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Investor Johnson Controls praises Slovakia's 'cost structures' over rivals'

The decision of American auto upholstery firm Johnson Controls to build a factory in Slovakia shows that the country is "at the moment playing the investment game better" than its neighbours, according to a senior Johnson Controls executive.
Klaus Pashko, Johnson Controls' General Plant Manager for eastern Europe, said that his firm had decided to build a new $20 million factory here because "Slovakia is showing better cost structures - principally lower salaries" than neighbouring Hungary or the Czech Republic.

The decision of American auto upholstery firm Johnson Controls to build a factory in Slovakia shows that the country is "at the moment playing the investment game better" than its neighbours, according to a senior Johnson Controls executive.

Klaus Pashko, Johnson Controls' General Plant Manager for eastern Europe, said that his firm had decided to build a new $20 million factory here because "Slovakia is showing better cost structures - principally lower salaries" than neighbouring Hungary or the Czech Republic.

The new factory in Kosťany nad Turcom, in the Martin region of northern Slovakia, will come on line in January 2000, Pashko said, with administrative buildings and landscaping being completed by May 2000. The factory will be devoted to "cutting and sewing covers for automotive seats," while 100% of production will be exported to a Johnson Controls sister company in Paris which supplies the French automaker Renault.

The foundation stone of the new factory was laid on August 16, in the presence of Prime Minister Mikuláš Dzurinda. The new factory will create about 670 jobs in the Turiec region, where unemployment is around 15%.

Pashko explained that Johnson Controls had chosen the Kosťany site because it was in a heavily populated region, ensuring a ready supply of labour. "The triangle containing Martin, Žilina and Banská Bystrica contains over 300,000 people," he said.

The fact that the Martin region had moderately high unemployment, Pashko added, had also qualified the firm for tax breaks under a government scheme announced in March for promoting investment into the country's poorer regions. He said the firm had received no special incentives from local governments, and had bought its land from private owners.

Welcome jobs

Kosťany Mayor Viera Višna said that "the new factory will give people in the village a chance to work. Not only professional tailors, but also unskilled unemployed people, whom the company will retrain for the jobs available."

Višna added that Johnson Controls had selected her village to build in because it had sufficient infrastructure and was located near a main highway to Martin, four kilometers away.

The new plant will be co-operating with the Auto Martin company, a domestic auto industry supplier. Auto Martin was launched last year by DMD Holding in Trenčín and ZŤS TEES Martinské strojarne in Martin. Pashko said that so far, Auto Martin had helped Johnson Controls cut through the red tape - technical and hygiene inspections, for instance - involved in setting up a factory.

While declaring himself generally satisfied with the efforts the Slovak government is making to promote investment, Pashko added that the country "could improve in administrative issues - we would like to see customs fees abolished on machinery imports that create added value and employment in Slovakia."

Johnson Controls, of Milwaukee in Wisconsin, supplies the auto concerns Volkswagen, Daimler-Benz, Opel, Renault and Audi. Its 1998 sales were almost $12.6 billion, of which 64% were gained in the US and about 25% in Europe. The company employs approximately 95,000 people worldwide.

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