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BERLIN — Ukraine and Romania are the next hot destinations for electronics manufacturing, according to a recent report on outsourcing in Central and Eastern Europe by Technology Forecasters Inc.Ukraine's labor costs are roughly one-third of Central Europe's and it has engineering talent and no labor shortage. Ukraine's Transcarpathia region, near its border with several Central European countries, already hosts two of the largest EMS companies -- Jabil Circuit and Flextronics. They use their nearby Hungary operations, a few hours away by road, for support.



But concerns include corruption and protection of intellectual property.



"There is a huge corruption problem in the Ukraine and Russia," one unnamed senior manager of an electronics company told Charlie Wade, author of the report. "This is just the business culture. To operate in these areas American companies must learn that this is the way of business and accept it if they wish to participate."



Romania was selected as the second most desirable location for a low-cost manufacturing operation in Eastern Europe. "We are operating in Romania nearly at the same cost level as we see in China, if you look at the total landed cost basis," said a senior EMS executive.



Flextronics, Celestica, Elcoteq, and Benchmark currently run Romanian facilities. Nokia, in a loudly controversial move, recently relocated a plant from Bochum, Germany to a site near the city of Cluj Napoca, Western Romania.