Korean tyremaker still browsing Visegrad claims Poland

By bne IntelliNews March 17, 2014

bne -

A Korean tyremaker, reported last week to be set to invest over €350m in a plant in the Czech Republic, is still looking at Poland as well, a senior official in Warsaw claimed on March 14.

Korean tire producer Nexen is hunting for a location to build its first factory in Europe. Poland's Economy Minister, Janusz Piechocinski claimed that the Lower Silesian town of Ujazd is in the running.

"Soon there will one of Europe's largest tire factories in Lower Silesia," he said, according to the Warsaw Business Journal. "Nexen Tire is to make its decision by the end of March," an unnamed source involve in the negotiations told Puls Biznesu.

Czech media reported in early March that an announcement from Nexen on an investment of up to CZK20bn (€630m) in north Bohemian town of Zatec was imminent. However, sources at the company quickly moved to dampen those suggestions, hinting that the company is still negotiating incentives.

An unnamed Nexen source said that the premature claims may have been triggered by the fact that the tyremaker recently secured a deal to supply tires to Czech automaker Skoda. "Like all tyremakers, Nexen has long-term expansion plans that naturally include building overseas plants," said the insider. He, however, added that the company's management has never expressed commitment to any country, reported South Korea's Yonhap.

Nexen's tyres are also used by South Korean car makers Hyundai and Kia. Hyundai has a plant in the Czech Republic in the Moravskoslezsky Region, which sits to the east bordering Slovakia and Poland. Kia is active in Zilina, in western Slovakia.

Nexen currently produces some 30m units annually in its factories in Korea and China. By 2020, the company hopes to be one of the top ten producers globally, manufacturing 80m units. The South Korean company has been mulling offers from Hungary and Slovakia, as well as Poland and the Czech Republic, for its first location in Europe.

The ongoing tussle between the Visegrad states for the investment is reminiscent of the 2005 race to land another South Korean tyre producer: Hankook. At the time, the Czech Republic said it had refused to offer investment incentives, insisting that it was only interested in high added value projects. However, with the crisis having pulled the rug from under the country's formerly successful drive for investment, the new government in Prague has made FDI a top priority.

Hungary eventually fought off Poland and Slovakia for the Hankook plant. On March 12, the European Commission gave approval to €57.9m in investment aid to the company, which is planning a third phase expansion of its Hungarian facilities.

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