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supply chain diversification in CEE 2026

Supply Chain Diversification in CEE: New Resilience Hub for Global Manufacturers

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Valians

Table of Contents

Introduction

Supply chain diversification in Central and Eastern Europe (CEE) is becoming a priority as Europe shifts from efficiency to resilience. Between 2023 and 2026, the European Union (EU) prioritized supply chain resilience at the center of its industrial agenda. According to the European Parliament Research Service (2025), the EU is shifting away from an “efficiency-first” model and encouraging companies to diversify their suppliers, expand regional production, and enhance the overall diversification of supply chain networks.

This shift is reshaping the role of the Central and Eastern Europe region. With strong engineering talent, competitive costs, and fast access to major EU markets, CEE is evolving from a peripheral zone into a strategic pillar of European industry. Its logistics capacity is also growing quickly, which further strengthens the region’s position and highlights the benefits of supply chain diversification for companies operating across Europe.

At Valians International, we support companies rethinking their European footprint. More businesses now see CEE as a key foundation for building stable, future-ready networks and improving supplier diversification strategies. In this article, let’s explore the opportunities and strategic value behind diversification in supply chain decisions in CEE.

CEE’s Strategic Advantages for Supply Chain Diversification

The global supply chain model has changed rapidly over the past few years. Long-distance logistics, single-region dependency, and cost-only decisions no longer provide the stability companies need. As a result, resilience has become a top priority.  

Therefore, supply chain diversification is now a priority for companies operating in Europe. CEE stands out for several strategic reasons that reflect the growing benefits of supply chain diversification in a volatile global economy.

Geographic advantages: Faster access to Europe’s core markets

CEE’s location is one of its strongest assets. The region sits at the intersection of major European trade corridors and allows companies to reach key markets quickly.

From CEE, goods reach Germany, France, Benelux, and Scandinavia in around 24–72 hours. Faster access to Europe’s Core Markets.
From CEE, goods reach Germany, France, Benelux, and Scandinavia in around 24–72 hours.
  • Goods can travel to Germany, France, the Benelux region, and Scandinavia within 24 to 72 hours by road. 
  • Key TEN-T corridors, including the Baltic–Adriatic and North Sea–Baltic routes, improve speed and reliability. 

This proximity reduces transport costs, limits exposure to global shipping disruptions, and supports Just-in-Time and Just-in-Sequence production models – two approaches frequently discussed in the European supply chain summit series in recent years.

According to the CTP Industrial Paper (2025), logistics efficiency is now one of the top decision factors for European manufacturers considering relocation. As a result, CEE gives companies a faster and safer route to European consumers.

Skilled workforce with competitive operating costs

CEE offers a strong labour market for industrial and engineering operations. The region is known for: 

  • High levels of technical education. 
  • Strong engineering and R&D capabilities. 
  • Multilingual talent. 
  • Competitive labour costs compared to Western Europe. 

Eurostat highlights that companies relocating to CEE typically achieve 30–40% lower labour costs while maintaining high productivity levels. This reinforces the benefits of supply chain diversification, especially when balancing cost efficiency with workforce capability. 

Moreover, CEE countries consistently invest in STEM programs and vocational training. Therefore, manufacturers find it easier to build specialized teams for automotive, electronics, machinery, or medical devices.

Rapidly expanding industrial and logistics infrastructure

CEE’s industrial real estate market has grown significantly in recent years. 

  • Poland alone surpassed 30 million m² of modern industrial and logistics space in 2025 (CTP, 2025). 
  • Romania, Czech Republic, and Hungary continue to report double-digit growth in warehouse absorption (IO Partners, Q2 2025). 

Additionally, the region is expanding into intermodal terminals, cross-border rail systems, and inland hubs. These developments strengthen its position as a European manufacturing and distribution base. 

Because of this expansion, companies can scale faster and manage inventory more efficiently.

Integrated and predictable regulatory environment

Another advantage is that CEE operates within the European Union’s regulatory framework. This provides: 

  • Predictable labour law. 
  • Consistent product and technical standards. 
  • Strong IP protection. 
  • Full access to the EU Single Market. 

The European Commission’s industrial strategy updates emphasize that EU-level regulation helps companies simplify compliance, especially when shifting production closer to Europe. 

For international investors, this creates a stable and transparent environment.

Strong manufacturing ecosystems and industrial clusters

Many CEE countries host well-developed clusters that attract global suppliers and OEMs. Examples include: 

  • Automotive clusters in Poland, Slovakia, Czech Republic, and Hungary. 
  • Electronics and EMS clusters in Czech Republic, Romania, and Poland. 
  • Aerospace and machinery hubs in Poland and Romania. 
  • Life sciences and MedTech clusters in Poland, Hungary, and Slovenia. 

These clusters reduce supply chain fragmentation and allow manufacturers to integrate quickly into existing networks. Consequently, companies enjoy shorter onboarding times and improved supplier diversification options across the region.

Growing access to EU funds and incentives

CEE countries benefit from significant EU financing through the Recovery and Resilience Facility (RRF). Funds support: 

  • Digitalization. 
  • Robotics and automation. 
  • Energy transition. 
  • Logistics infrastructure. 
  • Upskilling industrial workers. 

Governments in Poland, Hungary, Romania, and Slovakia also offer national incentives for high-tech and green manufacturing.  

This combination of EU and national support strengthens the long-term viability of industrial relocation projects. 

To sum up, global manufacturers face new risks: higher volatility, transportation bottlenecks, and pressure to localize strategic production. In this context, CEE offers proximity, resilience, quality talent, a strong industrial base, and regulatory stability.  

Together, these factors make CEE one of Europe’s most attractive destinations for companies seeking to diversify supply chains and build a regional production model that supports long-term growth.

Key Industries Driving the Shift

Supply chain diversification in CEE is not happening evenly across all sectors. Instead, a few strategic industries are driving most of the momentum. These sectors benefit the most from the region’s proximity, skilled workforce, logistics capabilities, and alignment with EU industrial priorities. 

Below are the industries where CEE is becoming a core part of Europe’s future supply chain architecture. 

Automotive & EV value chain 

The automotive sector remains the backbone of CEE’s industrial economy. 
Countries like Poland, Slovakia, Czech Republic, and Hungary are deeply integrated into Europe’s automotive ecosystem. 

Key advantages: 

  • Strong Tier-1 and Tier-2 supplier networks. 
  • Mature assembly lines and engineering capabilities. 
  • Proximity to German OEMs and Western European markets. 

According to ACEA and regional industry statistics: 

These investments support Europe’s broader EV transformation. As a result, CEE is becoming a critical hub for the European electric mobility supply chain. 

Electronics & Semiconductors (EMS) 

Electronics and electrical manufacturing services (EMS) have expanded significantly across the region. Countries like Czech Republic, Poland, Romania, and Hungary offer strong technical talent and competitive operating costs. 

Drivers of growth: 

  • Rising demand for nearshored EMS capacity. 
  • Need for shorter lead times for European electronics brands. 
  • The EU is pushing for semiconductor resilience. 
  • Strong base of engineering and mechatronics graduates. 

Therefore, electronics and semiconductor-related industries see CEE as a natural location for regional diversification. 

Machinery, Metalworking & Industrial components 

This sector is one of CEE’s historical strengths. Companies from Germany, Italy, and Scandinavia continue to relocate parts of their component manufacturing to the region. 

The reasons are clear: 

  • Skilled mechanical engineers. 
  • High precision capabilities. 
  • Strong machine-building tradition. 
  • Lower labour cost vs. Western Europe. 
  • Reliable supplier networks. 

According to IO Partners (Q2 2025), industrial components and machinery remain among the top 3 demand drivers for new industrial space in Poland and Czech Republic. 

Consequently, CEE is ideal for companies seeking to shorten supply chains without compromising quality. 

Pharmaceuticals & Medical devices 

Hungary, Poland, Slovenia, and Czechia are strengthening their life sciences clusters. These sectors rely heavily on regulatory stability, quality control, and access to skilled scientific talent, all of which CEE provides. 

Key strengths: 

  • Strong tradition in R&D and chemistry. 
  • Compliant with EU Good Manufacturing Practices. 
  • Growing MedTech assembly and component production. 
  • Increasing demand for nearshored sterile packaging and medical electronics. 

EU policies promoting strategic autonomy in critical health goods further support the growth of these sectors. 

For this reason, pharmaceutical and MedTech companies are increasing their footprint in Central Europe. 

Logistics, Distribution & E-commerce infrastructure 

Industrial demand in CEE is also driven by the region’s expanding role as a European distribution gateway. 

Key factors: 

  • Poland’s logistics stock exceeds 36 million  m² (Updated June 2025). 
  • Romania and Hungary record some of the highest warehouse absorption rates in Europe. 
  • Growth in cross-border e-commerce requires large fulfilment centers, parcel hubs, and last-mile delivery platforms. 

CEE’s infrastructure allows companies to serve both Western Europe and South-East Europe efficiently. Consequently, the logistics segment continues to attract new 3PL, 4PL, and retail operators. 

As you can see, all the industries we mentioned above share similar needs: 

  • Stable production conditions. 
  • Skilled labour. 
  • Predictable regulations. 
  • Fast access to major markets. 
  • Reduced exposure to long-distance supply chain risks. 

These factors align with the core benefits of supply chain diversification, especially for companies that need both regionalization and efficiency inside Europe.

Country Spotlights: CEE Leaders in Supply Chain Realignment

Central and Eastern Europe are not uniform markets. Each country offers distinct strengths for supply chain diversification. Below is a concise overview of the region’s most influential hubs. 

Poland: Scale & Distribution power 

Poland is the anchor of the region’s industrial and logistics landscape. It combines scale, workforce depth, and strategic location, three factors that are essential for resilient supply chains. 

Key advantages: 

  • The largest industrial and logistics stock in CEE, surpassing 36 million m² in 2025. 
  • Strong manufacturing base across automotive, machinery, aerospace, furniture, and electronics. 
  • Expanding EV battery investments from SK On, LG Energy Solution, and Northvolt. 
  • High logistics performance supported by road, intermodal, and rail corridors linked to Germany and Scandinavia. 
  • Competitive costs for both production and distribution.
Poland leads CEE with over 36 million m² of modern logistics and industrial stock.
Poland leads CEE with over 36 million m² of modern logistics and industrial stock.

Czech Republic: Engineering excellence

Czechia offers one of the most sophisticated industrial profiles in the region. Its proximity to Germany makes it a core part of the Central European supply chain. 

Key advantages: 

  • World-class automotive and engineering clusters. 
  • High productivity and strong technical education. 
  • Mature EMS base supporting electronics and mechatronics production. 
  • Dense supplier networks for German OEMs and Tier-1 manufacturers. 
  • Efficient logistics link to Western Europe.
Czechia offers one of the most advanced engineering and automotive ecosystems in Europe.
Czechia offers one of the most advanced engineering and automotive ecosystems in Europe.

Hungary: EV and Electronics investments 

Hungary is one of the fastest-growing industrial markets in Europe, driven by strong foreign investments and government support. 

Key advantages: 

  • A booming EV battery and electric mobility industry, backed by major Korean and Chinese investors. 
  • Attractive incentive schemes for high-tech and large-scale industrial projects. 
  • Strong base in automotive assembly and electronics. 
  • Central location serving both Western and Southern Europe.
Hungary is a fast-growing EV and electronics hub driven by major global investors.
Hungary is a fast-growing EV and electronics hub driven by major global investors.

Romania: High-growth logistics & Digital talent

Romania is emerging quickly as a competitive alternative for companies needing both engineering talent and logistics reach. 

Key advantages: 

  • Rapid expansion of logistics corridors, ports, and road networks. 
  • Strong IT, software, and electronics engineering capacity. 
  • Competitive labour cost and availability, especially in secondary cities. 
  • Growing interest from U.S. and Western European investors.
Romania combines engineering talent with rapidly expanding logistics infrastructure.
Romania combines engineering talent with a rapidly expanding logistics infrastructure.

Slovakia: Automotive specialization & Automation 

Slovakia continues to hold the title of one of the world’s top automotive producers relative to population. The country is now transitioning toward electric mobility.

Key advantages: 

  • Longstanding automotive ecosystem anchored by global OEMs. 
  • High adoption of automation and robotics in production lines. 
  • Central location between Poland, Czech Republic, Austria, and Hungary. 
  • Skilled labour force with strong technical training.
Slovakia remains a leader in automotive production and advanced manufacturing.
Slovakia remains a leader in automotive production and advanced manufacturing.

Each of these markets provides a different strategic advantage. Together, they offer a complete platform for companies that want to diversify their supply chain into CEE, covering both high-volume production and high-precision processes.

Future Outlook

Supply chain diversification is now a strategic necessity. As Europe moves toward resilience and more regional production, Central and Eastern Europe (CEE) has become a key pillar in this transformation. The region offers fast access to EU markets, strong industrial talent, and a stable regulatory environment – all essential elements for future-ready supply chains and sustainable diversification of supply chain operations.  

For global companies, the question is no longer whether to diversify, but how quickly they can secure the right position in the region. 

So, when to choose CEE for your supply chain strategy: 

  • You need rapid delivery into the EU. 
  • Your product requires high precision or strict regulatory compliance. 
  • You want to reduce transport risks and long-distance disruptions. 
  • You need close coordination with European OEMs or R&D centers. 
  • You aim to build a regional production model for Europe. 

In these cases, CEE is ideal for EV components, machinery, robotics, medical devices, mechatronics, and advanced assembly. In summary, the region works best for proximity-driven and quality-driven industries. 

Our experts at Valians International support businesses in evaluating opportunities, reducing risks, and building resilient operations across the CEE.  

Ready for near-shore production or diversifying sourcing in Central Europe? 

Valians provides hands-on support across Poland and the wider CEE region. 

👉 Contact us or send an email to valians@valians-international.com to get tailored guidance for your project now!

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