Morocco tempts with lower costs

 - July 21, 2010, 9:16 AM

Ahmed Reda Chami, Morocco’s minister of industry, trade and new technologies, said here in Farnborough that a European company with 10,000 employees, ranging from clerical workers to senior directors, would save approximately $363 million per year by moving its operation to his country. He pointed out the benefits of establishing factories there, including lower labor costs and the proximity to European markets. Chami’s figures take into account labor, taxes and transportation, which is expected to be expensive because of the distance to major aerospace hubs.

Morocco imposes no corporate tax in free zones during the first five years of a company’s operations; after that, the rate is 8.75 percent, he said. Local laws guarantee total intellectual property warranty, and, Chami said, for technical training, the country is creating a specialized aeronautical institute with support from the French UIMM metal industry lobbying group. Standard & Poors upgraded Morocco to “investment” in March, he added.

Morocco is close to Europe– just nine miles across the Strait of Gibraltar from Spain, which enables just-in-time deliveries to European countries. The cultural proximity is also strong, Chami said, with “laws and business practices being similar.” He also noted that Tangier’s port is poised to become the largest in the Mediterranean.

Today, 90 companies–70 percent no more than five years old–are actively involved in aeronautics in Morocco, which translates into 7,000 jobs. Total revenues amounted to $777 million last year. Chami said estimated development potential for the aeronautical sector in Morocco is $518 million in annual sales and 15,000 new jobs by 2015.