The ceremonial laying of a foundation stone for a major bearings factory attracted the government's brightest lights.
The new factory, which is to be built in Kysucké Nové Mesto in northern Slovakia, represents an investment of some 180 million German marks (4.5 billion Slovak crowns). The venture, a rolling bearings factory which will export 85% of its production and employ 1,600 workers, will be under the ownership of the German company INA Walzlager Schaeffer.
The cabinet turned out in force to mark the factory construction ceremony - Prime Minister Mikuláš Dzurinda, Deputy Primer Minister Ivan Mikloš, Economy Minister Ľudovít Černák, Finance Minister Brigita Schmögnerová and Labour Minister Peter Magvaši were all on hand on July 21, with good reason: the Slovak government had worked hard to attract INA to Slovakia, purchasing the factory site for 15 million Slovak crowns and volunteering at least 120 million crowns for the re-training of future employees.
"When we were informed that INA had decided to build its new plant here in Kysuce, we were pleased that this hole [the Kysuce district] would be rescued," said Jana Svrčková, the head of the Kysucké Nové Mesto district office, for The Slovak Spectator on July 27. Svrčková said the new factory would make a crucial difference to the region's troubled economic, financial and social situation.
The level of unemployment in the district is 24.4%, meaning that 3,800 people are without jobs. In the first of three development phases, 1,000 jobs should be created at the INA factory.
"Just imagine - the new company will employ 1,600 people in its three development phases. That will rapidly change the social situation in the district," said Svrčková. She explained that the company will cooperate rather than compete with a local bearings maker named KLF-ZVL. "The company [KLF-ZVL] announced massive layoffs in January, but later they signed a contract with INA, and now 500 employees that would have been fired can stay with the company," she said.
INA had been considering building its plant in Hungary, but decided on Slovakia because of the financial incentives offered by the Slovak government. The most important concession for INA was a release from all customs duties and a ten-year tax holiday. Exactly how much this government largesse will cost the country cannot be exactly calculated, but lost budget revenues should range between 100 and 300 million Slovak crowns.
The Confederation of Slovak Trade Unions, a labour umbrella group, criticised the government's cap-in-hand approach to INA, saying the state should subsidise regional development of small and medium sized businesses rather than focus on foreign corporate giants.
But government officials said that in the end, INA would bring more to Slovakia than it took. "The new company will increase exports, because 90% of its output will be exported. It will also bring more than 60 million Slovak crowns in taxes and obligatory transfers into the state budget every year," said Anton Kubica, assistant to the director of the Economy Ministry's Processing Industry Section. He added that Slovak companies would be encouraged to take part in the construction of the new plant.
"We have had good experiences with INA because they have another plant in Skalica, so we really wanted to offer something better than the Hungarian government, and INA decided very quickly," Kubica concluded.
"We had been working very hard for two months before we got INA here," said Svrčková., adding that "the German investors were surprised how quickly we [the city Kysucké Nové Mesto] and the government worked to prepare everything for the laying of the foundation stone."
The government is pushing to have the new plant up and running by the spring or summer of the year 2000, reported Kubica. The Economy Ministry, he said, was relying on INA to keep up its cooperation with KLF-ZVL and make a serious dent in unemployment in the region.
Anton Ježák, the chairman of the board of directors at INA Kysuce, told the Slovak Spectator on July 28 that his firm was completely in step with the Economy Ministry. "Cooperation between INA and KLF-ZVL will boost the prosperity of the whole region," he said. "This project is absolutely crucial for solving the problems in the region."
INA ranks among the ten largest producers of bearings in the world. It manufactures roller bearings, linear systems and engine components, and is the world leader in the manufacture of needle roller bearings.
After the completion of the project in Kysuce, INA will be one of the most significant foreign investors in Slovakia.