The Czech Republic, , and are expected to become major auto export hubs and centers for auto electronics suppliers, feeding local and Western European markets. But labor markets are tightening, wages are rising and suppliers must consider looking to new regions for production.

Johnson Control's Skopje plant has an assembly-and-test line for fitting electronic components to PCBs that go into car instrument clusters. Pilot production began in December and six assembly lines will be in full operation by the end of 2009, he said.

's location is favorable because it is near the company's other CEE operations. The plant supplies the company's factory in Namestovo, . PCBs are sent by road up through daily, with minimal freight costs, arriving in one day later, Simon said.

Simon sees possible synergies with the company's Bulgaria R&D center, which develops embedded software solutions that are integrated into instrument clusters and multimedia systems. Skopje is 200 kilometers (120 miles) from the R&D center in 's capital Sofia.

The Macedonian government is eagerly accommodating foreign investors, offering low tax rates and other financial incentives to set up operations.

Overall, 's operational costs are comparable to and . "Nevertheless, the increase in costs over the next couple years will be significantly lower in than in other [CEE] countries,