An auto parts manufacturer co-owned by two of Germany's largest companies is hoping to pump up to 40 million euros into a new auto wiring factory in western Ukraine.
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Achim Stepczynski, business development manager of Volkswagen Bordnetze, a 50-50 joint venture between Volkswagen and Siemens, said he visited the western Ukrainian region in late May to explore the option of investing between 20 million and 40 million euros into an auto wiring plant that would employ up to 4,000 Ukrainians.
The plant’s main client will be Volkswagen, which controls almost 20 percent of the automobile market in Western Europe.
“We are in the beginning of a pilot phase,” Stepczynski said. If all goes well, the plant could be operational by 2006, he added.
Stepczynski said that he and his colleagues visited several oblasts in western Ukraine, including Lviv, Zakarpattya, Rivne and Volyn.
During the trip, Stepczynski was accompanied by Karin Rau, head of the German Economic Delegation in Ukraine. Stepczynski and Rau discussed the investment plans with regional government officials.
One insider said that the planned facility, if built, will likely produce auto wiring, out of imported wire and harness kits, for Skoda automobiles.
Volkswagen Bordnetze produces auto wiring harnesses for automobile brands that belong to the Volkswagen group, including Volkswagens, Skodas, Seats and Audis.
The company employs more than 9,000 people at 13 locations.
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If Volkswagen Bordnetze does build the facility, it won’t be the first auto wiring plant in Ukraine.
Germany’s Leoni, a major automotive wiring supplier, started production last year at a new 40-million euro, 33,000-square-meter auto wiring production facility in Striy, a small town in Lviv oblast. The German company also launched a smaller facility in Mukachevo, in Zakarpattya oblast.
Leoni’s two new plants represent one of the largest investments by a German company in Ukraine, and one of the largest single foreign direct investments the nation has seen since independence.
Besides Leoni’s production facilities, Japanese company Yazaki, a major developer of vehicle wiring systems, recently opened a $35-million plant in Zakarpattya oblast.
Stepczynski said his company’s production facility in Ukraine will be comparable to those operated by Leoni and Yazaki.
More auto part manufacturers are expected to follow, shifting production facilities from Central Europe to Ukraine and other CIS countries, where labor and production costs are lower that in EU member countries.
A representative of Germany’s Bosch, a major auto part manufacturer, told the Post that his company had visited western Ukraine in April to explore cost-cutting production opportunities.
Andry Beyzyk, head of the western Ukrainian Committee of the Kyiv-based European Business Association, said western Ukraine is potentially attractive to European manufacturers seeking to cut costs by relocating labor- and cost-intensive processes.
“Western Ukraine is attractive because of its proximity to EU markets and cheap labor,” said Beyzyk, who is also general manager of Western Ukrainian Management Consulting, a business consulting firm that advises investors in the region. “Enlargement of the EU is expected to increase the cost of manufacturing in Central European countries [such as Poland, Slovakia, the Czech Republic].”
Rau said her bureau plans to open a permanent office in Lviv with the goal of promoting German business interests. German companies invested about $18 million in the region last year.
“No region of Ukraine can boast the same quantity of German investment as Lviv region,” the Lviv Regional State Administration quoted Rau as saying.
“After the successful realization of the Leoni project, German investors got the green light for investment projects in the region.”
Although Volkswagen does not have its own production facilities in Ukraine, Skodas and Volkswagens are assembled at the Eurocar plant, located in Ukraine near the Hungarian border.
