A decision on the site of Hyundai Motor‘s €1.1 billion ($US1.41 billion) European plant should be made after a recently returned team from the Korean car firm spends 10 days examining proposals from Slovakia and Poland, a source close to the deal told Reuters on Thursday.
Officials from Hyundai Motor and affiliate Kia Motors returned to South Korea late on Wednesday after completing negotiations with governments of the two central European countries.
Speculation has been rife in Slovakia’s financial markets that Hyundai has tentatively chosen Slovakia, sending the crown currency higher in anticipation of the hefty foreign investment.
“The business environment is the top criteria (in decision making) as incentives have just temporary effects,” the source told Reuters by telephone. “A place where we could save costs would be better when we take into account that the business would be there for decades. Not only labour, but logistics costs are important. Also, the consumer market there is crucial,” he reportedly said. For now, Slovakia has an edge in cost terms, but it has a small population and there was a risk costs could rise as major global businesses make a foray into the once-Soviet-style economy, the source added.
The source told Reuters that the decision could be announced officially late this month.
He reportedly added that Hyundai and KIA plan to spend €700 million to €800 million initially and begin construction in the first half of this year with completion due in the second half of 2006 for the factory to begin operations in 2007.
Hyundai Mobis, Hyundai’s car parts affiliate, and other supplier firms would make additional investment decisions once the plant location was determined, the source told Reuters.