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Factors behind international relocation and changes in production geography in the European automobile components industry

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  • Lampón, Jesús F.
  • Lago-Peñas, Santiago

Abstract

This article analyses business strategies in the automobile sector to determine the key factors behind production relocation processes in automobile components suppliers. These factors help explain changes in production geography in the sector not only in terms of location advantages but also from a perspective of corporate strategies and decision-making mechanisms within firms. The results obtained from an empirical study in Spain during the period 2001-2008 show how the components sector has used relocation to meet the requirements for efficiency imposed by automobile manufacturers. The search for lower labour costs, production concentration and specialisation in order to obtain economies of scale and improved productivity are found to be the main factors determining relocation in the sector. These processes are facilitated by the operational flexibility of the multinational firms that dominate the sector which allows them to transfer resources internationally. Lean supply, technological requirements for production processes and the integration of production plants in the institutional environment are the main barriers to such processes of mobility, and may also determine the geographical destination of migrated production.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45659.

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Date of creation: 29 Mar 2013
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Handle: RePEc:pra:mprapa:45659

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Keywords: Production relocation; automobile components sector; geography; Spain; Europe;

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  1. Leo Sleuwaegen & Enrico Pennings, 2006. "International Relocation Of Production: Where Do Firms Go?," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 53(4), pages 430-446, 09.
  2. Thomas H. Klier & James Rubenstein, 2006. "Competition and trade in the U.S. auto parts sector," Chicago Fed Letter, Federal Reserve Bank of Chicago, Federal Reserve Bank of Chicago, issue Jan.
  3. Wan-Wen Chu, 2011. "How the Chinese government promoted a global automobile industry," Industrial and Corporate Change, Oxford University Press, vol. 20(5), pages 1235-1276, October.
  4. Marie-Claude Belis-Bergouignan & Gerard Bordenave & Yannick Lung, 2000. "Global Strategies in the Automobile Industry," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 34(1), pages 41-53.
  5. Motta, Massimo & Thisse, Jacques-Francois, 1994. "Does environmental dumping lead to delocation?," European Economic Review, Elsevier, Elsevier, vol. 38(3-4), pages 563-576, April.
  6. Yannick LUNG (GRES-IFReDE-E3i and GERPISA), 2003. "The changing geography of the European automobile system," Cahiers du GRES, Groupement de Recherches Economiques et Sociales 2003-10, Groupement de Recherches Economiques et Sociales.
  7. Jean-Bernard LAYAN & Jean-Bernard LAYAN, 2007. "Les Nouvelles Configurations De L'Espace Automobile Méditerranéen," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 25, pages 157-176.
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Cited by:
  1. Frigant, Vincent & Zumpe, Martin, 2014. "Are automotive global production networks becoming more global? Comparison of regional and global integration processes based on auto parts trade data," MPRA Paper 55727, University Library of Munich, Germany.

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