Automotive FDI in Emerging Europe A. Jacobs Automotive FDI in Emerging Europe Shifting Locales in the Motor Vehicle Industry A. Jacobs Department of Sociology East Carolina University Greenville, North Carolina, USA ISBN 978-1-137-40781-8 ISBN 978-1-137-40786-3 (eBook) DOI 10.1057/978-1-137-40786-3 Library of Congress Control Number: 2017937902 © The Editor(s) (if applicable) and The Author(s) 2017 The author(s) has/have asserted their right(s) to be identified as the author(s) of this work in accordance with the Copyright, Designs and Patents Act 1988. This work is subject to copyright.
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Petr Pavlinek, whose scholarly publications on the auto industry in Post-Socialist Europe and dedication to excellence have inspired my own research. Contents 1 Introduction and Overview 1 2 Two Blocs to One Market: The Shift East of Auto Production in Post-Socialist Europe 11 3 Foreign Passenger Car Plants in Poland 35 4 Passenger Car Plants Before and After the Former East Germany 103 5 Foreign Carmakers in Czechia 147 6 Foreign Automakers in Independent Slovakia 191 7 Foreign Car Plants in Hungary 235 8 The Next Ring:The Emerging Southeast Europe Auto Zone 279 9 Conclusions and Future Auto FDI Prospects for CE and SEE Nations 319 Index 351 vii List of Tables Table 1.1 Active and planned foreign car plants in the CE and SEE, 2016 3 Table 2.1 Passenger car production in CE and SEE, 1950–1989 16 Table 2.2 Foreign passenger car plant takeovers and launches in CE and SEE, 1989–2000 20 Table 2.3 Passenger car production in three areas of Europe, 1989–2001 23 Table 2.4 Foreign passenger car plants launched or planned in the CE and SEE, 2001–2016 26 Table 2.5 Passenger car production in three areas of Europe, 2001–2015 28 Table 3.1 Active and former foreign car plants in Poland 41 Table 3.2 UkrAVTO-GM car production at FSO Zeran, 2008–2012 64 Table 3.3 FCA Tychy light vehicle production, 2009–2015 70 Table 3.4 VW Poznan light vehicle production, 2009–2015 78 Table 3.5 Opel Gliwice car production, 2009–2015 87 Table 3.6 Foreign car production in Poland, 1989–2015 90 Table 4.1 Active and former car plants in the former East Germany 111 Table 4.2 VW Zwickau (Mosel) car production, 2009–2015 116 Table 4.3 VW Dresden car production, 2009–2015 119 Table 4.4 Porsche Leipzig car production, 2009–2015 123 Table 4.5 Opel Eisenach car production, 2009–2015 134 ix x List of Tables Table 4.6 BMW Leipzig car production, 2009–2015 135 Table 4.7 Car production in the former East Germany, 1989–2015 140 Table 5.1 Foreign car plants in Czechia 148 Table 5.2 Skoda light vehicles production in Czechia, 2009–2015 171 Table 5.3 TPCA Kolin car production, 2009–2015 174 Table 5.4 Hyundai Nosovice car production, 2009–2015 179 Table 5.5 Foreign car production in Czechia, 1989–2015 183 Table 6.1 Foreign car plants in Slovakia 196 Table 6.2 VW Bratislava car production, 2009–2015 203 Table 6.3 PSA Trnava car production, 2009–2015 208 Table 6.4 Kia Zilina car production, 2009–2015 219 Table 6.5 Foreign car production in Slovakia, 1989–2015 226 Table 7.1 Active and former foreign car plants in Hungary 243 Table 7.2 Suzuki Esztergom Car Production, 2009–2015 256 Table 7.3 Audi Hungary car production, 2009–2015 263 Table 7.4 Mercedes-Benz Kecskemet car production, 2012–2015 267 Table 7.5 Foreign car production in Hungary, 1989–2015 270 Table 8.1 Foreign passenger car plants in SEE Auto Zone 281 Table 8.2 Car production in the SEE Auto Zone, 1989–2015 283 Table 8.3 SEE Auto Zone car production by Plant, 2009–2015 288 Table 9.1 Comparing labor in Central, Southeast, and Western Europe, 2015 321 Table 9.2 CE and SEE labor, accessibility, and government attractiveness for car plants 324 Table 9.3 CE and SEE near-term prospects for new car plants and expansion 327 1 Introduction and Overview In the first ten years following the fall of the Berlin Wall in 1989, Western automakers commenced passenger car production at 16 sites in the former Socialist Central European (CE) nations of Czechoslovakia, East Germany, Hungary, Poland, and Slovakia. Four more were taken over in the former Socialist Southeast Europe (SEE) nations of Romania and Yugoslavia. Passenger cars were defined here as cars, sport and crossover utility vehicles (SUV or CUV), multi- purpose vehicles/microvans (MPVs), minivans/vans, and light pickup trucks utilized for private transportation and not commercial purposes.
The first sooners, Fiat (now FCA) and General Motors (GM) in Poland, Suzuki in Hungary, and Volkswagen (VW) in East Germany and Czechoslovakia, originally established joint ventures with state-run organizations. Whereas the labor savings accrued by building cars bound for Western Europe in CE grew more important over time, inflated projections of new cars sales in the Eastern Bloc and gaining duty-free entry to these markets were the most decisive factors provok- ing the establishment of most early plants. In fact, 13 of the 20 plants launched in CE and SEE by 2000 were officially announced before © The Author(s) 2017 1 A. Jacobs, Automotive FDI in Emerging Europe, DOI 10.1057/978-1-137-40786-3_1 2 1 Introduction and Overview November 1, 1993, the day when the Treaty of Maastricht making the European Union (EU) a reality came into effect (See Chapter 2).
The success of these initial factories attracted scores of foreign com- ponents suppliers to these areas, and then more foreign car plants. This second wave of car factories was motivated by the growing influence of other forces. Most important among them was the impending major enlargement of the EU on May 1, 2004 which incorporated all four CE nations into the single market. This enabled foreign automakers to truly take advantage of the CE’s strategic geographic proximity to Western European markets and their relatively inexpensive, yet sufficiently skilled labor forces.
CE governments also became more involved, competing aggressively for these plants by adopting extensive foreign direct invest- ment (FDI) focused incentive programs and then offering larger and larger subsidy packages to lure foreign carmakers. In sum, the situation went from automakers chasing markets to firms chasing cost-cutting labor and States chasing automakers. As a result of this new environment, ten more foreign car assembly complexes were announced in CE and SEE between 2001 and 2016, and many of the first wave of 20 plants were expanded significantly. Conversely, three facilities from the initial group were closed by 2012 and four others ended car output to concentrate on other activities.
As a result, as detailed in Table 1.1, there currently were 22 active foreign car plants and one under construction in CE and SEE in 2016. Among the active plants, 18 and the one in progress were in CE and four in SEE. The CE plants included: four in Czechia; three in Slovakia, with a fourth in Slovakia underway (Czechoslovakia split in 1993); three in Hungary; three in Poland; and five in the former East Germany (East and West Germany unified in 1989). The four in SEE included: two in Romania; and one each in the former Yugoslav republics of Serbia and Slovenia.
None of these 22 factories were controlled by firms originally based in Eastern Bloc nations. Overall, the active 22 plants collectively had the capacity to produce more than 6.2 million light vehicles per year and employed 123,171 persons in 2015. Slightly more than 5.0 million of this available vehicle capacity and 101,783 of these workers were located in CE factories. Finally, these complexes assembled more than 4.7 million passenger cars Table 1.1 Active and planned foreign car plants in the CE and SEE, 2016 Emp.
Passenger Vehicle Company Production 31 Dec, car output capacity Automaker origin Place, CE nation Announced launched 2015 2015 2016 Total 123,171 4,732,545 6,207,000 CE 101,783 4,124,074 5,047,000 SEE 21,388 608,471 1,160,000 1. FCA Italy Tychy, Poland Sep-1987 Jun-1991 3,270 302,639 600,000 2. Renault Revoz France Novo Mesto, Slovenia Jun-1988 Dec-1989 3,178 129,405 210,000 3. VW Germanya Zwickau, Germanyb Dec-1989 Oct-1996 8,820 301,301 300,000 4.
Suzuki Japan Esztergom, Hungary Jan-1990 Oct-1992 3,100 185,533 300,000 5. GM Opel USA Eisenach, Germanyb Mar-1990 Sep-1992 1,850 116,248 160,000 6. VW Skoda Germany Mlada Boleslav, Czechia Dec-1990 Apr-1991 21,299 537,621 600,000 7. VW Skoda Germany Kvasiny, Czechia Dec-1990 Apr-1991 3,374 142,286 180,000 8.
VW Germany Bratislava, Slovakia Mar-1991 Dec-1991 9,762 358,776 400,000 9. VWc Germany Poznan, Poland May-1993 Jul-1994 7,765 62,656 175,000 10. GM Opel USA Gliwice, Poland Dec-1995 Aug-1998 2,890 169,405 207,000 11. Audi Germany Gyor, Hungary May-1996 Apr-1998 11,411 160,206 160,000 12.
VW Germany Dresden, Germanyb Jun-1998 Dec-2001 525 3,254 10,000 13. Renault Dacia France Mioveni, Romania Jul-1999 Sep-1999 11,108 339,204 450,000 14. Porsche Germany Leipzig, Germanyb Sep-1999 Aug-2002 3,667 164,968 165,000 15. BMW Germany Leipzig, Germanyb Jul-2001 Mar-2005 6,000 233,656 240,000 (continued ) Table 1.
Passenger Vehicle Company Production 31 Dec, car output capacity Automaker origin Place, CE nation Announced launched 2015 2015 2016 16. Toyota- Japan-France Ovcary-Kolin, Czechia Dec-2001 Feb-2005 3,464 219,054 300,000 Peugeot 17. PSA France Trnava, Slovakia Jan-2004 Jun-2006 3,500 303,025 360,000 18. Korea Teplicka nad Vahom, Mar-2004 Dec-2006 3,646 338,200 360,000 Slovakia 19.
Korea Nosovice, Czechia Sep-2005 Nov-2008 3,440 342,200 350,000 20. Ford USA Craiova, Romania Sep-2007 Sep-2009 4,002 47,967 300,000 21. FCA Italy Kragujevac, Serbia Apr-2008 Mar-2009 3,100 91,895 200,000 22. Mercedes-Benz Germany Kecskemet, Hungary-Plant 1 Jun-2008 Mar-2012 4,000 183,046 180,000 — Mercedes-Benz Germany Kecskemet, Hungary-Plant-2 Jul-2016 Mar-2012 ~2,500 NA ~150,000 23.
JLR India Nitra, Slovakia Aug-2015 Late-2018 ~2,800 NA ~300,000 Sources: Compiled and adapted by the author from Tables 3.3 of this book. a All German automakers were based in the former West Germany. b All five plants listed in Germany were located in the former East Germany. c Also produced 108,144 LCV in 2015.
Introduction and Overview 5 in 2015, of which CE produced 4. By comparison, CE and SEE plants assembled 1.7 million cars in 2001 and slightly less than 1. Including East Germany, CE facilities built 1.5 million of these cars in 2001 and 702,819 in 1989. As output in CE and SEE expanded after 2001, many of these same automakers, with the exception of the Japanese and Korean firms, mothballed and/or downsized one or more of their existing plants in Western European.
France, Belgium, and Italy were hit hardest, but even the former West Germany was not immune to such actions. The result was that after declining slightly from 14.9 million in 1989 to 14.8 million in 2001, total car production in Western Europe’s ten largest producing nation fell to 11. In other words, as annual car output in CE increased by 2.6 million in 2015 as compared with 2001 and 3.0 million including SEE, it contracted by 3.1 million or one-fifth in Western Europe during this frame. Chapter 2 supplies more details on this shift.