7 reasons why Bulgaria is emerging as a vital manufacturing hub

Emerging from behind the Iron Curtain in 1989 and joining the EU in 2007, Bulgaria has grown as an important manufacturing hub in South Eastern Europe. Here’s why having access to manufacturing facilities in the country is a smart idea for OEMs looking to shore up supply chains and bridge the gap between East and West.

Why Bulgaria?

For millennia, Bulgaria has been recognised and exploited for its strategic position on the edge of Europe. It has been a vital trading post and a significant theatre for ongoing power struggles between the East and West.

But happily, in 2024, Bulgaria’s position as a trading hub is once again in the ascendant, with a skilled and educated population building a powerful manufacturing sector in places such as Plovidiv, part of the large Trakia Economic Zone (TEZ).

Where in the world is Bulgaria?

Manufacturing operations are ramping up in scope and significance across the country :

“According to InvestBulgaria, 80% of sensors in European cars are now made in Bulgaria. Melexis launched R&D facilities in Sofia to combat the effects of global chip shortage and Schneider Electric announced a new big investment in its smart factory in Plovdiv.” 

Source: The Recursive 

Here’s what's driving the surge:

7 reasons why Bulgaria has emerged as a vital manufacturing hub

1. Strategic position

Bulgaria's strategic position in Southeast Europe offers seamless access to both European and Asian markets. This location is ideal for ensuring timely delivery of components and finished products within the EU and to the East, facilitating faster time-to-market. The country boasts a robust transport infrastructure, including major Black Sea ports, international airports, and an extensive network of road and rail systems, which support efficient logistics and supply chain management.

2. Competitive labour costs

According to the Euro Stat, Bulgaria offers some of the most competitive labour costs in Europe, making it an attractive option for cost-effective manufacturing without compromising on quality. The country has a well-educated and skilled workforce (many of whom are English-speaking), particularly in technical and engineering fields, ensuring high standards of manufacturing. 

Interestingly, Bulgaria has a strong tradition in electronics (dating back to the Cold War when it supplied computer chips to the Soviet Union). This tradition has evolved with the country to support a new entrepreneurial spirit in the electronics and manufacturing sector, with many technical universities producing highly motivated graduates ready to help with innovation.

3. Favourable business environment

Bulgaria’s tax regime has many benefits for manufacturing companies. Currently, it boasts a flat corporate tax rate of 10%, intended to stimulate continued internal investment in facilities and capabilities. Various government incentives are in place for foreign investors to bring capital into the country and take advantage of its strategic location to broaden their access to key markets. 

4. EU membership

Bulgaria’s EU membership offers all the advantages of access to the single market with reduced trade barriers, facilitating smoother business operations across Europe. Manufacturing processes meet high EU quality standards, reducing trade friction and the risk of non-compliance and product recalls.

5. Developing industrial zones

Bulgaria has established several industrial and economic zones designed to attract foreign investment and support manufacturing operations.

These zones come with ready-to-use infrastructure, including modern facilities, utilities, and transport links. For instance, the Trakia Economic Zone (TEZ) is one of the largest in Bulgaria, offering comprehensive infrastructure and services to businesses, including pre-built facilities and access to utilities.

Additionally, industrial zones offer incentives such as tax breaks, grants, and support services, making it easier for companies to scale their operations and improve efficiency without significant capital investment.

When in 2000 we chose the TEZ as the location for our plant, several factors were taken into account. Firstly, the availability of highly qualified personnel who have technical education, the presence of suppliers for future production, the competitive cost of labour and the opportunity to conquer new markets

Radoslav Koshkov, Vice President LifeSpace Business, Schneider Electric

6. Innovation and technology

The presence of industry clusters in Bulgaria fosters collaboration and innovation. These clusters bring together companies, research institutions, and other stakeholders within specific sectors such as automotive, electronics, and IT. 

Bulgaria’s growing investment in R&D promotes innovation in manufacturing processes, aiding in the development of advanced products. Access to technology parks and incubators supports continuous improvement in facilities and capabilities.

7. Cost-effective utility services

Bulgaria offers relatively low electricity costs for businesses compared to the EU average, which helps maintain competitive production expenses. Beyond this, the National Recovery and Resilience Plan ('NRRP') of Bulgaria aims to invest in renewables, targeting 30% renewable energy by 2030. The Bulgarian climate lends itself well to a solar future. Significantly, the Trakia Economic Zone is looking to become completely carbon neutral by 2040, a pace of change which could be accelerated with more investment and pressure from external players. 

For OEMs in the electronics industry looking to shore up their supply lines and distribution capabilities in the EU, choosing a manufacturing partner with a footprint in Bulgaria makes a lot of sense. 

For more information on 7 reasons why Bulgaria is emerging as a vital manufacturing hub talk to ESCATEC Mechatronics Ltd