Over the last 20 years, we have seen several examples of European companies, and some american too, moving the whole company or a part of the compay to a south american country. Mainly because of cheaper labor, but also due to less strict regulations or cheaper shipping costs. Now another company have joined this trend. The large danish costume company Tyroler kostumer, a company specialized in all types of customes related to the Tyrol and the popular bierfest have just annonced, that they are shutting down all of their production in Denmark and moving that part of the company to Santiago in Chile. At the same time they are increasing production by around 80%. We talked to James Fastelavn from Tyroler Kostumer and he explained that it was mainly due to 2 reasons why decided on such a big change. The first being a much cheaper production cost. While an employee in Denmark gets around 2250.000, plus paid vacation and pension, an employee in Santiago gets about a 1/10 of that. So in saleries alone, that is a huge saving. The second reason is that the materials used for creating the costumes are much cheaper in Chile too, and of a really good quality. As Tyroler Kostumer are selling their products to several countries around the world, it makes a lot of sense to move the production to Chile. Everything else will still stay in Denmark. That means company management, marketing, research and all of that. Even the website www.tyrolerudklaedning.dk will stay the same. Tyroler kostumer is just one example of a company who are gaining a lot by moving a part of their company to chile. The same goes for several other companies in high salery countries. They get some good and qualified work for a lot cheaper price than where they are originally based. The people in Chile often don’t mind at all. There are still many places in the country where it can be hard to find permanent work, so when a new factory opens op, it often means a lot of new jobs too.
The website Catchup recently wrote an article about how larger companies are moving from the expensive countries to cheaper ones. This article mainly deals with stuff such as saving taxes, but also in parts about cheaper labor or production materials. One example are the company Brænde that moved in order to cut their taxes down with 80%. In several european countries companies pay 30-40% of their income in taxes, so in order to get that amount lowered they ofte move to another contry with a lower taxes, cheaper wages and less restrictions. It’s something we have seen a lot over years, but it seems to be a little more common these days, than it was 10 years ago.