Ten years ago, businessmen took the Czech Republic as the perfect country for assembling products – the local price of labour was very low, the land was cheap and Czech workers were hardworking. Recent examples of companies show that the Czech Republic has already crossed the threshold of “the assembler of Europe”. Research and development centres are also being created next to them.
This is a warning signal for the surrounding countries: beware, the Czech Republic is already beginning to excel in the field of technologies and products with high added value and is starting to be competitive. Our research centres are being built here by scientists from national university departments and laboratories, as well as by companies such as Foxconn, Honeywell, Lear and Siemens. A year ago it was different. Analysis by Raiffeisenbank showed that the Czech Republic largely exported unfinished products at the time, from where they often went through Germany to finish production and on to demanding markets including the US. These products were thought up, drawn, tested and perfected elsewhere.
“You’re politically stable”
Constantin Kinský, the Director of the French-Czech Chamber of Commerce, recently nicely outlined the situation for the E15 website. He says that the Czech Republic, at least in French eyes, is losing its poor reputation. “In recent years, the French have appreciated the political stability of the Czech Republic. The Czech Republic is one of the few Central European countries that has remained purely democratic in the region. There is quite a lot of interest from the small and medium-sized business segment, and every two to three weeks there is someone who wants to operate here in some form.” According to Kinski, the Czech Republic is the ideal platform for French companies to serve the most interesting parts of Central Europe. In addition to political stability, the Czech Republic’s location is also advantageous for being an entry portal to Central Europe. The French also appreciate the quality of managers and suppliers. On the contrary, according to them, Czechs lack humour. According to Kinsky, Czechs are too pragmatic; they have concepts and plans and thus are a bit dry.
The government of the Czech Republic is also aware of the improving situation here. Prime Minister Bohuslav Sobotka said this year that the Czech Republic cannot be just a production base for the European market in the future, but it must also be a place of technological progress where innovation is being created. The government has therefore launched a discussion on changing their strategy on supporting foreign investment. The effort to promote quality education is related to this of course.
In this context, we are now talking about the so-called Industry 4.0 or the fourth industrial revolution. This is an indication of the current trend of digitization and the associated automation of production and changes in the labour market that it brings. The basic vision of the so-called Fourth Industrial Revolution dates back to 2011, where the entire document was introduced at the Hannover Fair in 2013. It was attended by leading German engineering and electro-technical companies such as Siemens, Bosch and Volkswagen, which have branches and business partners in the Czech Republic who are directly affected by the project. The government is also taking the fourth industrial revolution seriously by approving the Ministry of Industry’s National Industry 4.0 Initiative last year. This is aimed at preparing companies in the Czech Republic to be competitive in the upcoming era of the fourth industrial revolution.
Small smart factories
A test centre for Industry 4.0 was recently established in Prague where robots are working to help smaller companies in particular. It was founded by Czech Technical University in Prague (ČVUT), the Brno University of Technology, Siemens, Škoda Auto, the Czech Chamber of Commerce, the Confederation of Industry of the Czech Republic, innovation centres in the Central Bohemian and South Moravian regions and several other companies. Businesses will be able to take advantage of the so-called Testbed for Industry 4.0 to test production in smart factories before full implementation. The whole idea also has its opponents. “Politicians are advocating for the Industry 4.0 Initiative to redistribute new billions and fill new clerical posts. This would be enough but they are using innovative sticks to trip us up and they should forget about cheap and short-sighted populism,” said Lukáš Kovanda, chief economist of Cyrrus, in commentary on iDNES.cz
Siemens and the others
However, back to projects which have gone without the support of this programme for now. The engineering company Siemens in the Czech Republic is modernizing its existing plants and is building a new centre for developing electric motors. In the next seven years, these development programs should represent an investment of more than seven billion crowns and should generate 1,800 new jobs, one third of which will be related to research and development and managerial positions. Honeywell also employs 1,500 top scientists and engineers in Brno, making it the largest development centre of the global concern in Europe.
The Czech Silicon Valley
There are several scientific and innovation centres in a corner of a triangle known as the Czech Silicon Valley, east of Prague. The state-of-the-art EMI Beamlines laser is located in Dolní Břežany. Charles University has partnered with the Academy of Sciences years ago to jointly build a BIOCEV Biotechnology and Biomedical Centre in Vestec. It has been operating for almost two years, with 420 people working there, including scientists, technicians as well as students from the Czech Republic and abroad. “200 scientific publications are produced annually and we are educating dozens of PhD graduates,” said Petr Solil from Marketing. And the InnoCrystal innovation centre in Zlatničky is focused on biotechnology once again, which, according to its representatives, has an enormous potential that is still not utilized in the Czech Republic.
And Czech companies are also carrying out research
We will leave the transnational giants for a while; Czech companies are thriving too. Alukov, the traditional Czech manufacturer of roofing terraces, swimming pools and whirlpool baths in Orli u Chrudim, built its research and development centre with the help of European subsidy funds. It serves to develop and modernize roofing systems, test new technologies and materials, and test the products and materials used. One of its main objectives is developing large-scale telescopic devices.
However, be careful, there are two sides to every coin. The fact that Czech companies want to place their brains in the Czech Republic does not necessarily mean their hands will not be needed anymore. ”Many people in the Czech Republic say they want to skip building assembly lines and immediately opt for much nicer research and development centres instead. But we often forget that everything starts with the assembly line. If the assembly line goes to another country, we can also forget about the R & D centres in the future,” noted Bert Hesselink, Head of Industrial and Logistics Department.