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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.

Suggested Citation

  • Lampón, Jesús F. & Lago-Peñas, Santiago, 2013. "Factors behind international relocation and changes in production geography in the European automobile components industry," MPRA Paper 45659, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:45659
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    References listed on IDEAS

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    Cited by:

    1. Vincent Frigant & Martin Zumpe, 2014. "The persistent heterogeneity of trade patterns: A comparison of four European Automotive Global Production Networks," Working Papers hal-02150622, HAL.
    2. Eric Rugraff & Magdolna Sass, 2016. "Voting for staying. Why didn’t the foreign-owned automotive component suppliers relocate their activity from Hungary to lower-wage countries as a response to the economic crisis?," Post-Communist Economies, Taylor & Francis Journals, vol. 28(1), pages 16-33, January.
    3. José Quesada-Vázquez & Juan Carlos Rodríguez-Cohard, 2019. "Subsidiary upgrading and regional innovation policies: The case of Valeo lighting Systems Spain and the Andalusian Plastic Innovation Centre," Environment and Planning C, , vol. 37(5), pages 908-928, August.
    4. Vincent FRIGANT & Martin ZUMPE, 2014. "Are automotive Global Production Networks becoming more global? Comparison of regional and global integration processes based on auto parts trade data," Cahiers du GREThA (2007-2019) 2014-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).

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    More about this item

    Keywords

    Production relocation; automobile components sector; geography; Spain; Europe;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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