U.S. appliance maker Whirlpool (nyse: WHR – news – people) may have to abandon its expansion plans in Slovakia because of problems with buying land for its production facilities, a company executive said on Thursday.
Ericco Biondi, director of Whirlpool’s plant in the northern Slovak town of Poprad, said the company would not be able to continue with rapid expansion in the new EU member state if land owners continued to demand excessive prices for their property.
“We have already lost the opportunity to have cooker production. If we can buy the land for a normal price, we will have a chance to go on, but if we cannot, our expansion is finished,” Biondi told Reuters.
Slovakia has seen foreign direct investment rise sharply in the past few years after business-friendly government adopted a series of economic measures such as flat 19 percent tax rate and flexible labour rules.
But land buying has recently appeared as a possible snag for future investment, endangering even the biggest projects.
Slovakia lost a contest for Whirlpool’s 130 million euro ($159 million) white-goods and cooker plant to neighbouring Poland earlier this year due to the land stalemate in Poprad.
Biondi did not give the size of new projects that might be endangered, but local media have reported the company wanted to bring more suppliers of parts closer to its Poprad factory.
Whirlpool officials plan to meet Economy Minister Pavol Rusko this month to seek ways of removing the land obstacle.
Last week, Rusko said the state was lagging behind in buying land needed for a one-billion-euro factory to be built by South Korean car maker Kia Motors <000270.KS>.
He said the problem could delay or even jeopardise the entire Kia plant, Slovakia’s biggest-ever greenfield project.
Whirlpool has invested 1.4 billion crowns in its Poprad plant so far this year, up from 600 million in 2003. Its total investment in Slovakia totalled 3.6 billion crowns since 1992.
Biondi said the plant’s output should be 1.8 million washing machines this year compared with 1.6 million in 2003. The firm, which exports around 90 percent of its output, plans to reach capacity of 2.0 million washing machines in 2005.
From Forbes