Visteon is joining the rising number of auto suppliers following their car-manufacturing clients into low-cost Slovakia.
The US supplier will open a E40 million plant in Nitra, 80km northeast of Bratislava, to supply PSA/Peugeot-Citroen, Hyundai-Kia and Volkswagen.
"We will manufacture car interiors and climate control systems," said Heinz Pfannschmidt Visteon president for Europe and South America.
Production will start in spring 2006 at the factory, which will employ 400 people.
VW has been making cars in Bratislava for more than a decade and boosted annual capacity this year to nearly 300,000 units.
PSA and Hyundai-Kia are building large-capacity assembly plants in Slovakia.
The carmakers aim to start production by 2006.
Hyundai-Kia's plant in Zilina will produce 200,000 cars annually while PSA's factory in Trnava is scheduled to build 300,000 cars a year.
Including planned expansions of capacity, the three plants could have the ability to build 900,000 vehicles a year by 2008.
For Visteon, the move to Slovakia reflects the company's efforts to broaden its customer base by lessening its dependence on Ford, its former owner, and Ford brands within the Premier Automotive Group.
Spun off by Ford four years ago, Visteon is the world's No. 6 auto supplier with 2003 sales of $17.7 billion.
"Ford of Europe and PAG will represent only 50 percent of our sales in 2005," Pfannschmidt said. In 1999, Ford accounted for more than 90 percent of Visteon's revenue.
Visteon already has three plants in the Czech Republic, two in Poland and one in Hungary. It is one of several large suppliers locating in Slovakia.
In June, French partsmaker Faurecia said it will invest E30 million in a bumper plant in Hlohovec, Slovakia.
The production will mostly go to PSA in Trnava, where, sources say, the 207, successor to the 206 small car, will be built.
US-based Key Plastics plans an $18 million (currently E14.6 million) auto parts plant in Dolny Kubin. The plant, which will employ 350 people will be Key's second molding operation in central Europe.
Johnson Controls Inc. will start construction this month on a $26 million technical center in Trencin.
JCI is also considering Slovakia for a $30 million factory for seat components to supply PSA and Kia.
JCI already has a seat assembly plant in Slovakia to supply VW. It shares the building with Lear, which makes door panels for VW.
Plastic Omnium of France opened a bumper-making plant in Bratislava in 2002 to supply VW.
Slovakia is attracting foreign investment with competitive labor costs, low corporate taxes, a relatively well-trained labor force, government incentives and transport facilities.