ManufacturinginRomania-081125 (1)

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Manufacturing in

RomaniaAda Bacalum & Alina Ionita

Finpro Romania

September 2008


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Romania

Quick facts:

- population: 22, 2 mio- area: 238,391 sq km

- biggest cities: Bucharest

(population: 2,1 mio,

0.8% of Ro area)- inflation: 6.6 (2007)

- EU 2007 / euro est. 2012

- avg. (gross) wages 440E (2007).

- social costs for employer:

27.75- 39.85%

Key Industries:

-Energy industry

-Manufacturing industry

-Construction industry

-Telecommunication industry

Logistics and infrastructure:-The present state of the infrastructure and services, which can be qualified as

having a poor quality and not responding to the present needs, is a major obstacle

to social cohesion and economic development. It impedes competitiveness, the

transition of goods, labor force, business settlements, investments.

-The upgrading of transport system is considered urgent and requiring huge

investments, but financial constraints require prioritization based on straight

objectives.Materials: steel production amounted 7.5 mill tons in 2007 and it is forecasted to

reach 8.8 mill tons in 2010. The biggest steel producers in Romania are:

AcelorMittal,Mechtel.

2006 2007e 2008f 2009f 2010f

Nominal GDP (EUR, bn)

Per capita GDP (EUR)

Real GDP, yoy (%)

Inflation (CPI), yoy, avg. (%)

Unemployment rate (%)

Current account balance/GDP

(%)

FDI/GDP (%) 9.3 6.0 4.8 4.1 3.6

-15412812197

4,500 7,260

7.7

6,570

4.9

5,830

5.4

4.7

5,390

5.7 5.0

6.6

4.3

5.4

5.8

4.2

4.4

-14.5 -14.8

4.2

-14.5

3.7

4.1

-14.0-10.3


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Availability of labour force

Recruitment

The recruitment process takes longtime in Romania (2 weeks-one monthor more). In Romania, most of thepeople have higher education and is agreat demand of jobs, especiallytechnical and economic jobs.

The recruitment process is usually

made using recruitment agencies orInternet recruitment pages.

There are also many job fairs especiallyfor new-graduated ones.

Region %

Bucharest 2

South-West 6.8

North-East 5.9

Vaslui County

( North-East)

11 (max)

Timis County

(near Hungarian

border)

1.6 (min)

In 2007, the budget for education was 5.2% of the GDP, but much of it waswasted uselessly on supporting what is called "useless teaching".Higher education in Romania is provided by universities, polytechnic, vocationalschools, and other institutes.

There are 6 Technical Universities in Romania which are accredited.

There are 24.054 students which graduated Technical universities.

The largest technical university in Romania is the Polytechnic University of

Bucharest. It is one of the most difficult faculty of the educational system.Studying technical universities, English language is compulsory and sometimes,French or German.

More than 90% of Romanian young people speak English, more than 47% ofRomanian people speak at least one language, 26% speak two languages and6% three languages.

Engineering became unpopular after many industries closed down (1990), but,

became again hugely popular in the early 2000s, after the new boom in industry(communications, metal industry, chemical industry, cement etc.) andconstruction.

Unemployment

Labor Productivi ty:

GDP/medium number of employees: 121 bn euro/4.7 mill employees=

25.7 bn euro/employee

Number of employees in manufacturing: 24.2 bn euro/1.46 mill =16.57 bn

euro/employee


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Wages, social costs and taxation

Type %

Social cost for

employerMin - 27.75 % 25.95 %

(as 01.12.2008)

Max - 39.85% 38.05%

(as 01.12.2008)

Corporate tax 16%

Income tax 16%

VAT 19%

Social costs & taxationWages

Regional differences in salaries

Bucharest and Ilfov: with 1/3 more than the medium salary

North-East: 86.7% of the medium salary

South-West: 99.5 % of the medium salary

Center: 91.3% of the medium salary

Source: Information received from HR companies, Adecco and Aims

TypeAvg. salary

(gross Eur)

Welder

CNC programmerMetal worker

Labourer

Project manager

735 EUR

515 EUR

690 EUR

405 EUR

845 EUR


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Investment Incentives

Several different types of incentives: grants, financial allocations, tax redemptions

Both national and regional level incentives. Local incentives usually tax holidays on

property taxes or cheap land and connections to local infra

Incentives to manufacturing to both large companies (max 5 Meuro) and to SMEs

(max 1,5 Meuro)

Investments to more environmentally friendly production can have separate funding

Incentives for Micro-Enterprises:

Starting from 1 January 2007, several amendments are brought to the micro-companies taxation regime.

Thus, the companies that have opted for the micro-company regime (annual turnover up to EUR 100,000

and between 1 and 9 employees) must fulfill a new condition, namely they have to derive more than 50%

of their income from activities other than

consultancy and management.

Also, the income tax rate is 2% of revenues earned in 2007, 2.5% of revenues earned in 2008 and 3%

of revenues earned in 2009. The income tax is payable each quarter, by the 25th of the month following

the quarter for which the tax is paid.

If during a fiscal year a micro-company derives revenues higher than EUR 100,000, it becomes a profit

tax payer starting from the quarter in which the limit was exceeded; its first tax computation should include

all revenue and expenditure from the start of the fiscal year.


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EU funds are a type of public support. As a result, EU funding is regulated by state aid thresholds. Focus isplaced on SMEs that are regarded as the most flexible type of company, likely to increase the

competitiveness of EU products.

The following activities may benefit from EU funding: acquisition of fixed assets (buildings, equipment);

acquisition of intangible assets (patents, trademarks and know-how); research & development; IT

development; human resources; participation in fairs and exhibitions; standardization and certification of

companies.

ALLOCATION of EU FUNDS 2007-2013 (millions Euro)

Operational Program Allocated Funds EU Funding National Funds

SOP Competitiveness 3,011 2,554 457

SOP Development of

Human Resources

4,089 3,476 613

SOP Environment 5,611 4,512 1,098

SOP Transport 5,698 4,566 1,132

Regional Operation

Program

4,383 3,726 657

EU Funding


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Key locations Romanian manufacturing

companies (national companies)


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GERMANY

CONTINENTAL AUTOMOTIVE PRODUCTS (Timisoara, Sibiu)

CONTINENTAL AUTOMOTIVE SYSTEM tyres, software

CONTI TECH

LISA DRAXLMAIER (Pitesti, Satu-Mare, Timisoara) cable and wires

PHOENIX AG - (Carei) - rubber car parts

KROMBERG & SCHUBERT - (Timisoara)-car cables

DAIMLER-CHRYSLER (Cugir) gear boxes

INA SCHEAFFER (Brasov) bearings;

HONSEL- (Slatina)- casting alloys

LEONI WIRING SYSTEMS - (Arad, Bistrita) wires&cables

BAUMEISTER & OSTLER - (Arad) aluminium and plastic car parts

SIEMENS AUTOMOTIVE (Timisoara, Iasi ) software

SCHLEMMER (Satu Mare)

MARQUARD SCHALTSYSTEME (Sibiu)

HELLA (Timisoara) electronics

FRANCE

MICHELIN - (Floresti, Zalau, Bucharest) - tires

VALEO - (Pitesti) - electric wiring systems

SNR ROULEMENTS - (Sibiu) - bearings

FAURECIA - (Sibiu) - seats covers

AUTO CHASSIS INTL. (Mioveni) - auto chassis

RENAULT-NISSAN (Pitesti) gear boxes

Key locations: brand owners


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JAPAN

SUMITOMO ELECTRIC WIRING SYST. - (Hunedoara, Deva, Orastie) - wiring systems

YAZAKI CORP. - (Ploiesti, Arad) - wiring systems

KOYO SEIKO - (Alexandria) - ball bearings

TAKATA CORP. - (Arad) - airbags and steering wheels

CALSONIC KANSEI (Poiesti) - air condition and cooling units

USA

JOHNSON CONTROLS - (Mioveni, Ploiesti) - seats

HONEYWELL GARETT - (Bucharest)- spare parts for turbochargers

ALCOA FUJIKURA INC. - (Chisineu-Cris and Caransebes) - wire harnesses

DOW AUTOMOTIVE - (Pitesti) - chemical compounds

BORLA ROMCAT - (Curtea de Arges) - mufflers, catalizersLEAR CORPORATION - (Pitesti) - wiring systems

DELPHI (Iasi) car components

DELPHI PACKARD - (Sannicolau) - wiring systems

TRW (Timisoara) steering wheels

DURA AUTOMOTIVE - (Timisoara)

ITALYMAGNETTO GROUP - (Dragasani) - wheels

MOMO - (Brad) - steering wheels

PIRELLI - (Slatina) steel cord and tires

Key locations: brand owners

ManufacturinginRomania-081125 (1)

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