Carmaker Hyundai considering huge investment in Czech Republic

Thursday's Czech newspapers are dominated by reports of what could be one of the biggest investments ever in the Czech Republic, as the South Korean carmaking giant Hyundai considers putting almost two billion dollars into a new plant in Moravia. What's more, that news comes just months over another huge foreign-backed car plant opened near Prague. Lyle Frink writes for Automotive News Europe. I asked him how likely was it that Hyundai would make this major investment in the Czech Republic.

"I think it's very likely that they will end up in central Europe, extremely likely. The question whether it's the Czech Republic: I would say there's a three-fourths chance yes."

Other countries in the region are competing for this kind of investor; I understand Hyundai's sister company KIA went to Slovakia. Is the Czech Republic having to compete strongly with its eastern neighbours for this Hyundai deal?

"Yes and no. Yes, because a car plant is every foreign direct investment officer's dream to get a billion dollars, or a billion dollars worth of investment in one spot..."

Are there any potential problems if Hyundai does come to the Czech Republic? Apparently there was great fanfare when the Slovak's attracted KIA, but then there were some problems...

"There still are problems. These are I believe getting resolved, but, yes, land acquisition will be a key issue in wherever Hyundai decides to build its plant."

So if they come here there could be difficulties after the deal has been struck?

"There could be some, but I think as a result of the Slovak expansion they will be far more careful about how they step into a situation."

If Hyundai does come here they'll join car makers such as the traditional Skoda and more recent arrivals - I know Peugeot-Citroen and Toyota recently opened a plant together in Kolin. What is it about the Czech Republic that appeals to international carmakers?

"This is the birthplace of the automobile. The first car in Europe I believe was made in Koprivnice in the Czech Republic, and the Porsche family has it's origins in Liberec..."

And is that really a factor for a South Korean company today?

"What is a factor is that Czechs do very well with mechanical things and building. So it's right along the native skills set, I guess you could say. The workforce is appealing, and also there's simply the follow the leader aspect - major suppliers are already set up in the Czech Republic.

"So to be nearby, in the southern flank of Poland or in Slovakia or in the Czech Republic, or also perhaps in Hungary, means that you're close to a relatively low cost supplier base, which is essential."

What about for export - is the Czech Republic's central location in Europe also attractive?

"Yes, the Czech Republic is quite central, for export to western Europe, and also I think there's the belief that eastern Europe will grow as a consumer base."