Fiat and General Motors are planning to build a £190m diesel engine factory in Poland. Construction of the factory in the southern Polish city of Bielsko-Biala will be launched after the two manufacturers establish two joint ventures as planned later this summer. One of the joint ventures will be responsible for development of motors and transmissions, and the other for parts. The Bielsko-Biala factory should produce 460,000 small-capacity motors annually, with most intended for export.

The new facility will replace the factory that produces the mini class Fiat 126, due to be phased out of production this autumn.

The Polish government has agreed to include the new factory in the Bielsko-Biala special economic zone, entitling it to an exemption from import duties for 10 years. From 2010 to 2016 the facility will be subject to half the normal import tariff.

It is reported that the engine factory will employ 1,200, some of whom will be laid-off from the old facility.