GM considers building new plant in Eastern Europe

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Jesse Snyder
Automotive News Europe
July 11, 2007
UPDATED: 07/11/07 6:23 A.M.


General Motors is considering building a new assembly plant in the East, a top company executive told Automotive News Europe.

"We still need some capacity in central and eastern Europe," Chris Lacey, GM's executive director for central and eastern Europe, said in a phone interview today.

Lacey identified seven new-EU countries as potential sites for a greenfield plant: Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia.

All seven have joined the EU within the last three years.

"Where does GM want to build?" Lacey said. "Where people buy cars, where a good, educated work force is available, and where you have the ability to build up a parts supply chain. So any of these countries."

GM will either have sole ownership of the plant or form a partnership with a local manufacturer.

GM already has assembly plants in Poland and Russia and joint ventures or contract manufacturing agreements in Poland, Russia, Ukraine, Kazakhstan and Uzbekistan. GM aims to build 70,000 units a year at its St. Petersburg plant by 2008, up from its original plan of 25,000 by that same year.

Lacey said GM needs the capacity to keep up with rapidly increasing sales in central and eastern Europe. In Lacey's region — the new EU, the Balkans, Russia and the republics of the former Soviet Union — GM boosted first-half sales volume 42 percent to 230,113 cars compared with the same period last year.

You may e-mail Jesse Snyder at jsnyder@craincom.de

[Kennyboy]

I hoped they open a plant in Poland. Poland is rising economically and with its labor force, they're a force to be reckon with.

[nadepalma]

All good news obviously. I know that they were looking at taking over the old FSO-Daewoo plant in Poland (i think it was Poland) to build Aveo sedans and such there to feed Eastern Europe -- but it never panned out. In fact, it seems that Ford is in the running right now to own the plant.

If they decide to build a whole new factory, then they must have some decent projection on what the potential growth is for Chevrolet in Europe. All good news.

But that might also mean that perhaps their operations in South Korea might not be able to sustain the need for vehicles in Europe -- as such, the quick growth of Chevrolet as a brand in Europe may need to move beyond just South Korea to sourcing models from other locations...including central and eastern Europe...

One wonders, though, if the plant builds Chevrolet vehicles exclusively, would it be considered a GM-Europe plant or some kind of GMDAT-controlled plant, etc? Would such a "distinction" or "division" exist? The reason I ask is b/c GM already has a plant in Poland that will be the Astra Sedan --- why not just add onto an existing factory to build what they need rather than a Greenfield site? Or perhaps add it onto a plant in Russia? Just curious is all....

[MechEng]

A lot of companies are now putting production in eastern Europe. These countries have a lot of economic potential. The workforce is well educated. And Labour is still relatively cheap. It makes sense.

[rkuk2k]

Originally Posted by Kennyboy

I hoped they open a plant in Poland. Poland is rising economically and with its labor force, they're a force to be reckon with.

The only force they have is the migration force!

[Smaart Aas Saabr]

Originally Posted by Kennyboy

I hoped they open a plant in Poland. Poland is rising economically and with its labor force, they're a force to be reckon with.

They already have a plant in Poland, but yes, I agree with you, Polski rules the world

[Bravada]

In fact, it seems that Ford is in the running right now to own the plant.

I admit that massive amounts of work have been keeping me more or less out of the loop for the past weeks, but I can't believe I've missed that! Could you expand on that?

It is a bit said to see them giving up on FSO so easily. And, given the competition of all New Europe countries, our wonderful government (I assume we still have a government this evening, but I haven't caught up with the evening news yet) is almost bound to massively lose this one out again to the Czech Republic or Slovakia - hopefully not Bulgaria or Rumania, this would've been a total disgrace...

PS. GM's Gliwice factory has been consistently ranking as the highest-quality GM plant worldwide. I am not 100% sure, but I believe the same can be said of VW's factory in Poznań (they make VW Caddies and some version of the Transporter, I believe). Fiat's recent quality rating improvement is in a large part due to the bulletproof Panda, made in Tychy, Poland (not far away from Gliwice).

[t-rex]

This may give GM a bit of bad press in Western Europe, where Antwerp, Azambuja, and Ellesmere Port are all facing the axe!

[Slowrider5]

Originally Posted by t-rex

This may give GM a bit of bad press in Western Europe, where Antwerp, Azambuja, and Ellesmere Port are all facing the axe!

Yep, there's a reason why they are building in Eastern Europe and closing plants in Western Europe on the European continent. It's because there are similarities to the difference between the Mexico and the U.S. on the North American continent.

[caling7]

Originally Posted by Bravada

...hopefully not Bulgaria or Rumania, this would've been a total disgrace...

Wow, that's so rude. First of all, it's Romania, not Rumania, and second, don't forget that just a few years ago Poland was pretty much in the same position Romania is in now. Don't be so quick to dismiss us like western europe probably dismissed your country (many still probably do) when you started trying to undo the decades of corruption and mismanagement.

[SimonDavid]

There's a hub of manufacturing plants in Czech & Slovakia - all the big players are there. And not joint ventures either - band new state of the art greenfields

I think GM's production mix is the most slanted towards high wage west european plants of any European maker - Germany Sweden UK Belgium.

[nadepalma]

Originally Posted by Bravada

I admit that massive amounts of work have been keeping me more or less out of the loop for the past weeks, but I can't believe I've missed that! Could you expand on that?

Bravada, I'm thought it was FSO, but now I'm not so sure...the reason being that it said the "former Daewoo plant" -- which I automatically thought was FSO -- is this correnct?

Here is the article:
http://www.zf.ro/articol_131878/ford...n_craiova.html

GM was looking to buy them, then it seems they dropped out of the running and Ford wants the plant...

All good stuff with Polish plants running so well -- good info there Bravada.

[Bravada]

Wow, that's so rude. First of all, it's Romania, not Rumania, and second, don't forget that just a few years ago Poland was pretty much in the same position Romania is in now. Don't be so quick to dismiss us like western europe probably dismissed your country (many still probably do) when you started trying to undo the decades of corruption and mismanagement.

You obviously misunderstood my comment. I have got some knowledge of the foreign investment agencies of the countries in the region, and while the Czech and Slovak ones are exemplary, the Bulgarian and Romanian ones still could be seen as lagging behind even out Polish PAIiIZ (what a marketable name, isn't it?), which has recorded setback after setback (not that much due to the hard-working people there, but the general lack of direction and absolute lack of support and understanding in our government).

If the PAIiIZ, with all the infrastructure and other advantages pointing towards Poland would lose to the still up-and-coming Romania (in Polish and many other languages in the region, it's "Rumunia" or similar, hence my spelling mistake) or Bulgaria, which has no automotive industry at all, this would mean that PAIiIZ is unable to win even when they have the, pardon the pun, pole position.

Just to make sure - I have many Romanian friends, as well as some Bulgarian, and I have much respect and admiration for both fellow New European nations. I believe there is a lot of heritage potential in both countries, and culturally they are in no less way parts of Europe than either Poland or "old" EU members like Greece. Even now, Bulgaria and Romania record higher measures of economic, cultural etc. development than some regions of the EU, some regions of Poland included. And I like Dacia

BTW, FYI the decades we had to undo were not so much about corruption (yet perhaps about mismanagement), but about a different political system. Corruption is a problem quite irrelevant of the political systems, check out Italy. Actually, according to some quantitative measures, corruption has been on the rise since the fall of socialism in Poland, though it was curbed later on.

[Bravada]

Bravada, I'm thought it was FSO, but now I'm not so sure...the reason being that it said the "former Daewoo plant" -- which I automatically thought was FSO -- is this correnct?

Here is the article:
http://www.zf.ro/articol_131878/ford... craiova.html

GM was looking to buy them, then it seems they dropped out of the running and Ford wants the plant...

All good stuff with Polish plants running so well -- good info there Bravada.

Nick, I am quite disappointed given your usual research prowess...

The site is ".ro", which indicates Romania, and the article clearly says "Craiova", which is in Romania. Automobile Craiova is the former Oltcit (Romanian factory founded in joint-venture with Citroen under the Chauchesku regime), which made cars known as either the Oltcit or the Citroen Axel (in Western Europe), effectively being the rejected Citroen Visa prototype (the final Visa was redesigned to share components with the Peugeot 104 after the PSA merger). It was later acquired by Daewoo and shared much of the FSO's fate, but they are not related directly in any way.

It is interesting to see Ford winning Craiova over GM, this surely makes sense to see them looking for a greenfield now. I wonder what model will Ford make in Craiova - Fiesta sedan/Ikon much in the way Linea is made in Turkey or perhaps spare capacity for Focus sedans/wagons like Renault and Toyota do in Turkey?

[raygamhu]

Originally Posted by nadepalma

All good news obviously. I know that they were looking at taking over the old FSO-Daewoo plant in Poland (i think it was Poland) to build Aveo sedans and such there to feed Eastern Europe -- but it never panned out. In fact, it seems that Ford is in the running right now to own the plant.

If they decide to build a whole new factory, then they must have some decent projection on what the potential growth is for Chevrolet in Europe. All good news.

But that might also mean that perhaps their operations in South Korea might not be able to sustain the need for vehicles in Europe -- as such, the quick growth of Chevrolet as a brand in Europe may need to move beyond just South Korea to sourcing models from other locations...including central and eastern Europe...

One wonders, though, if the plant builds Chevrolet vehicles exclusively, would it be considered a GM-Europe plant or some kind of GMDAT-controlled plant, etc? Would such a "distinction" or "division" exist? The reason I ask is b/c GM already has a plant in Poland that will be the Astra Sedan --- why not just add onto an existing factory to build what they need rather than a Greenfield site? Or perhaps add it onto a plant in Russia? Just curious is all....

I think that the FSO plant in Warsaw Poland, it is controlled by UkrAvto-ZAZ, which also get parts from GM DAT and produces Chevrolets for Ukraine and also exports the old Lanos to Russia.
But there are rumors, that FSO next year will start to produce the facelifted new Aveo for Europe, from kits delivered by GM DAT.