Adoption of The Euro Pays Off for Slovakia Manufacturing
In 2009, Slovakia made one of its best economic decisions by adopting the Euro. Since then, Slovakia has experienced a steady economic growth from both the services and manufacturing sectors. Unemployment rates dropped and now hover around 8%. Today, 40 Slovak enterprises earn their rank in the 500 most important European companies.
The Slovak manufacturing industry produces more than 30% of the country’s GDP. Since Slovakia tends to pay lower wages than surrounding countries like Germany and the Czech Republic, the costs of production are also significantly lower for foreign investors. Companies like Volkswagen and KIA have become some of the biggest enterprises in Slovakia, having opened plants here to cut costs.
As one of the largest automotive companies worldwide, Volkswagen has a major headquarters in Bratislava. This plant produces about 1 million units per year, and just last year, the company spent 150 million euros to build an on-site logistics center. Now, Slovakia is a power force for European car production.
Germany is the number importer to Slovakia; Volkswagen ships in about 90% of assembly parts by train daily. In 2016, exports from Germany to Slovakia valued close to 16 billion euros. Volkswagen Slovakia has now sold more the 6 billion Euros worth of vehicles.
KIA Motors Slovakia is another prestigious automobile company. The plant in Zilina manufactures engines and assembles finished vehicles. They’ve produced more than 300,000 units annually since 2014, and by 2016 exceeded 1.5 million Euros in sales. The plant currently provides employment for about 5000 people, but that number is expected to rise with predicted for expansions.
Equipment, machinery, and activities related to automotive account for more than 40% of the nation’s total manufacturing.
Most Eastern and Central European countries focus in the automotive, metallurgy, and engineering industries which makes technology a rare exception.
As has been mentioned, foreign investment is of vital importance to the Slovak economy. Samsung is one of the few technology companies in Slovakia. While Samsung is most famous for their cell phones, they are also a power player in other electronics. In fact, Samsung is the largest producer of LCD screens in the world. Their main plant in Voderady manufactures these LCD screens. Since they do not produce finished electronic products, Slovakia is still a major importer for electronics. Currently, the subsidiary of the South Korean company in Slovakia invoices more than 3 billion euros and employs hundreds of people.
The combined efforts of KIA and Samsung have placed South Korea as the sixth largest trading partner to Slovakia. Korean imports have reached around 5 billion Euros.
U.S. Steel Košice, a subsidiary of the American U.S. Steel company, is currently the largest Slovak manufacturer in the metallurgical sector. Last year, U. S. Steel Košice nearly broke 3 billion dollars in sales. While it is an important company to the Slovak economy, it does not touch the metal manufacturing of the rest of Europe. With all subsidiaries, U.S. Steel is the 15th largest steel producer in the world.
Changing to the Euro opened many opportunities resulting in the creation of jobs, foreign investments, and an increase in exports. Since then, Slovakia economy has steadily risen.
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