Central Europe car makers face labor shortage

By Martin Dokoupil

TRNAVA, Slovakia (Reuters) - 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 here or are setting up production, taking advantage of cheap labor, low taxation and Slovakia's location.

But the new plants have now soaked up the available work force, to the point that car makers must now offer incentives and are even starting to seek workers from other countries.

"We see a lack of labor force for certain positions. There is much less labor with a higher qualification," said Dusan Dvorak, a spokesman for the latest company opening shop here, South Korea's Kia Motors. "We have advertised specific positions in the neighboring countries."

Frantisek Bardy, a 27-year-old who has worked at several auto 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 traveling more than 150 kilometers (93 miles) 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. "They told me there's a chance for career growth here and also offered housing so I took this job," he said.

It is easy to see why France's PSA Peugeot Citroen picked this tiny, mainly rural nation to move production from its plant near Coventry, Britain, 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 J.D. Power Automotive Forecasting.

Last year, with production of 267,032, it ranked behind central European neighbors the Czech Republic and Poland, with 826,629 and 589,561 vehicles, respectively, J.D. Power said.

FIGHT FOR Labor

Seeing a labor shortage, 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 in a way they can prepare qualified people for the car industry," said Peugeot's Slovak spokesman Peter Svec, standing in workers' coffee area next to the assembly line.

"It's important that not only us, but also our suppliers have a good quality workforce," he said.