Scania has signed an agreement in principle with the government of Iraq on assembly of trucks and buses in that country. The contract includes an initial delivery of 500 vehicles, with production starting during the third quarter of 2009. Operations will take place under the aegis of Iraq’s State Company for Automotive Industry.

Infrastructure investments and job creation are important elements of the rehabilitation of Iraq. Scania has been offered the opportunity to resume operations in the same facility that it previously used for assembly of trucks. The factory is located in Iskandariyah outside Baghdad.

“Scania has the necessary qualifications to satisfy the Iraqi government’s desire to begin local production quickly. Assembly of the 500 trucks initially ordered is expected to employ about 500 people. The facility will be designed for the production of 3,000 vehicles per year,” says Klas Dahlberg, Vice President in charge of Scania’s sales in the Middle East.

A memorandum of understanding signed by the two sides specifies that Scania, in collaboration with its Iraqi distributor, will assume responsibility for installation of production equipment as well as employee training. Operations may eventually be expanded to include production of complete vehicles, such as tipper trucks, and bodyworking of buses and coaches.

“In collaboration with our Iraqi distributor, we will also invest in the establishment of a service network in the country. Even today, there is a great need for workshops to take care of vehicles that operate in international traffic to Iraq,” Mr Dahlberg says.

In the early 1980s, Iraq was one of Scania’s largest markets. In 1981, the Iskandariyah factory assembled 3,900 trucks. Many of the trucks produced there during the 1980s are still in service.

The contract between Scania and the Iraqi government’s Ministry of Industry & Minerals was signed during Swedish Trade Minister Ewa Björling’s visit to Baghdad, accompanied by a delegation of Swedish exporting companies, which ends on November 19.