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November 29, 2005

CZECH REPUBLIC: Officials try to turn cabbage patch into plant site

The Czech government is using cash and launching a public relations offensive as it tries to assemble a building site for a Hyundai car assembly plant, Automotive News Europe said.

The Czech government is using cash and launching a public relations offensive as it tries to assemble a building site for a Hyundai car assembly plant, Automotive News Europe said.

The challenge for the central and regional governments is successfully negotiating the purchase of numerous parcels of land with 170 landowners – and a cooperative that grows cabbage on part of the site.

It is a legacy of doing business in central Europe. Laws allow governments to force landowners to sell. But new democratic regimes are highly reluctant to enforce them because of the memories of how previous communist governments did so.

Hyundai said in October that it had selected the Czech Republic for a car assembly plant with expected annual capacity of 300,000 units. The Korean automaker wants to start construction in spring 2006 and open the plant in 2008.

But Hyundai did not specifically identify which of three nearby sites it had picked. That gives it some manoeuvring room in case the land-buying process drags on like it has for subsidiary Kia in Zilina, Slovakia.

The favoured Hyundai site is south of the industrial city of Ostrava, in eastern Czech Republic near the borders with Poland and Slovakia.

The regional and central governments are prepared to spend about EUR55 million to create a 260-hectare industrial zone for Hyundai. But they first must come to terms with local landowners.

“They have promised a land exchange, but I don’t know” if the cooperative will accept it, said Nosovice agricultural cooperative chairman Jiri Vicha. The cooperative grows cabbage on 1,000 hectares of land. That includes a rented half-hectare plot in the proposed industrial zone.

The group wants compensation for being shifted to a plot six miles (10km) from the current site and a 15-year rental agreement for the new plot.

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