Production in Europe: “Made in Portugal” is booming

Portugal has risen to become Europe’s largest bicycle manufacturer. Other industries are also showing increasing interest in production in the country – especially as deliveries from Asia continue to falter.

If you want to meet a lucky person these days, you should make an appointment with Pedro Conceição. Then the man leads through the hall of his bicycle factory east of Porto. He weaves his way through boxes full of bicycles, and the laws of gravity seem to be suspended from the corners of his mouth. “In just four years, our turnover has increased: from three to 67 million euros,” he says.

His people produce wheels on running lines. The demand – especially from Germany and the Netherlands – is so high that he can hardly find any more employees. There are a total of 60 bicycle companies around Porto. The entrepreneur says: “More and more parts are coming back from Europe. There are always companies that want to invest in Portugal, like the German company Bosch recently.”

suppliers nearby

Experts speak of “nearshoring”: The corona pandemic has repeatedly torn supply chains. Some companies are now relocating production to Europe. Luís Castro Henriques, President of the Portuguese investment agency AICEP, says: “German companies have noticed: I need suppliers in the Vicinity. With Covid, investment requests increased significantly.”

The bike manufacturers in particular are benefiting in Portugal. Many speak of reindustrialization. A whole cluster of suppliers and manufacturers has emerged near Porto. Initially called “Bike Valley”, now “Bike Value”, around 60 companies produce here.

Including “Carbon Team”, a German-Taiwanese-Portuguese cooperation. They manufacture carbon wheel frames that weigh 770 grams each. They want to increase production from a few thousand to more than 50,000 frames a year over the next four years. The parts are baked in one piece in large ovens, which was unthinkable just a few years ago: too labor-intensive, too expensive. Today it is said here: The production pays off. Portugal benefits from the delivery problems of Asian competitors, young people who are enthusiastic about technology and low wage costs.

Lots of regenerative energy

The employer-oriented Institute of the German Economy (IW) recently examined which factors are important for industrial companies when choosing a location. In an international comparison, Portugal achieved an above-average value, especially in the “Costs” area. This is probably partly due to low energy costs: Portugal obtains up to 80 percent of its electricity from renewable sources. But also due to low wages: according to figures from the Federal Statistical Office, hourly labor costs in Germany are EUR 37.30 – in Portugal EUR 14.70.

In the IW ranking, the country also achieved above-average values ​​in the “State” category. The efficiency of governments, entrepreneurial freedoms and the rule of law were evaluated here. A secure, trustworthy environment is particularly important for IT companies. Experts speak of “friendshoring”.

Software preferably from Europe

Rui Cordeiro is a director of Critical TechWorks, a joint venture between BMW and a Portuguese IT company. They are currently looking for 400 employees – per year. “Many European companies prefer to develop their software in Europe rather than outside. This trend has been around for a number of years. And now, with the war and Covid, it’s getting worse.” Portugal benefits. 70,000 visitors recently came to the industry meeting, the Web Summit in Lisbon.

Thorsten Kötschau, board member of the German-Portuguese Chamber of Industry and Commerce, also confirms increased interest in Portugal. “In recent years, Portugal has been able to position itself in various areas both as an investment location and as a supplier for German companies. Investments by German companies in IT hubs in Portugal and shared service centers in other areas such as finance and human resources development are very prominent.” “Go west” is apparently the motto of many companies that have discovered the country in south-western Europe.