Hyundai Motor is expected to break ground for a European production plant as early as next spring, a Czech Republic government official told The Korea Herald.
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The fast-growing automaker plans to build a €1 billion ($US1.2 billion) plant at one of three sites near the Czech city of Ostrava, about 140 miles (230 kilometres) east of Prague.
Producing cars in the Czech Republic, a member of the European Union, will exempt Hyundai from import tariffs levied on exports to European countries and will also save on logistics costs, as Ostrava is located within two hours’ drive of affiliate Kia Motors’ factory currently under construction in Zilina, Slovakia.
“After Hyundai decides on the final location, it will take about half a year to prepare the site for construction,” Rene Samek, a director at CzechInvest, a government agency promoting foreign investment, told the Korean newspaper.
“Therefore, construction of the factory is likely to begin in late spring or early summer next year.”
Hyundai said earlier that it plans to complete the Czech plant by the second half of 2008 to roll out 300,000 cars annually. Its sales in Europe rose 12% this year
Last week, Hyundai Automotive Group Chairman Chung Mong-koo met with the Czech Prime Minister Jiri Paroubek and inspected the three sites in the country, the Korea Herald said.
The Czech Republic had been a strong candidate for Kia’s plant two years ago until neighboring Slovakia won the deal by promising to prepare the site earlier.
The wage level in Slovakia was also slightly lower than in Czech two years ago, according to Samek.
“The estimated monthly wage for workers at the Ostrava plant may be about €500 euros for unskilled employees and €600-700 euros for the skilled,” he said.
Hyundai proposed to create 3,000 new jobs in the region.
By 2009, Hyundai Motor’s overseas production volume is estimated to reach 1.72 million units per year, close to 1.9 million manufactured domestically. Hyundai plans to churn out 300,000 cars from its US plant in Alabama, 600,000 units from China, 120,000 units from Turkey and 300,000 from the Ostrava factory.
The Ostrava plant is expected to be Hyundai Motor Group’s ninth overseas production base after Kia’s planned US plant.
In three years, the combined production of Hyundai and Kia in Europe is expected to reach half a million units.
