iron.jpgThey could say it louder but not any clearer. Braun, the German appliance maker, plans to shutter its loss-making factory in Barcelona, Spain by 2008 and shift production of irons to China where labour is much cheaper.

According
to a survey commissioned by Braun, labour accounts for 31% of direct
production costs at the Barcelona factory and costs keep rising. By
transferring production to China, where labour costs are just 19% of
those in Spain, the company hopes to make the irons business
profitable. The plant's other product line is food mixers but that is
going to be transferred to eastern Europe, where labour costs are half
what they are in Spain. Around 700 jobs will be lost overall.

The
fiercely nationalist Catalan regional government sees the closure as
another example of the pernicious effects of globalisation on the local
economy. But as making irons is hardly a strategic industry, there
probably isn't much it can do to counter this text-book example of the
theory of comparative advantage.

“Wages in this country are just not competitive with those of China,” laments a government official.

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