IN a Memorandum of Understanding with Getrag Ford Trasmissions, the coalition government pledged €54.5 million in state aid to the German automotive company. In exchange, Getrag Ford promises to pour €300 million into the Slovak economy in the form of a new manufacturing plant at Kechnec Industrial Park in Eastern Slovakia.
The ruling coalition also agreed to build a a ring road around Košice town as well as infrastructure to connect Kechnec Industrial Park with nearby US Steel.
An investment contract between the two parties, subsequent to the Memorandum of Understanding, is in its final stages and should be forwarded to parliament for debate and approval by the end of 2004.
Unlike the KIA Motors deal, which the Slovak government is still trying to resolve, the Getrag Ford negotiations have gone smoothly.
"We have received very professional help from the [Economy] Ministry through the Slovak Investment and Trade Development Agency (SARIO). The personal commitment of Economy Minister [Pavol] Rusko has been very valuable to us, too, along with the support of the Košice district represtatives," company spokesperson Karin Burgmer told The Slovak Spectator.
The construction of the Getrag Ford plant is expected to begin in late May or early June 2005, with production starting in 2007. The new plant should produce 300,000 car transmission components annually, all of them for an export.
Negotiations with Getrag Ford have been underway for nearly a year, confirmed Economy Ministry officer Dagmar Hlavatá. She also said that the state's generous €54.5 million stimulus package helped motivate the German automotive company to invest. (Getrag and Ford Europe both own 50 percent of the company.)
According to Burgmer, Getrag Ford weighed a variety of factors before making its final decision. Strong references from other foreign investors, the country's stable political situation, the government's deft management of economic reforms, and low labour costs all helped swing the outcome in Slovakia's favour.
The fact that Slovakia is a member of the EU also made a difference, Burgmer added.
Although Getrag Ford had a choice of several Slovak locations, it selected Kechnec Industrial Park over the others. Burgmer told The Slovak Spectator that the location was well prepared for building works, and Košice's district representatives were flexible and offered constructive advice.
"We had very specific infrastructure requirements, such as high electricity consumption requirements on top of the usual water, gas, and normal electricity supply," she said.
Other important reasons persuaded Getrag Ford to select the Kechnec Industrial Park site. Košice airport is only a few kilometres away, with daily flights to most European destinations, and US Steel is located nearby as well.
According to the chief of the Slovak Automobile Interiors and Technicians Association, Ján Lešinský, the industrial park's proximity to aluminium and steel manufacturing plants also influenced the deal, the daily Pravda wrote.
However, US Steel spokesman Ján Bača considers any speculation about cooperation between it and Getrag Ford immature "even though Ford is a very good customer of ours in the USA," he said.
Getrag Ford specially selected a site with easy access to a highly skilled labour force. Košice has an extensive educational network of technical schools, from technical vocational schools to technical universities.
Minstry officer Hlavatá said that Slovak graduates from technical schools would have a great chance to find employment with Getrag Ford, once it starts production. She confirmed that the vocational and university programmes would tailor its courses in respect to the needs and requests of the new manufacturing plant.
Burgmer told The Slovak Spectator: "We are planning to cooperate with technical vocational schools and universities. We are at present in discussions or are establishing contacts with potential cooperation partners."
The Economy Ministry expects Getrag Ford's investment to create 1,000 new jobs, and another 1,000 to 1,500 through company suppliers.
The Ministry is hoping the German automotive company's presence in the region will boost the economy there and help decrease the exceedingly high unemployment rate of 23 percent.
Price also played into the decision. Kechnec Industrial Park's Sk50 per square metre of land is competitive, thanks to a government programme to help lower unemployment rates in Eastern Slovakia. The programme allowed the state to make Sk184.42 million (€2.5 million) in investments in the region. In this case, the government used the financial aid to withdraw land for Kechnec Industrial Park from the Agricultural Fund and extend the public infrastructure surrounding it.
The land at Kechnec Industrial Park is lower than the Sk160 per square metre requested for the area near the Žilina district, where KIA Motors intends to build its factory.
The government is still working on the KIA Motors deal, in which landowners refuse to sell the land near Žilina to make room for the factory because of disagreements about the official land valuation.
Economy Ministry officer Hlavatá said the situation with KIA Motors should not be compared to the one with Getrag Ford. "The situation is very different. This was a long-term preparation and the landowners' position is different as well," she said.
There are two other investors in Kechnec: Molex Slovakia and Gilbos.
Molex Slovakia produces parts for the automotive and high-end telecommunications industries. The company, well known for its cooperation with the Technical University Košice, currently employs 650 people.
Gilbos, a Belgian company with 225 employees, is directly in the Kechnec Industrial Park. Another high-tech manufacturer, Gilbos NV started production in March 2003 and has 50 employees.
