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US parent firms of Slovak subsidiaries going bankrupt

US COMPANIES such as Delphi and Tower Automotive are under the protection of bankruptcy courts but their subsidiaries in Slovakia are not affected by the problems, the daily SME reported.

Delphi, which has a plant in Senica, belongs to one of Slovakia's most important employers, with over 2,000 employees. The company, which produces electro-technical appliances for cars, even plans to hire more staff by the end of the year.

Another US corporation, Tower Automotive, which also faces trouble in the US, has a branch in Slovakia that has 800 employees. The firm, based in Malacky, supplies the Volkswagen plant in Bratislava.

ING Bank's chief economist Ján Tóth explains the trouble free operation of the Slovak subsidiaries as follows: "Low production costs [in Slovakia] compared to the richer countries secure a certain level of immunity against the negative consequences of the decreasing demand".

"If a producer has plants in Germany and Slovakia for instance, in case of a slow down in demand it will logically decrease output in the more expensive country," Tóth said.

Compiled by Martina Jurinová from press reports
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