BRATISLAVA -- U.S. car parts producer Visteon Corp. will invest 40 million euros ($48.9 million) to build a plant in Slovakia to supply the new EU member's booming car industry, the company said on Wednesday, Oct. 13.
Visteon joins other auto part suppliers that have recently set up plants in Slovakia to support the major car producers that are building factories in the country.
The No. 2 U.S. auto parts maker said its new Slovak facility will make car interiors and climate control systems for plants owned by South Korea's Kia Motors and France's PSA Peugeot Citroen.
"Recent new business wins gave us the opportunity to review our European manufacturing base and evaluate how to best serve future business with car makers located in Central Eastern Europe," said Karl Krause, Visteon's Europe and South America vice president for manufacturing.
The plant, which should begin production in spring 2006, will be located in the western Slovak town of Nitra and it is expected to employ around 400.
Slovakia has become a favorite location for car manufacturers and their suppliers in the past few years, thanks to a low-cost workforce, proximity to eastern and western markets and the flat 19-percent corporate and income tax rates.
Foreign direct investment into the car industry and prospects for growing exports have contributed to a stronger crown currency this year.
The car industry is already the main pillar of Slovakia's economy, accounting for over 25 percent of the overall industrial output.
Car production currently centers mainly around a Volkswagen plant near the capital Bratislava, which makes 280,000 units a year.
But PSA Peugeot Citroen intends to start assembling 300,000 vehicles a year in its new Slovak plant from 2006, while Kia plans to open the 200,000-cars-per-year factory in late 2006 or early 2007.
Volkswagen and the two new factories are expected to make Slovakia the world's largest car producer per capita.