VW's industrial park has leapt up in the past six months, and is now seeing its first tenants.
photo: Ján Svrček
While the park became a maelstrom of digging and grading machines after construction began in July 2001, six months later the first four tenants - all VW suppliers - have already moved in. Makers of car parts such as Johnson Controls, Brose, Hella Behr and Lear Corporation (see fact box) have set up shop in two production halls that sprawl over 60,000 square metres; space remains for three more VW suppliers which have yet to be identified.
With construction expected to be finished in mid-March, government officials and analysts say the park will boost the Slovak economy and help narrow the country's huge trade deficit.
VW Slovakia, which already accounts for 15 per cent of the country's exports, is promising to more than double its annual production after suppliers in the park come fully on line and start delivering components for VW's new Colorado off-road vehicle, expected some time in the second half of 2002.
"The markets are waiting for an increase in VW production because it will help Slovakia increase its exports," said Ján Tóth, an analyst with ING Barings.
"With the kind of investment VW has made in Slovakia and with the supplier base it has built, the company has created the basis for a long-term business in Slovakia. VW's suppliers are also expected to use Slovak companies, which in turn will help domestic small and medium-sized businesses grow," said Ján Pribuľa, the government's plenipotentiary for the car industry.
He added: "The government is expecting a lot from this investment."
Due to the park's importance for the Slovak economy, the government has been directly involved in its construction. Using a clause in the State Assistance Law, it donated land owned by the Defence Ministry and covered the costs of building the necessary infrastructure. The deal cost tax payers Sk333 million ($7 million), while VW promised to invest 70 million German marks ($33 million) into the park's production facilities and to create 1,256 jobs.
The government is now banking on VW's performance picking up with its new model, assisted by an increase in EU demand which slackened after the September 11 terrorist attacks on New York and Washington.
Tóth said that the opening of the industrial park came in the nick of time with Slovakia facing a record trade deficit.
The latest figure for 11 months of 2001 show the trade deficit at Sk87.2 billion, up by Sk56.1 billion on the same period of 2000. The total for 2001 is forecast to hit a record Sk100 billion.
VW Slovakia has long been crucial to Slovak trade, and this year's figures were hurt by a 20 per cent drop in VW output in the second half of 2001 as the firm changed over its production lines in preparation for the launch of Colorado.
"A year ago we were expecting production of the Colorado to begin in January, but now it is likely to start at the end of the first half of this year. This short delay will reflect in a higher Slovak trade deficit for that period," Tóth said.
VW Slovakia exported 99.1 per cent of its production in 2000 in the value of Sk84.8 billion, almost twice that of the country's second-largest exporter, the refinery Slovnaft. The figure represented a 25 per cent increase on the year before.
28. Jan 2002 at 0:00 | Peter Barecz