SLOVAKIA continues to compete for the biggest players in the automobile industry. This time, the country has attracted German auto supplier, Getrag Ford Transmissions.
After Volkswagen, PSA Peugeot Citroen, and Hyundai/KIA Motors, Getrag Ford Transmissions is yet another large company in the automobile sector to find a home in Slovakia.
Slovak Economy Minister Pavol Rusko confirmed at a December 2 press conference that Getrag Ford Transmissions intends to start production of Ford gear boxes in 2007.
The German company selected a site at the Kechnec industrial park near Košice city in Eastern Slovakia. Regional government head Rudolf Bauer had told the news wire agency SITA that he would market the Košice region in such a way to be especially attractive to Getrag.
The construction of the transmission plant will start in the first half of 2005. The German company will invest €300 million in a region that suffers from the highest unemployment rate in the country.
Getrag estimates that it will bring 1,000 jobs to Kechnec. Getrag's business partners and suppliers might also establish themselves in the region, injecting the area with 1,000 to 1,500 more new jobs.
Getrag expects its annual turnover in Slovakia to reach €300 to 400 million.
Rusko said investment incentives offered to the German company by the Slovak government will not exceed Sk3 billion (€80 million).
While analysts agree that Getrag's investment would boost the country's economy, some worry that the presence of a fourth carmaker could make Slovakia's economy overly dependent on the automobile industry.
Whenever a region relies on a single industry for the majority of its economic well being, that region becomes vulnerable to market changes.
As the auto manufacturing business is cyclical, characterised by peaks and valleys, Slovakia could experience some economic instability as a result.
Most analysts do not think that would be the case, however.
"The automotive industry in Slovakia is fairly well diversified around three large, independent car producers. This diversification should soften potential fallouts from a fall in global demand," VÚB Bank research analyst Mária Valachyová told The Slovak Spectator.
According to Valachyová, the benefits of focussing on a single industry outweigh the pitfalls. Slovakia, for example, is home to a great many automobile suppliers and trained workers, both of which can help car manufacturers reduce costs.
"Along with increasing car exports and generating new jobs, which helps boost standards of living and consequently increases consumption, the benefit of yet another carmaker on the Slovakia scene would be the further clustering of auto-related industries.
"Over time, this would grow beyond manufacturing and involve higher value-added activities, such as research and development," Valachyová said.