Chairman Chung attends construction launch at Hyundai's Nosovice plant

The first pillar of the new plant in Nosovice, photo: CTK

After months of delay the South Korean automaker Hyundai began construction on Wednesday on a one-billion-euro car assembly plant in Nosovice, northeast Moravia. The ceremony was attended by Hyundai's chairman Chung Mong-Koo, facing a prison sentence at home for corruption. The troubles at Hyundai haven't stopped the company from going ahead with this huge investment project.

Chung Mong-Koo,  photo: CTK
Hyundai were always adamant that Chung Mong-Koo would come to Nosovice to officially launch the new plant, the Czech Republic's third major car factory after Skoda Auto in Mlada Boleslav and Toyota Peugeot Citroen in Kolin. Mr Chung came to Nosovice from Zilina across the border in Slovakia, where he cut the ribbon on a new facility for Hyundai's sister company Kia motors.

When the Nosovice plant reaches full production, some time in 2011, the Czech Republic will be turning out more than a million cars a year, making it Central Europe's biggest carmaker. The Hyundai factory is the biggest ever foreign investment project in the Czech Republic, and will employ around 3,000 people when production begins in 2009.

The first pillar of the new plant in Nosovice,  photo: CTK
However analysts are voicing concern that the Czech Republic could be facing a skills shortage, as the country is not producing enough qualified workers to fill the new vacancies being created by investors like Hyundai. There's also concern that the Czechs are putting all their eggs in one basket, with fears that the Czech economy is becoming over-dependent on carmaking.

Workers at Skoda Auto have just won a 13 percent pay rise, admittedly spread out over two years, after a day of strike action. That's led some to speculate that the Czech Republic's days as a competitive place for big foreign companies to do business are numbered.

That speculation is rejected by organisations such as CzechInvest, the government's inwards investment agency, who say the deal is proof of the good relationship between unions and employers in the Czech Republic, itself a good reason to invest. Whoever's right, it is fair to say that the country is still enjoying a huge boom in foreign investment.