WHIRLPOOL'S Poprad production line turned out almost a million washing machines last year.
Although talks are expected to be long and confrontational, Whirlpool representatives in Slovakia said that the company's intention to consolidate its production in Slovakia was part of a natural process.
"We are waiting for the end of negotiations in France and decisions from our management. After that, if the decision will be to move the operations to Poprad, we will be ready in short time," said Errico Biondi, director of Whirlpool's Poprad facility.
He added: "There is big market potential for high range washing machines in central Europe and Russia which are currently being produced in France. We need to consider the synergies which may be created."
Bringing the French washing machine production to Poprad, which lies just under the High Tatras mountain range, would create about 150 new jobs in the district, which currently has an unemployment rate of 20.7 per cent, identical to the national average in February. The move would also boost and diversify Whirlpool's production in Slovakia.
Last year Whirlpool's Slovak plant turned out 930,000 washing machines, of which 600,000 were top-loading. While the Poprad plant makes only low and mid range washing machines, the French facility at Amiens turns out about 300,000 high-end top-loading machines per year.
"An increase in production at the plant could certainly lower the unemployment rate in the district," said Zita Kozlerová, deputy director of the district labour office in Poprad.
Whirlpool employs 580 people in Poprad, which makes it the second largest employer in the district behind machinery company Tatravagónka Poprad.
Whirlpool has also lured a part of its supplier base to the region, following its global policy of having suppliers nearby. Contractors include plastic components maker Scame, polystyrene maker Sogit, rubber components maker Pazel, (all three are Italian-owned), as well as Czech cable maker AŽD. Another Italian metal component supplier, Cima, is likely to establish an operation in Slovakia before the end of the year.
Whirlpool itself is also building up its presence in central Europe. News of Whirlpool's possible move from France came only a few weeks after the company announced the purchase of Polish appliance maker Polar. Before this transaction, Whirlpool's plant in Poprad had been the company's only investment into production in central and eastern Europe (it has 11 European plants in total).
Top Whirlpool representatives said that the Polish acquisition was a unique opportunity to increase sales in central and eastern Europe, mainly in Poland, the biggest market in the region. However they added that Hungary, the Czech Republic and Slovakia are also important markets.
Although central and eastern Europe accounted for only 7 per cent of total European home appliance sales in 2001, sector representatives said recently that the situation was likely to change over the next decade. While most families in western Europe already own sophisticated appliances, the market is far from saturated with such products in central and eastern Europe.
"The fact that Whirlpool is considering shifting part of its production to central Europe is a sign that it is changing its strategy, and that it realises that demand in western Europe is limited," said Marek Jakoby, an analyst with the Mesa 10 think tank in Bratislava.
Jakoby said that Whirlpool was not the first company to consider growing its Slovak operation at the expense of its western business. European car giant Volkswagen last year decided to move production of its Polo passenger car model from Spain to its successful Slovak plant in Devínska Nová Ves, outside Bratislava. "This move was also preceded by big protests from Spanish unions, but in the end it happened," Jakoby said.
"By considering such a step, foreign investors are saying they believe that Slovakia will become a member of the European Union together with other central European countries, including Hungary, Poland and the Czech Republic," Jakoby added.
Government officials have welcomed Whirlpool's intentions. "This proves that foreign investors in Slovakia are satisfied and have opportunities to grow their business here," said Vladimír Tvaroška, an adviser to Deputy Premier for Economy Ivan Mikloš.
Whirlpool was one of the first foreign investors to enter Slovakia, launching its business in 1992 after the purchase of a minority stake in washing machine producer Tatramat Poprad. The company increased its stake to 100 per cent in 1996.
According to the Trend business weekly, in 2000 the plant recorded revenues of Sk7.7 billion ($162.8 million). The figure for the first nine months of 2001 was reported at Sk4.97 billion ($105.1 million).
15. Apr 2002 at 0:00 | Peter Barecz