Although Danish shoe-maker Ecco hasn't even started building its new plant in the central Slovak town of Martin, it is determined to launch production by October. Martin municipal leaders are waiting breathlessly to see if Ecco can keep the deadline; having sold 80,000 square meters of land to the company for a symbolic one Slovak crown, city officials have much at stake, not least the 1,700 employees Ecco has promised to hire.
John Svane Hansen, Ecco Project Manager, said the project was the first Danish manufacturing investment in Slovakia, and that it would entail expenditures of about 45 million Danish crowns ($6.8 million). In the next two years, he said, the company intended to invest another $7.4 million.
"In the beginning we will re-invest profits as much as possible, and thus make the company bigger," said Hansen in explanation of Ecco's philosophy. "We will not take profits from Slovakia and turn them over to headquarters in Denmark. This is not the way we do it." Hansen added that the project would be self-financed, and that the company was not thinking of taking any loans.
Choosing the site
Company officials said that Slovakia had been a natural choice, due to its strong economic performance, but conceded that selecting the right city had been a struggle. "Last December we decided that we would go either to Asia or to Eastern Europe," Hansen said. "Due to the crisis in Asia and to the fact that nearly all our factories are located there...we chose Eastern Europe."
When choosing a country, Ecco had considered mainly salary levels, inflation rates, shoe production experience and workforce education. "We found that in Slovakia you have a very good economy, better than in the Czech Republic, better than in many other countries," said Hansen, adding that the company had also received good terms from the Finance Ministry and that it was satisfied with GDP growth in Slovakia.
Finding the right location had come down to the size of the building site, the local unemployment rate, local population distribution and local salary levels. "We considered 40 districts...and selected five," said Jakob Andersen, Director of the Danish Trade Commission in Slovakia, who helped Ecco find the right city.
The candidate cities were finally narrowed to two names - north-central Martin and south-central Lučenec. One of the problems with Lučenec was its rural tradition. "In summertime, they would not make shoes, they would go and pick tomatoes," said Anderson.
But Jozef Murgaš, Lučenec Mayor, disagreed with Anderson. "This is a completely outdated view of the [town]," he said. "Lučenec has been more an industrial city than an agricultural town for more than 20 years now."
Giving land away
However, Ecco finally settled on Martin, giving local officials hope that local unemployment might finally be reduced. "Ecco was a kind of a blessing for our city," said Ján Dreisig, the mayor of Martin, adding that Ecco was something of a lifesaver for the town, which was mired in growing unemployment caused by problems in the local engineering industry.
"We value Ecco's approach extremely highly, despite their straight way of negotiating while looking for the best possible benefits," Dreisig said. Among the concessions the municipal leaders were willing to make was a giveaway deal on the land, 1 Sk (3 cents) for about 80,000 square meters. Dreisig said Ecco had not demanded the deal, but that Martin's aldermen had simply wanted to show some good will in order to attract more foreign investment to the region.
The Ecco investment will not only help ease unemployment, but it will also boost trade for local companies. One of Ecco's regional suppliers is Ferex, which looks after Ecco's engineering needs. "Ecco is a very demanding but exceptionally reliable company," said Milan Malík, one of Ferex's owners.
Ecco was founded in 1963 in Denmark and now has factories in Denmark, Indonesia, Thailand and Portugal. Before launching its production in Slovakia, the company will open a new training school for its future employees. "We will start training in July, increase the pace in August, and start production in October," Hansen predicted boldly.
