Is Volkswagen going to pick Serbia for location of its new factory?

Bulgaria is willing to allocate almost 1 billion euro to swaying Volkswagen to open a factory there, Romania has already prepared the land for the construction of the new factory, and Serbia is not giving up on getting Volkswagen here.

When the news broke that VW froze its plan to build the factory in Turkey, the investment imagination of the three Balkan countries started running wild.

The Turkish army’s invasion of the Kurdish territories in Syria not only reminded us of the unstable situation in the region but also cooled the relations between Berlin and Ankara. It is not surprising that Volkswagen’s investment, which after months of the investigation had decided to locate its factory in Turkey, is also on stand-by.

A source at Volkswagen recently revealed to a German newspaper that ‘under these circumstances, the decision to build the plant in Turkey cannot be made’.

This sparked the imagination in three Balkan countries that had previously been considered by the German carmaker – Bulgaria and Romania. According to Deutsche Welle, behind the scenes, the three countries are racing to induce Volkswagen to invest 1.4 billion euro in one of them.

Director of the Serbian Development Agency, Rados Gazdic, said that Serbia would continue to push for negotiations on the arrival of the German company in the country.

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“It is important to mention that we, compared to Bulgaria, we have a better-qualified staff, which has the technical knowledge and are able to support an investment not only in terms of production of the VW, but also in the production of components,” Gazdic added.

The extensive network of automotive component manufacturers is an important factor in the decision, as the renowned German automotive expert Stefan Bratzel, head of the Centre for Automotive Management, said in an interview, pointing out that Volkswagen would go to that part of Europe because of the low cost of wages and electricity.

Bulgaria to invest almost a billion euro?

Former Bulgarian President Rosen Plevneliev, honorary chairman of the powerful Automotive Cluster Bulgaria network, announced that Sofia has increased its initial proposal and “found a way to offer Volkswagen between €250 and €260 million instead of the original €135 million.”

Plevneliev said his country had already fundamentally made the offer and is now waiting for an answer from VW.

Take into account the infrastructure, rail links and highways in Elin Pelin near Sofia, where the proposed site is for a future plant, and the offer is quite generous as the total amount rises to a whopping €800 million.

Romania in the game too

Romania also sees a chance to win the contract for the investment. The city of Arad on the country’s western border with Hungary and Serbia would be the ideal location for the new VW plant from a Romanian point of view. Good connections to Western Europe and cheap labour — even from neighbouring countries — would be clear advantages, according to Bucharest.

Stefan-Radu Oprea, Romania’s minister of trade and business environment, confirmed that the government in Bucharest had resumed discussions with Volkswagen in order to bring the factory to Romania.

Both Bucharest and Sofia have announced their strict adherence to the European Union’s requirements. The subsidies offered will not violate the rules of the common market. So far Volkswagen has not yet commented on the new advances from Bulgaria and Romania.

(Danas, 18.10.2019)

This post is also available in: Italiano

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