The engineering sector is weak in Georgia, it is 1% of GDP and 0.55% of total employment The production in previous times was big, for example in the Kutaisi factory (wide selection of products), in Tbilaviamsheni (aircrafts). These factories are currently working on limited. Engineering activity has been suspended after the collapse of the Soviet Union, there was arised technological cracks in capital and in employment.
Georgia has the potential to specialize in the production of four types of engineering products: Isolated wire and cable; entertainment and sports equipment; Containers of cargo; Cranes, dual trains.
Since Georgia's previous engineering industry is either abandoned or technologically obsolete, significant potential can be in the renewal of the sector.
In order to assess Georgia's competitiveness, several factors should be taken into consideration: human capital expenditures and skills; business environment; Transportation.
Salaries takes 15% -30% of the total cost of engineering, taking into account the technological level. Accordingly, salaries are highly competitive in Georgia. As for the job skills it is limited and because of small production in engineering, it is often used old technologies.
Public education (academic and professional) in the technical fields needs the improvement of quality and quantity. It is desirable to cooperate with the private educational colleges if possible.
In conclusion, there are very competitive prices in Georgia but low working skills. Therefore, fewer problems may be caused to the companies with nonenhanced technologies. This environment is initially the most suitable for production, which needs limited job skills
The business environment plays a major role in attracting direct foreign investments. In the researches of World Bank and in other researches Georgia has a leading positions. There is a bit of tax and low prices. Corruption and bureaucracy are very low. It takes only two days to start the business and according this Georgia has the top ranking is in the ratings. The initiative "Produce in Georgia" provides very cheap access to land, infrastructure, financing and consulting services. Based on this, there is a great business environment in Georgia, good political stability and the smallest administrative and tax system in the region.
Now about the transportation in Georgia. Transport costs are especially important for heavy products. The supply chain integration requires reliable and effective transportation system. Compared to big and heavy products transportation in Georgia there is a high prices. Lightweight products can be safely transported by land transport through the main highway. Batumi and Poti ports are used for small ships, the deep sea port of Anaklia for large ships. Investments are made in the road system, new East-West highway which is connecting Tbilisi with the Black Sea is good.
Secondary roads are in poor condition. The modernization of the railway system is slowly running, not in good shape, cargo tariffs are relatively high.
Taking into account the above mentioned, there are relatively high cargo tariffs in Georgia due to the railway system and lack of large ports.
Effective rail and road transport must be developed with the program "Produce in Georgia". The information about the potential of the engineering sector in Georgia should be actively provided to potential investors
In conclusion, there is very limited production in the engineering sector in Georgia, technology is mostly outdated. There is very competitive salaries, but limited qualified workers, therefore this environment is most advantageous for companies who need limited job skills or can invest in trainings. Transport costs depend on the type of products, that is less problematic for lightweight products for which it is used road transport of the east-west highway. There is a very good business environment and political stability in Georgia. There is a good potential for the intensive production of lightweight products in the country and gradually can be produced more complex production too.