Is Greece’s Bad Economy Good for Business?
The effect of Greece’s debt on the European markets and economy is hard to miss, and the fallout in the United States has been obvious to investors for years. The Greek debt crisis has changed the way companies do international business, with many limiting their exposure while others capitalize on low labor costs.
Citigroup (NYSE:C) is one company packing in some of its operations. The bank announced that it will close nearly have of its branches in the country, focusing on locations in Athens and Thessaloniki. Understandably, the lending environment has been turned on its head since the crisis began.
On the other hand, struggling computer manufacturer Hewlett-Packard (NYSE:HPQ) will be using a port in Greece as a transport hub between Europe and North Africa. Unilever (NYSE:UL) intends to move some of its manufacturing capacity to Greece from elsewhere in Europe, as well. High unemployment — currently over 25 percent — has driven labor costs low enough that performing logistics in the country is becoming a financially attractive reason to move business there.
Reports indicate that the cost of labor in Greece dropped as much as 14 percent between 2010 and 2011, with non-salary labor palling as much as 19 percent over the same period. Businesses that already operate in the region, such as IKEA, have cut wages because of the labor environment.
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