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| Jaguar Land Rover deal signed |
| Bratislava, 12.12.2015 |
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| Slovak cabinet finalises agreement with the British carmaker on plan to build new plant in Slovakia.
The clinching of an investment agreement between representatives of the Slovak government and the British carmaker Jaguar Land Rover (JLR) on December 11 confirmed the arrival of the fourth carmaker ti Slovakia. JLR, owned by the Indian Tata Group will build a new plant near Nitra in western Slovakia and invest about 1.1 billion pounds (about €1.52 billion). The Slovak government will support it with investment stimuli of €130 million, the TASR newswire reported.
“Jaguar Land Rover is delighted today to welcome Slovakia into our family,” Ralf Speth, CEO of JLR wrote in company’s press release. “The new factory will complement our existing facilities in the UK, China, India and Brazil and marks the next step in the company’s strategy to become a truly global business.”
JLR chose Slovakia over a number of other European countries, the United States and Mexico. Slovakia has an established premium automotive sector, which represents 43 percent of the country’s overall industry. It has more than 300 suppliers in close proximity and an excellent logistics infrastructure; this confirmed our decision that this country was the ideal location, JLR wrote.
After signing the agreement Prime Minister Robert Fico highlighted that the JLR’s investment in Slovakia is the biggest investment on the European continent over the last seven years. In terms of the stimuli, for which the carmaker will be entitled only after the process of ratification and notification by the European Commission, he said that even though the stimuli in the form of a subsidy for purchase of long-term tangible and intangible assets seems high, it is only 9 percent of the total investment.
Slovak Economy Minister Vazil Hudák specified after the signing of the agreement that the investment is calculated for five years, from 2016 to mid 2021, while this first phase might be followed by a second phase of €500 million. But Hudák specified that whether the second phase would follow would depend on the general development on the market.
“Direct employment via the JLR investment should be almost 3,000 jobs and the total scope of work places that should be created as a result of this investment should be about 15,000,” said Hudák.
The annual production capacity of the plant should be 300,000 while models to be produced here have not been specified yet. Production should start in 2018 or 2019.
Analysts believe that the investment will boost the economic growth of Slovakia as well as employment but warn about concentrating too much on the automotive industry, pointing out that development in this sector is cyclic. Moreover, while Slovakia suffers from a high jobless rate, some companies also have problems to fill their vacancies.
Slovakia already has three car manufacturers, Volkswagen Slovakia in Bratislava, Kia Motors Slovakia near Žilina in Teplička nad Váhom and PSA Peugeot Citroën Slovakia in Trnava. Last year the three carmakers manufactured 993,000 vehicles, or 183 per capita, according to the European Association of Carmakers. That makes Slovakia the biggest car producer in the world based on per capita production.
The National Bank of Slovakia (NBS) has alreday calculated potential impacts of the arrival of the new car maker to Slovakia.
“The arrival of a car maker initially benefits construction, with car production only to follow later,” NBS Vice Governor Ján Tóth said. “The initial effect on GDP is 0.3 percent of GDP in 2016 and 0.2 percent in 2017.”
Jana Liptáková
Spectator |
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