Few foreign investors would stay in Slovakia after the complicated and time-consuming search for suitable land for an investment that Belgium autoparts producer Bekaert has just been through.
But the world's leading manufacturer of steel car cords, which had led an intensive year-long search across Slovakia, has finally found a place to set up its one billion crown ($20 million) plant - Sládkovičovo in western Slovakia.
However, the company's representatives have made it absolutely clear that the reason for their presence in Slovakia is a customer base within the country and the Czech Republic, not what incentives or investment sweeteners the government could have offered.
"Bekaert is here for its customers and market potential. If our customers weren't here we wouldn't be here either. We never invest in any country for anything else than our customers, and the industrial potential is here," said Willy Snaet, corporate vice-president of the Bekaert group.
"We never invest in any country because of government incentives. Bekaert's priority has always been to deliver products to its customers on time, and have good relations with them, something that cannot be achieved when the distance between customer and supplier is too great," Snaet said.
Bekaert's major customers in Slovakia include central Slovak tyre-maker Matador Púchov and Matador's joint venture with German tyre-producer Continental.
Regrets
Government representatives said they regretted Bekaert had had to search so long for a suitable investment site in Slovakia, but suggested that it was not purely proximity to customers which had prompted their decision to invest outside Bratislava.
"Take the example of Volkswagen [which already has a production plant outside Bratislava]. Although Slovakia can be thankful to 14 [support] car component suppliers for the fact that Volkswagen Slovakia will produce its new Colorado model here in Slovakia, we are repeatedly told by investors that the government's support, and political and economic stability are also important for them," said Alan Sitár, chairman of the board of the government's investment agency SARIO.
Bekaert plans to begin production in the first quarter of next year, expecting to turn out 30,000 tons of steel cord per year and employing 90 to 100 people in the first two to three years of operations. The company, in cooperation with K.L.E. and Medias, will have to install infrastructure for its facility as soon as it acquires permission to begin construction of the plant, expected sometime in mid April.
"Things have been moving quite smoothly. We are happy with the area, and the professional approach that we have encountered from local and district governments," said Joost Berghmans, general director of Bekaert Slovakia.
However, according to Karol Balog, the head of the Phare-funded Agency for Industrial Revitalisation (AIDR), Bekaert's investment has highlighted a need for industrial parks with clear ownership rights and infrastructure, having access to roads, and water, electricity and gas supplies already installed.
"Slovakia has these places. They are the production halls of former companies and bankrupt factories. One such project, where former shoe-maker JAS Bardejov used to have a production plant, in eastern Slovakia, is being prepared right now. The area there has everything. All it needs is 20 to 30 million crowns from the government to make it attractive for investors," Balog said.
At the end of February, the government approved a long-awaited draft law on industrial parks, which would allow municipalities to claim government subsidies to secure land under their administration and prepare infrastructure for foreign investors up to 70% of the total costs. The legislation, though, is yet to be approved by parliamentary deputies.
"The law is on the way, and we expect it to make it easier for other investors to come," SARIO's Sitár said.
The legislation, which is standard in other Visegrad group countries, including Hungary, Poland and the Czech Republic, is according to Berghmans an important piece of legislation for Slovakia to compete on an equal footing with other central European countries for investment.
