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SLOVAKIA'S AUTOMOTIVE INDUSTRY IS SET FOR RAPID GROWTH ON PEUGEOT'S CZECH, SLOVAK PROJECTS

Auto suppliers see boom ahead

WITH the arrival of a 700-million-euro investment from French auto concern PSA Peugeot Citroen, Slovakia is set to see a boom in its growing automotive component sector.
The location of Peugeot's planned Trnava complex, combined with existing Volkswagen plants outside Bratislava and in central Slovakia and a joint-venture between Peugeot and Toyota in the Czech Republic's Kolín puts Slovakia in an ideal position to host suppliers for Europe's two largest automakers.
"There will be a lot of supplier movement on the back of [Peugeot's Slovak investment]," said Carol Thomas, eastern European analyst for JD Power in a recent issue of the Automotive News Europe trade magazine.


EXISTING suppliers are set to benefit from the new plant.
photo: File photo

WITH the arrival of a 700-million-euro investment from French auto concern PSA Peugeot Citroen, Slovakia is set to see a boom in its growing automotive component sector.

The location of Peugeot's planned Trnava complex, combined with existing Volkswagen plants outside Bratislava and in central Slovakia and a joint-venture between Peugeot and Toyota in the Czech Republic's Kolín puts Slovakia in an ideal position to host suppliers for Europe's two largest automakers.

"There will be a lot of supplier movement on the back of [Peugeot's Slovak investment]," said Carol Thomas, eastern European analyst for JD Power in a recent issue of the Automotive News Europe trade magazine.

When Peugeot's Slovak plant comes on line in 2006, it will produce 300,000 cars per year; the Kolín facility is set to produce another 300,000 per year; and Volkswagen's Slovak production topped 225,000 for 2002, up from 182,000 in 2001.

Although Volkswagen and Peugeot are likely to sign contracts with common suppliers, neither company thinks the overlap will be harmful.

"From a long-term perspective, the [Peugeot] investment is not a risk. I have to think of it as competition, but on the other hand it allows us to develop a new family of suppliers," said Jozef Uhrík, a board member at Volkswagen Slovakia.

"In 2005 and 2006, our company will have different problems. I have to consider how we will increase work productivity among our 9,000 employees, because dynamic employment growth has been so large that productivity has not always been put first.

"We could profit from the network of suppliers created by Peugeot," said Uhrík, adding that Volkswagen had provided information on Slovakia to the French automaker that may have affected its decision to invest in the country.

Peugeot officials stress that the investment incentives offered by Slovakia, at 15 per cent of the total investment, or around 105 million euro, were not the deciding factor in selecting the Trnava site. Transportation infrastructure and the chance to build a supplier park adjacent to the site were more important, they say.

"Logistics was the key to the Trnava choice," said Alain Baldeyrou, manager for Peugeot's Slovak project.

"We were offered about the same incentives by the other countries we had short-listed," he said.

A number of suppliers at Volkswagen's Lozorno industrial park already make parts for Peugeot, either directly or through parent companies, and they are the companies that will benefit most from the new plant at the beginning.

"The French [carmaker] likes to orient itself towards established suppliers. Because of that, there is a high probability that we will also supply the Trnava facility," said Vladimír Smolka, manufacturing director at Plastic Omnium's Slovak facility. The Paris-based group produces exterior components and fuel systems, and 21 per cent of its current output goes to Volkswagen or Peugeot.

"We have been working with Peugeot for a year and a half already. The carmaker knows us and has had a good experience with us, so we are counting on further cooperation with the new factory in Trnava," said Luboš Lauko, head of product development at Contitech Slovakia, which makes hoses and sealing systems for Volkswagen as well.

While so-called Tier-1 suppliers, those supplying finished components to automakers, should be seeing the greatest benefits from a new production centre, manufacturers further down the supply line also expect to benefit from Peugeot's Slovak operation.

"We have a great interest [in the Trnava plant]. We are already preparing ourselves so that in five years we will be a licensed subcontractor for [Tier-1] Peugeot suppliers," said Peter Krátky, general director of Topos Tovarníky, which produces parts for exhaust systems.

In addition, auto service industries see great growth potential, as building and commercial activity will create a greater need in the sector.

"The manufacturing colossus around Peugeot will bring us enhanced growth through the commercial vehicles on the roads, growth in employment, and more development of infrastructure. For us it is an opportunity for our auto maintenance services," said Marek Horváth of Mikona-MTG, a Trnava-based tyre service company.

Although the neighbouring Czech Republic was also in the running for the Peugeot investment, industry leaders there welcome the decision to build in Slovakia, saying the move will also be a boost for Czech suppliers.

"We have already done a few calculations. Trnava is only 45 kilometres from us," said Ivan Chrastek, head of the Kastek company in Uherský Brod, just across the Czech border. Kastek makes auto interior mouldings and glass parts.

While expressing regret than Peugeot had not chosen the Czech Republic, the Czech Automobile Industry Association applauded Peugeot's choice.

"It is definitely better for us than if the Peugeot investment went to Poland," said association head Antonín Šípek.

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