With carmaking expanding rapidly in eastern Europe the demand for workers is exceeding supply. Martin Dokoupil reports.
As Europe's car manufacturing has shifted from west to east in the past decade, Slovakia has earned a reputation as a Detroit in the heart of Europe.Volkswagen, Peugeot and Kia either have plants there or are setting up production, taking advantage of cheap labour, low taxation and Slovakia's location.
But the new plants have now soaked up the available work force, to the point that carmakers must now offer incentives and are even starting to seek workers from other countries.
"We see a lack of labour force for certain positions. There is much less labour with a higher qualification," said Dusan Dvorak, a spokesman for the latest company opening here, South Korea's Kia Motors.
Frantisek Bardy, a 27-year-old who has worked at several car plants, is a case in point. When he was looking for a new job, he was spoilt for choice, finally settling on the new Peugeot plant in Trnava. Bardy does not mind travelling more than 150km every two weeks to work, even though his apartment is just around the corner from Kia's plant near the northwestern town of Zilina. "I also went for an interview at Kia, but the salary was not that good," he said, as he tested cooling systems on a Peugeot 207 assembly line.
It is easy to see why France's PSA Peugeot Citroën picked this tiny, mainly rural nation to move production from its plant near Coventry, which is due to close this year. Not only are wages less than a third of those in western Europe, but also the government offers attractive incentives and a friendly tax regime.
By 2012, Slovakia will be producing 840,713 passenger cars a year, more per capita than any other country in the world, according to JD Power Automotive Forecasting.
Last year, with production of 267,032, it ranked behind central European neighbours the Czech Republic and Poland, with 826,629 and 589,561 vehicles, respectively, JD Power reported.
Indeed Peugeot and other firms have taken a more direct route to cultivate skilled technicians and line workers. "We decided to co-operate with technical schools so that they can prepare qualified people for the car industry," said Peugeot's Slovak spokesman Peter Svec.
By 2011, car-making capacity in Poland, the Czech Republic, Hungary and Slovakia will rise by 43 per cent to 3.46 million cars a year, or nearly 4 per cent of global light vehicle production, PricewaterhouseCoopers Automotive Institute said.
That increase, together with an easing of labour restrictions in western Europe, will further toughen the fight for skilled labour. "We already feel the lack of a qualified workforce," said Silvia Nosalova, spokeswoman for Volkswagen Slovakia.
Volkswagen is already feeling the pressure. Hired buses bring workers to its assembly plant near the capital, Bratislava, from as far as 100km away. Some 17 per cent of its 9,000 employees live farther than 150km away.
In Slovakia, as many as 40,000 new jobs in the industry may be created in the next three to four years, bringing the total to 100,000, the Slovak Association of Automotive Industry (ZAP) predicts.
Some investors, such as a joint-venture between Ford and German part supplier GETRAG, are already settling in much less-crowded eastern Slovakia, attracted by the availability of skilled labour or booming eastern markets such as Russia.
"In central Europe, there are a lot of car plants located within a 200km radius. It is a big attraction for suppliers," said Carol Thomas, analyst at JD Power. "The whole of central Europe has become much tighter to find good labour."