The South Korean carmaker, pored over maps for eight years before settling on a town in northern Slovakia

WHEN it came to deciding where to build its first factory in Europe, Hyundai, the South Korean carmaker, pored over maps for eight years before settling on a town in northern Slovakia. Last Friday work started on the $1.1 billion (£600 million) plant at Zilina. The factory will open in December 2006 and will employ 2,800 Slovaks. It will produce 200,000 cars a year by 2008 for Kia Motors, Hyundai’s subsidiary. Low costs and wages have made Slovakia “a new hub for European automobile production”, in the words of the UN’s World Investment Report. The study by Ernst & Young shows new investment projects in the former communist territory have shot up from six in the first half of 2003 to 39 in the first half of this year, the fastest growth rate in Europe. Jean-Charles Lievens, vice-president of Kia Europe, said that low costs and well-trained workers were key reasons for the decision to locate in Slovakia. “There is a kind of reservoir of suppliers in the region,” he said. “There is also a very good skilled workforce, with a long tradition of carmaking and before that weapons-making.” Wages were lower than in the West, he said, although they would soon rise. But he added: “When you buy a piece of land in Slovakia it’s cheaper than Germany.”