Earlier this month, semiconductor company TE Connectivity announced plans to open a new $15 million plant in Morocco. Once its new factory is complete, the Swiss corporation will operate four manufacturing facilities in the North African nation. The company will establish a new facility in Tangier dedicated to producing sensors and communication systems.
TE Connectivity’s new Tangier facility will employ 500 people once active.
TE Connectivity’s Moroccan Plants
In 2014, Morocco’s Ministry of Industry launched an initiative called the Industrial Acceleration Plan (IAP). The agency established the IAP to bring 500,000 automotive, aeronautics, agricultural, and textiles positions to the North African kingdom. Thus far, the program has been quite successful as it created 405,496 new jobs.
In particular, the IAP has created 116,611 automotive sector positions, a development TE Connectivity has had a hand in.
In 2016, the semiconductor maker established two facilities in the Moroccan capital. The company built one factory to manufacture automotive sensors while the other creates plastic injection systems and assembling technical wiring and components. A year later, the corporation established a third plant responsible for fabricating molding and assembling truck sensors.
Why TE Connectivity is Wise to Establish Production Facilities in Morocco
TE Connectivity is very shrewd to continue establishing production facilities in Morocco. For one thing, the North African nation offers several incentives to manufacturers that open factories within its borders. Indeed, Oxford Business Group notes the Moroccan government offers a five-year tax exemption to corporations that set up shop in certain areas.
Furthermore, the Swiss components maker can benefit from establishing a supply line in North Africa rather than China. Although China is well known for being a manufacturing hub, the region has faced significant issues in recent years. Until last November, the Sino government engaged in a multiyear trade war with Washington. As a result, several semiconductor companies with production facilities located in China saw profits suffer due to unexpected tariffs.
More recently, the outbreak of the COVID-19 coronavirus in China has prompted Beijing to suspend manufacturing activity. As a result, companies like Apple, Nintendo, and Tesla are dealing with potential production shortages and revenue shortfalls.
Conversely, TE Connectivity’s efforts to build up a Moroccan centered manufacturing infrastructure offer it a degree of protection from Sino economic headwinds.