CAR COMPONENT suppliers have been flocking to Slovakia in their droves since PSA Peugeot Citroen and KIA announced their intention to open auto manufacturing plants in the country.
Economic analysts consider these investments equally as important and beneficial as the massive investments of the well-known car producers. These suppliers support small- and medium-sized businesses and develop diversity in the manufacturing sector.
Car component producers manufacture a range of products, including car seats, textiles, steering wheels, cables, lights and various rubber and plastic components. The car parts industry also opens up opportunities for domestic companies, not only the large foreign investors. It therefore helps to build a healthy business environment and establish and develop new industries, including research.
According to the VDA (Verein Deutsche Automobilindustrie) one job in car production creates five jobs in the supply chain. "From this point of view, it is possible to estimate the gross potential of jobs in the whole automotive industry at about 85,000 [in Slovakia]," reads the analysis of the Slovak Automotive Industry Association (ZAP) and the Economy Ministry.
Over the last year, several different component producers have announced plans to set up production in Slovakia.
That is in addition to the firms already established here, which are now planning to supply the car industry. Some of them want to provide parts for the car companies (KIA, PSA Peugeot Citroen, Volkswagen) and others want to serve car companies abroad.
Examples of such investments are as follows:
Spanish firm Cikautxo is planning to start hose production for the automotive industry in the autumn of 2005. Initially it will employ 40 to 50 people. That number may increase to as many as 700.
Austrian engineering firm Rübig is setting up a production plant and logistics centre in Prievidza. By June 30 the company and the municipality will have signed a binding contract.
Rübig will initially produce coating materials' aggregates, and later parts for the automotive and aircraft industry. Around 220 jobs will be created with a total investment of Sk1 billion (€30 million), Sk850 million (€21.66 million) of which will be for the production technology. Prievidza will be Rübig's first Central European subsidy. It will also serve as a logistics base for other countries
An agreement on a joint venture between Slovak tyre firm Matador and South Korean firm DongWon Metal has already been signed.
The new company will supply car doors for the KIA plant in Žilina. The companies plan to invest €10 millions in a joint venture. Matador will control 65 percent of the new company and DongWon Metal the rest.
Its plan provides ffor about 170 jobs. The joint venture will start production at the same time as the KIA car assembly plant. The joint venture in Slovakia will be the third investment of DongWon Metal in Europe.
Australian leather products manufacturer for the automotive industry, Howe Leather, will launch production at its unit in Košice during April.
For the time being the company will employ 70 people and that number should double within two months of a successful start.
The company's ambition is to begin three-shift operations by the end of the year and increase the number of employees to 170.
Howe Leather has installed technology for processing leather products worth €1 million in 3,400 square metres of rented space.
Its turnover should grow to €30 million over two years.
The company has already signed contracts with carmakers BMW, Land Rover and VW's Audi. All output from the new production unit will be exported.
Howe and Company admitted that the well-trained but relatively cheap labour force played a role in deciding the location for the unit.
US company Johnson Controls plans to invest €20 million in southern Slovakia. The company will create 350 jobs directly in Lučenec. An additional 100 to 150 secondary job opportunities could be created. The firm will manufacture filling for car seats at the new plant.
Production should be underway at the plant by mid-2006. Johnson Controls chose Slovakia chiefly because of the arrival of KIA in Žilina.
They chose Lučenec because of its infrastructure, advantageous geographical position, as well as the low cost of labour in the region.
The US company has been operating in Slovakia since late 1993 through Johnson Controls International. The company has had a research centre near Trenčín since last October. It focusses on computer design for the automotive industry.
American-German joint venture Getrag Ford Transmissions, the main supplier of Ford transmissions for its European cars, plans to invest around €300 million in Eastern Slovakia, the SITA news agency reported.
Getrag Ford Transmissions will create 1,000 jobs in the Kechnec industrial park near Košice. It is estimated that a further 1,000 jobs will be created in connection with this investment. All the transmissions produced (300,000 annually), will be exported to other EU countries. Getrag Ford expects an annual turnover of €300 million to €400 million.
All in all, these investments represent a vital contribution to the success of the Slovak economy.
Source: SITA reports
