“[We conducted] a methodically organised selection process in which literally hundreds of different factors were taken into consideration. We carefully evaluated each candidate country against a very detailed set of criteria,” says Kia Motors senior executive vice-president and chief operating officer Yong-Hwan Kim. He says he has Slovakian prime minister Mikulás Dzurinda’s “unflagging support”.

Kia’s decision confirms Slovakia as an important hub for the European car manufacturing industry. Slovakia and Poland were short listed as finalists in the competition for the factory but, according to Kia, Slovakia’s incentives, low logistical costs and low wage levels won it the deal.

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Slovakia’s deputy prime minister and minister for economy, Pavol Rusko, says: “Recent Kia Motors and Hyundai Mobis decisions to invest in Slovakia proved the right direction of the Slovak economic reforms, heading to improve the business environment of the Slovak Republic significantly. It is a strategic investment that decreases the unemployment rate, attracts more investment in subcontracting and improves the international image of the Slovak Republic.”

Under the terms of the agreement, Slovakia’s government will provide subsidies worth about 15% of the total investment cost, in addition to the use of a 367-acre site. The government has also committed to building a new transport infrastructure and setting up a Korean language school for Kia employees’ children.

Production is slated to begin in late 2006, by which time several of its Korean auto part manufacturers will also have set up production plants in the region, the company says.