South Korea’s Daewoo has suspended
its plan to construct a new engine production facility in Poland until a decision
has been made on a new strategic investor for the car maker, company officials
said.

According to Krystyna Danilczyk, spokeswoman for the Daewoo-FSO plant in Warsaw,
Daewoo has suspended its request to the Polish treasury for a $US100 million
loan, which would have allowed the auto maker to build the Matiz compact model.

Following the bankruptcy of the Daewoo Group in August 1999 – with $US80 billion
debt – Poland’s second largest auto manufacturer behind Fiat SpA is struggling.

Last October, the Polish factories cut costs by nearly a third in order to
remain in operation and in December Daewoo vowed to slash its workforce by one
third in an effort to speed up its takeover by General Motors.

“If the new investor confirms the decision to build the plant we are ready
to launch work in a maximum of two months,” said Danilczyk, speaking to Agence
France Pressse. “We are continuing discussions with the bank consortium which
is ready to make the loan.”

The new engine factory would build up to 30 1.0-1.2 litre engines per hour,
and would allow Daewoo to reduce production costs and make the Matiz model compatible
with stringent EU pollution regulations.