Kia to build 100-million-euro engine plant in Slovakia

(BRATISLAVA) - South Korean car maker Kia Motors said Thursday it would build a new engine production facility worth 100 million euros (136.7 million dollars) in Slovakia.

Kia, which already produces cars and engines in the central European country, said in a press release it expected the new facility to launch operations in 2011 and reach a full annual production capacity of 150,000 engines the following year.

"This investment will boost our (overall) annual production capacity to 450,000 engines, which confirms our strategy to develop Kia's activities in Slovakia in a long term," said chief executive In-Kyu Bae.

The new facility will provide engines for a plant run by Kia's sister firm Hyundai in the neighbouring Czech Republic, about 60 kilometres (40 miles) from the Slovak factory.

The investment will add 270 direct jobs to the 2,700 people already working in Kia's vast auto complex near Zilina, a northern Slovak city about 200 kilometres (125 miles) northeast of the capital Bratislava.

Kia Motors launched production in Slovakia in 2006, two years after the country joined the European Union.

The group raised engine production in its Slovak plant by 37 percent in 2009 against the previous year to 243,000 engines.

Kia, which makes the Kia cee'd, Kia Sportage and Hyundai ix35 models in the Slovak plant, said on its website it had produced more than 150,000 cars there last year, down from 201,000 in 2008.

Car production at Slovak plants run by Germany's Volkswagen, France's PSA Peugeot Citroen and Kia Motors -- the engine of the country's economy -- was hit hard at the end of 2008 as the global downturn crimped demand.

But car output in the former communist economy started to grow again last November, posting year-on-year increases every month since then as the 2009 eurozone entrant started showing the first signs of recovery.