Volkswagen Slovakia was founded in 1991 and is your largest investment outside Germany today. Can you tell us what motivated you to invest in Slovakia at that time?
It is the largest and the oldest investment, because it was founded at the very beginning of the transformation process in 1991. I have to say that the Czech and Slovak Governments in 1990 initiated this project. I was the First State Secretary for the Minister of Machinery and Electrotechnics in Prague back in those days. We were focusing on the restructuring process of the machinery industry. The first Government project was a proposal for the development of the car industry. It was commonly known that the level of sophistication of the car production industry in former Czechoslovakia was the best in all Eastern European countries. We prepared two final projects, Skoda Mlada Boleslav and Bratislava. Based on this project, also a restructuring of the entire sub-supplier network. Our goal was to change the direction of exports. We wanted to find new targets and to improve underdeveloped production. That is how we came to the conclusion to look for a strategic partner. We turned to 12 major car producers, and at the very end just two World Investment News Ltdrs remained at the table. In both projects, it was Volkswagen. They were the best prepared for negotiating, it matched the strategy and it has proven to be a successful solution.
How do you actually define the difference between investments made by Volkswagen in Slovakia and in other Eastern European countries?
We are the most dynamically developing company. By the end of 2001, Volkswagen reinvested more than DM 1,5 billion into this company. This resulted in a sharp rise in production. We produced more than 181 000 cars last year, more than 320 000-gear boxes and 17 million car components. We employ 7 500 people. Another important point is that the sub-supplier network grew. Also, the sophistication level of our components improved. Volkswagen Slovakia produces the most sophisticated components in the Volkswagen Group. A fine example is the 4motion model in Bora and Golf.
What is the level of local content in terms of components?
We are part of a global company, but the majority of components originate in the region of Slovakia. The supplies are oriented towards the whole Volkswagen group. The production of components is growing faster than the production of cars.
How many sub-suppliers do you have here in Slovakia?
We have 47 suppliers located in Slovakia.
Your turnover in the first 9 months of 2001 was around Sk 85 billion (approx. $ 1,8 bn), which was higher than the total for 2000. Is this result in line with your plans and what are your expectations for 2002?
Our Company is known to exceed its budget every single year. This happened last year when we expected production to drop due to a new product line development. But we managed to overcome this handicap, our output reached Sk 90 billion. This year and next we expect more substantial growth.
You are by far the largest Slovak exporter accounting for 17% of Slovakia's total export. What is your expansion strategy and objectives for the markets you export to?
The percentage of our contribution to Slovakia's exports is going to rise in the next two years. New production lines and demand for these new car models determine this. More than 99% of our production is directed to the most demanding markets in the world, including Germany, Japan, France, and Austria. Every product is produced for a customer, we never have leftover cars. | One of your major projects is the construction of an industrial park in Lozorno. How would you evaluate the impact of that industrial zone on Volkswagen's activities and on the region's economy?
This industrial zone that we are building in Lozorno is making several impacts. The first fact that should be considered is that we are the most eastern located company within the VW group. This also has some negative sides, including long transport distances from the western suppliers. When our daily production exceeds more than 1000 cars a day, we want our suppliers to move their production closer to us. The industrial zone in Lozorno is going to be a place for our GIT suppliers and will solve our handicap in logistic expenses. The supplier may use a region with lower labor force expenses. The impact on the Slovak economy is clear: construction and employment are going to rise.
How many foreign suppliers do you expect to attract to that industrial zone?
We already have 12 major foreign suppliers located there. They are affluent suppliers from America and Western Europe. They aren't located just in the industrial zone. We possess one of the most sophisticated aluminum production facilities in the world in Ziar nad Hronom. More investors are penetrating the metallurgy business. So there are a lot of activities going on.
So far VW has benefited from various incentives that today are considered as conflicting with EU regulations, such as the ten year tax holiday. As a foreign investor, would you consider it as interesting to invest in the Slovak automotive industry today as was the case 5 or 10 years ago?
The tax holidays were given to us only three years ago. In the very beginning we experienced more complications than assistance. The first steps towards attracting foreign investors were formulated in the year 1998. That means all the neighboring countries had been using this powerful instrument for eight years. The truth is that in the year 1998 this condition helped some projects be established. That's why we think if one partner fulfills the objectives, the others should do the same. During negotiations with the EU these conditions should be finalized.
On a more personal level, can you give us a brief history of your personal background and what your challenge would be for the next few months?
I have worked in the machinery business all my life. I have worked as an architect in one of the biggest factories in Dubnica. Later on, I was in charge of production in that factory, and then I became technical director in a factory employing 15 000 people. Afterwards, I became technical director of ZTS which consisted of 14 factories, had five research institutes and employed 85 000 people. Our production made up to five times the current production of Skoda Plzen. In the years 1990 and 1991, I worked in Prague as the first Secretary of State at the Ministry of Machinery. And in 1991, I was asked to lead a group formed for the Slovak Government that was in charge of the conversion of the Slovak car industry. Since May 1991, I have been in this company in Bratislava. I am employee number one. I am also President of the Automotive Industry here in the Slovak Republic, President of the Association of Industrial companies, a member of the Board of Directors of the Association of Employers and a member of the Industrial Board. So I have got a few activities going on. This has one goal, which is to build a true business atmosphere in Slovakia. It takes a lot of energy, but we have to operate this way. Every single member of the transformation business had no idea what this could turn out to be.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
V.I.P. INTERVIEWS 
