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Slovakia, leader in automotive industry
( 10 / November / 2005 )
During the last days, press agencies published the news that in 2007, Slovakia will become the world’s automotive leader. As far as the production of cars per person, this wish will come true and Slovakia will beat the current leader, Belgium. After the beginning of full production in 2007, the automotive factories KIA and PSA Peugeot will produce 900 thousand cars per year. This success is partly a result of dedicated work of project managers from SARIO agency, who not only helped to attract the major investments of PSA Peugeot Citroën and Kia Motors to Slovakia, but also closely cooperate on the preparation of infrastructure for the plants from the beginning up to the final inspection. Moreover, they secure a whole army of subcontractors, which is far the best effect for the support of small and medium enterprises in the regions, and the growth of employment. Between Bratislava and Zilina, over 60 subcontractors already invested, attracted by both automotive factories. SARIO, apart from other activities, engages in aftercare for the investors already established in Slovakia. Example is the biggest greenfield investment in the Slovak republic, Volkswagen Slovakia. Also due this aftercare service, VW automotive factory in Devinska Nova Ves is one of the most profitable of all the 42 companies around the world. The favorable state aid is not the only reason, why SARIO managed to attract these automotive giants to Slovakia. The first step was the presentation of SARIO in foreign countries. Key factors are: good geographical position, cheap, but very qualified workforce, flexible labor code, much lower tax burden compared to other EU countries, no dividend tax and improving business infrastructure. These advantages may “sell” Slovakia abroad, and SARIO uses them to maximize its presenting possibilities. The competitiveness of Slovakia is underlined by low production costs, main parts of which are wages. They are generally 30% lower than in other V4 countries, and from the long term point of view, will not have radically growing tendency.
Inflow of automotive investments brings the risk of Slovakia being dependent on one industrial branch, but based on the Association of automotive industry, the local demand for automobiles positively grows. SARIO concentrates on investment projects from other branches besides the automotive sector. Based on the new transparent rules of state aid, the agency may look for new opportunities. The criteria will be based on the added value of the investment, and not on the industrial branch.