolling/ inward processing) Tax Free Free from Quotas and Licensing
EU Ukraine
DCFTA: Duty free export to EU
from 2022
DCFTA: Duty free import from EU
from 2019
11
Incentives for Electric Vehicles
more than
20%decrease of production and import cost for electric vehicles
due to Ukrainian government incentives
excise duty since 2018after 190 EUR0 EUR
0%
0%
import duty since 2016after 10%
VAT since 2018after 20%
Taxation level for electric vehicles in Ukraine in 20181st step
12
Incentives for Electric Vehicles
pension tax up until 2028on purchase of electric vehicles
0%
0%
VAT and import duty up until 2028on import of spare parts for electric vehicles production
excise duty up until 2028on import of bodies (including cabs) for electric vehicles production
Substantial changes expected within 15-years Electric Vehicles Strategy 2nd step
0%profit tax up until 2032for extractors of lithium, manufacturers of batteries and electric vehicles
0%
Relevant bills
№8159 and
№8160 are awaitingconsideration inthe Parliament
passenger car park (2017)
13
Ukrainian passenger car marketKey figures
2
4%
9,1mio 1
2
3
Ukrainian passenger car manufacturer companies (2016 – 2017)
average level of production capacity utilization(2017)
Eurocar PrJSC
SKD (Skoda)
Bogdan Corporation
CKD (Lada, Bogdan, JAC)
ZAZ PJSC
CKD, SKD (ZAZ)
Ukrainian passenger cars manufacturing capacities amount
to 400 k units per year.
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6 additional working places in supporting industriescumulatively are created by one working place in carproduction
202 cars per thousand people – the number of cars percapita
3 place currently occupies the import of foreign cars indevelopment of negative trade balance of Ukraine
Ukrainian car industryPotential
19,6 years is the average age of car park
0,4%
0,5%
4%
7%
10%
12%
14%
Ukraine
Russia
Poland
Czech Republic
Hungary
Slovakia
Germany
Indicators of the automotive industryWorld vs. Ukraine
15
850,9
470
178,3
159,7
88,5
66,4
7,8
Germany
Russia
Poland
Czech Republic
Hungary
Slovakia
Ukraine
Direct automotive manufacturing employment
(k employers)
4%of the EU’s GDP is the share of the automotive sector
Share in GDP(%)
of the EU employed population is
employed in the automotive sector5,7%
Automotive cluster in the Western Ukraine
16
SlovakiaUkraine
Hungary
Western Ukraine
of the wiring harness for the European automotive industry is produced in Ukraine
75%
Well-known international producers are already here,
that creates the potential for localization of car production
17
Industrial parks - opportunity for high value added production location
Existing preferences:
Already existing facilities and infrastructure
Exemption from a “regional development participation payment”
1
2
Solomonovo Industrial Park – high-techdevelopment and production center, inparticular for automotive industry.
Additional Taxation and Customs preferences upcoming
18
Expansion of global companies to Ukraine
Yazaki-UkraineGroclin-Karpaty
LEONI,Forshner,
ODW Elektrik,Bosch
Jabil
2002 2003 2004 2005 2006 2007 2008 2012 2013 2015 2016 2017
W.E.T. Automotive Ukraine
Kromberg & Schubert Ukraine, Sumitomo Electric Bordnetze
KostalDelphi
Tyco Electronics,Bader
Flextronics
Bader,SE Bordnetze,
Kromberg & Schubert, Fujikura (2 plants),
Prettl Group
LEONI,Bader-Aunde,
Delphi, Fujikura
SEWS Ukraine
Groclin
35plants
>45k
employees
>400mio EUR
investment
19
Skilled labor force
Employees in Ukrainian automotive production
EUROCAR is officially supporting the employment of Ukrainians at VW Group plants and engaged in training and skills matching of
personnel for VW Group
Structure of unemployment by education
State Statistics Service of Ukraine, State Employment Service of Ukraine data
of unemployedUkrainians havehigher education & vocational andtechnical education
80%7.8k.
Ukrainians are involvedin vehicle manufacturing
33k.Ukrainians are involved in electric and electronic equipment for vehicles manufacturing
20
Opportunities for Ukraine
1
2
3
Efficient supply chain
integration due to convenient
logistics
Skilled labor force and lower
(on average) labor costs
compared to European
countries
Government promotion of
electric vehicles and presence
in Ukraine of lithium deposits
used in the manufacture of
batteries for electric vehicles
turning into cost competitive extended production site for global vehicle manufacturers, including those producing electric vehicles.
Using Ukraine can integrate into global value chain,
Eurocar plant video:
Contacts of Eurocar Group :
Tel/fax: +38 (044) 490 10 70, 490 10 80 | Mob.:+380503341438 | E-mail: [email protected] | Elena Chepizhko
Thank you for attention.