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

  • Jesús F. Lampón

    ()

    (University of Vigo & REDE)

  • Santiago Lago-Peñas

    ()

    (University of Vigo & REDE & IEB)

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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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2013/16.

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Length: 27 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:ieb:wpaper:2013/6/doc2013-16
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  1. Marie-Claude Belis-Bergouignan & Gerard Bordenave & Yannick Lung, 2000. "Global Strategies in the Automobile Industry," Regional Studies, Taylor & Francis Journals, vol. 34(1), pages 41-53.
  2. Leo Sleuwaegen & Enrico Pennings, 2006. "International Relocation Of Production: Where Do Firms Go?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(4), pages 430-446, 09.
  3. Motta, Massimo & Thisse, Jacques-Francois, 1994. "Does environmental dumping lead to delocation?," European Economic Review, Elsevier, vol. 38(3-4), pages 563-576, April.
  4. Thomas H. Klier & James Rubenstein, 2006. "Competition and trade in the U.S. auto parts sector," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Jan.
  5. Yannick LUNG (GRES-IFReDE-E3i and GERPISA), 2003. "The changing geography of the European automobile system," Cahiers du GRES (2002-2009) 2003-10, Groupement de Recherches Economiques et Sociales.
  6. 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.
  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, vol. 25, pages 157-176.
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