At the entrance to an enormous marquee a band played and immaculately uniformed young girls marched. A primary school class presented bright red shovels for dignitaries to “turn the first sod”. A choir of teenage girls, already international performers, sang like larks: three songs in Czech and three in Japanese. The republic#;s prime minister showed up and the mayor made a speech.
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Kolin was excited that the car factory was coming to town and turned out in force. Short-listed by BMW for the 1-series plant, they#;d lost out to the east German town of Leipzig, another that, until 1989, had been under Russian management.
But, after exhaustive deliberations, beating off Poland (where Toyota recently sited an engine and gearbox plant) and sweetening PSA and Toyota with a $35.5 million “investment incentive” package from the government, Kolin had encouraged the small car joint venture partners to say “yes”. Construction of their 1.5 billion euro ($1.3 billion) factory was about to start.
Three years from now, 120 hectares of green field here on the vast, flat and fertile plains on the outskirts of town, close to the river Elbe and 60 kilometres (40 miles) east of Prague, will be home to a state-of-the-art assembly plant churning out 300,000 small Toyota-, Peugeot- and Citroen-badged cars a year, all built on a common platform.
The cars will all use either a three-cylinder, one-litre petrol engine built at that new $16 million Toyota engine and transmission plant in Poland (where an extra 300 million euros will soon boost production to 300,000 gearboxes and 250,000 engines a year using 700 extra staff) or a 1.4-litre diesel supplied by a yet to be decided French PSA plant.
A PSA insider told just-auto the engine would be the latest generation of the new HDi diesel developed with Ford and launched recently in the Peugeot 206 and 307 and Ford’s Fiesta.
However, Czech Prime Minister Milos Zeman made it clear he would really like to see an engine plant at Kolin as well.
At yesterday’s ceremony, attended by PSA Group president Jean-Martin Folz and Toyota Motor Corporation president Fujio Cho, he pointedly referred to Volkswagen’s recent investment in an engine plant near the Skoda factory.
But he won’t get one at Kolin: Folz responded that today’s economical engine plant builds one to two million units a year, way below Kolin’s initial offtake of 300,000 engines.
What PM Zeman will get, of course, will be a brand-new plant employing 3,000 in three shifts and 10,000 indirect new jobs. Employment starts next year, with some training in Japan, with production due by the end of 2005.
Kolin mayor Zdenka Majerova said the region is no stranger to car making, having built luxury cars from the late 1800s until the second world war.
The region was disappointed when it lost out to Leipzig after making BMW’s short list.
The Poles were a threat too. “Our biggest competitor and the initial, clear favorite to win this investment was Poland, where Toyota already produces transmissions,” Martin Jahn, CEO of CzechInvest, said last year.
“However, the complexity and quality of the Czech offer eventually overcame this initial drawback,” Jahn added.
Noting that Kolin is his home town, PM Zeman said that one of the key players in the BMW decision had told him that he had an aunt in Leipzig. To laughter from an audience of several hundred, Zeman added that he had concluded the aunt must have swung the deal ahead of his home town allegiance but, on the other hand, the subsequent Toyota investment is double what BMW proposed.
The investment and its inevitable job creation (80 suppliers followed VW into the Czech Republic after the Germans invested in Skoda) are obviously very welcome in a region that, glimpsed from a press coach window, seems to combine a sporadic mix of old-style Soviet-era heavy and chemical industries with vast fields of crops and energetic self-sufficiency, judging by the size of home vegetable gardens.
Unemployment around Kolin (pop. 32,000) is around 9.5 percent and 11 percent in a neighbouring region which will also benefit from the new plant.
Folz said Kolin was chosen due to its central location in the ‘Europe of the future’, its ‘industry-capable infrastructure#; including metallurgy skills, its sound technical education system and its excellent transport networks (which include a river port).
The plant will produce eight body variations on a single platform. One blank line and two press lines (utilising two-piece stamping to reduce costs) will chew through over 200 coils of steel a day producing 25,000 parts at the rate of 400 strikes an hour.
What TPCA calls a new ‘global body line’ will build the cars up with mostly manual operations for initial component placement and welding before 150 robots take over for jigged tacking and re-spotting. There’ll be only one jig for each car type.
In the paint shop the top coat will be water-based and cartridge bells will reduce paint consumption.
A T-shaped final assembly shop layout will contain trim, chassis and final assembly areas using mostly manual processes. Suppliers will be encouraged to set up just-in-time plants nearby with tyres and seats delivered direct to the line while other parts are fed in through a production control area.
Yesterday’s ground-breaking ceremony, actually a transfer of soil to a selection of potted trees that will be planted around the site, comes just nine months after Toyota and PSA signed in Brussels an agreement to develop and produce a new entry-level car for European markets.
Folz said the deal arose after he and Cho in early 2000 found many similarities in their views of how to tackle a segment vacated as previous incumbents, like Ford’s Fiesta, moved up in size, equipment and price.
The goal the two companies set last year after a joint feasibility study was to share as much of the development costs as possible yet produce three distinct versions that are simple yet attractive, innovative yet safe, small yet roomy enough for four European adults, and suitable for urban use yet comfortable on the highway.
Marketing studies showed a potential 1.2 million annual market in 22 countries by 2005 and the two companies believe they will succeed with their Fiat Seicento-sized offerings due to the increasing size of current small cars, the trend to more than one car in European households, growing urban traffic density and the increasing density of small cars in new markets.
Broadly, Toyota is handling the development and ‘productionising’ while PSA sorts out the purchasing arrangements for parts and supplies but Folz said there is considerable overlap and idea exchange for every aspect of the project.
Development costs are being shared 50-50 while investment expenses are being shared two-thirds PSA and one-third Toyota.
And the people of Kolin yesterday shared their excitement about the project with their guests.
