Building on its record year in 1999, German car giant Volkswagen (VW) has announced further plans to expand its Slovak operations in 2000, plans that are attracting foreign auto industry investors to the country.
After recording turnover of 69 billion Slovak crowns ($1.6 billion) in 1999, up from 56.7 billion crowns ($1.3 billion) in 1998, VW won the Trend business weekly's 1999 award for best company in Slovakia. Jozef Uhrík, a member of VW's Board of Directors, then announced the expansion of the company to the Martin region in northern Slovakia, as well as the construction of a new industrial zone near the village of Lozorno, only 10 kilometres from the factory's plant in western Slovakia's Devínska Nová Ves.
VW's growth in Slovakia has spurred the interest of foreign car component manufacturers like American companies Johnson Controls and Dana Corporation, and possibly the French firm Plastic Omnium - all of whom either have invested or are looking to settle in the country.
While the plant in Martin will start producing a car components for VW this year, construction of the industrial zone in Lozorno is a long-term project scheduled to be finished in 2002. The first models of a new off-road vehicle, the Volkswagen Colorado, are planned to roll off assembly lines by the end of that year.
With the new Colorado model being produced in Slovakia, VW Slovakia will become the only segment of the Volkswagen group to be producing three VW models concurrently.
The latest announcements about the company's future investments pleased Slovak government and regional officials. "We [the government] would rather support successful companies than ineffective investors," said Economy Minister Ľubomír Harach during a recent visit to the Devinska Nová Ves factory.
According to Ľubomír Haramia, the mayor of Lozorno (pop. 3,000), not many villages could boast Lozorno's good fortune. "Despite the fact that the VW industrial zone will be a burden on the environment, it will help to lower the amount of unemployment in the region, and that was the main aim of the project from our point of view," Haramia said.
Covering an area of 32 hectares for the Lozorno plant, Volkswagen plans to invest about 3.5 billion crowns ($81.3 million) in the site, creating in the process about 1,000 new jobs.
Haramia believed that Volkswagen's presence in Lozorno would help the tiny town financially. "We hope that VW can support us [Lozorno] not only by paying taxes on the land but also by making some donations we are hoping for," he said.
The presence of Volkswagen in Slovakia has attracted the attention of French car component producer Plastic Omnium, which has said it is currently looking for site close to the Lozorno plant to produce components for the German car maker.
According to Jean-Paul Hermant, a Plastic Omnium official, the company still hadn't decided whether it would invest in Slovakia. "We will make this decision in a couple of weeks," he told The Slovak Spectator on March 8. "However, if we invest here it will be this year to serve as VW's subcontractor. We will produce some of our components for their cars," Hermant said. The only east European production site Plastic Omnium currently runs lies in the Polish town of Gliwice.
VW, similar to other large car producers like BMW, Ford, Citroen and Mercedes, uses car components manufactured by Plastic Omnium including bumpers, body panels, exterior trims and fuel systems.
VW exported cars and components in 1999 worth 68 billion crowns ($1.5 billion) in 1999, which was 16% of Slovakia's total exports. The company plans to produce 150,000 cars this year and invest about 400 million marks ($200 million) in 2000-2001, including investment into the industrial zone.