Czech Republic ranks fifth overall in Global Manufacturing Risk Index

The Czech Republic ranked as the best country in Europe and fifth overall globally in this year’s annual Global Manufacturing Risk Index compiled by global commercial real estate services firm Cushman & Wakefield.

Since first being included in the index in 2016, the Czech Republic has regularly ranked among the top manufacturing destinations among the 47 countries covered in the annual report. The country first climbed to the top of the European ranking in 2020 and managed to defend the national title this year as well. It ranked fifth overall in terms of the global index, surpassed by China, India, the United States and Canada.

Jiří Kristek, who heads the Industrial and Retail Warehousing section of Cushman & Wakefield’s Czech branch, said that the fact the country holds this position is “very good news for the whole economy” and “shows the attractiveness of the country for new construction”. Several factors contribute to this, according to Mr Kristek, most importantly Czechia’s strategic location within Europe, its skilled workforce and stable economic environment.

The report assesses countries based on four criteria. The first is “Bounce Back”, which looks at the projected ability to restart manufacturing operations following the impact of the coronavirus pandemic. The second is “Conditions”, which compares business environments, including the availability of talent/labour and access to markets. The third relates to “Operating Costs”, including labour, electricity and real estate. The final criterion looks at political, economic and environmental risks.

Compared with last year, Czechia improved its position in the “risk” criterion, ranking fifth overall. In terms of its ability to recover from the coronavirus crisis, the country ranks within the second quarter of the country list, with China, Ireland and the Netherlands occupying the top three spots. The same second quarter position was occupied by the Czech Republic also when it comes to the criterion of operating costs. In the European context, Lithuania, Russia, Bulgaria, Turkey and Romania scored higher in this regard.

In its summary of global manufacturing trends, Cushman & Wakefield states that the COVID-19 pandemic highlighted production line and supply chain vulnerabilities. However, climate change, weather-related issues, and geopolitical instabilities also contributed to increased delays and other impediments to global freight shipping, according to the report.

The negative impacts to manufacturers’ margins over the past year have been so severe that, according to Cushman & Wakefield, companies have been forced to implement safeguards to their supply chains and production lines.