Processors see possibilities to east of Central Europe

Trek to the edges of the continent continues as processors seek new market advantages.

If last year’s call to follow the customer and go east was the main theme of the EAST 2005 conference and exhibition in Bratislava, Slovakia (September 2005 MPW, p. 90) organized by Groupe E.T.A.I. (Gentilly, France), the message this year at the Eastern Advanced Suppliers Tour (EAST 2006) was look even farther east for more opportunities. The event in Bucharest, Romania focused on possibilities for plastics processors serving the automotive sector.

Romania, which with its southern neighbor Bulgaria officially joins the European Union next month, has seen substantial growth in the number of vehicles produced in the last two years. Local car production went up by a strong 59.4% in 2005 compared to 2004, to 194,803 units. In the first half 2006, the figure increased by a further 12.5% compared to the same period in 2005. Car exports were up by 76.4%, says Constantin Stroe, president and general manager of ACAROM, Romania’s car manufacturers’ association and a VP of the country’s prime car producer DACIA (Pitesti, Romania), a Renault subsidiary bought in 1999 when the company was privatized.

DACIA, which started producing the highly successful Logan model for domestic, export, and complete knock-down-kit exports (CKD, a car in a box for assembly abroad) in 2004, says it is looking for Tier One and Two suppliers that can meet global quality standards with increased local content. That can also mean Western transplants which set up moldmaking and processing operations within the country. Renault-DACIA also sources transmissions, plastics components, and drive trains for export to plants outside of the country, which Stroe says should make locating in Romania attractive. Those companies unable to deliver Renault-Nissan global quality standards (50 ppm defects) at Romanian prices need not knock on DACIA’s door, says Catalin Petrescu, coordinator of strategy, in explaining the company’s purchasing policy.

Another positive sign that should stimulate more interest from western processors and moldmakers to select a site in Romania is the announcement that Renault has decided to locate its Innovation Center, to open in 2009, serving Renault plants in Western and Central European countries, at a yet-undisclosed location.

Despite these prospects for processors, one fly in the ointment for Tier One and Two suppliers has put a damper on the Romanian market. Korean car producer Daewoo, which employed 3000 workers at a plant in Craiova, Romania and produced 22,602 cars last year, closed its doors in September following bankruptcy. The Romanian government was forced to pay $60 million to buy back its 51% stake in the factory and is hoping to find a foreign buyer.

So what advantages do processors and exhibitors see in Romania? Frank Slawinski, sales engineer at mold maker and processor Mora (Chambost-Allières, France) is hoping to establish contact with DACIA to work as a supplier since his company is already serving Renault in other markets. “We see business to come, that’s why we established a plant here in Romania two years ago,” he says. “Czech Republic, Slovakia, Poland, and Hungary all have wages that are climbing fast, too fast for us.” Skilled worker wages in Romania are reported to be about ?2/hr compared to ?6/hr in Poland, and ?27/hr in Germany.

“We believe automotive parts will be the key here,” says Slawinski. The company now has a staff of 30 in Romania and operates six injection molding machines but will double that number next year. Mora supplies Valeo, Faurecia, Delphi, Schneider, Wagon, and Becton among others.

French molder Leman Industrie (Marignier) established a plant in Timisoara, Romania near the Hungarian border, which is said to offer better infrastructure than further east in the country. The facility operates four Engel and one Dr. Boy injection molding machines with a clamping force range from 50-250 tonnes but is increasing the number to 12 in February in order to meet the demands of new automotive business, says Gelu Mateescu, director general. All of the output of the Timisoara plant is for export to Western Europe, the U.S., and Mexico. Mateescu says Leman is looking to develop its non-automotive molding sector (vehicle parts now account for 80% of the total company’s business) to help balance output.

Italian moldmaker and processor Ramac Plast (Nerviano) which established a Romanian operation four years ago in Coseri with 19 fully automatic Arburg injection molding machines with clamping forces from 30-210 tonnes, two CNC milling machines, and four spark erosion machines, was after low- cost production but with the same guaranteed quality as produced in its home market. Wages average ?400/month in Romania for a skilled moldmaker compared to ?2500/month in Italy, says production manager Enea Cossa. His company is seeing a move by Western European white goods producers to Turkey and Romania to take advantage of lower costs and Ramac wants to be available.

French injection molder and metal working operation Delta Componants (La Ferté-Bernard), through its Romanian subsidiary Delta Rom Technologies (Arges), established five years ago, concentrates on automotive parts such as airbag devices and was on the prowl for more business in Eastern Europe in this sector. Why select Romania? George Cernatescu says eastern expansion to follow customers in the automotive sector was a key but the pool of qualified, trained workers in Czech Republic, Slovakia, and Hungary has started to dry up. Costs there were also substantially higher. Cernatescu also sees good possibilities for metal/plastics parts processing in Romania.

Muriel Brun-Millet, managing director of injection molder Apnyl (Izernore, France) says she attended EAST 2006 in the hopes of finding a strategic partner to start up a joint venture. “You can say we are following our customers, mainly underhood suppliers,” she says. Automotive is the key to getting one’s foot in the door to start supplying other parts such as overmolded bearings for sliding door devices, one of Apnyl’s specialties. “Most development today is in the new EU countries,” says Igor Klein, general manager/key accounts, GPI Slovensko (Liptovsk, Slovakia), a producer of double-sided gaskets for underhood applications. “But we expect substantial demand to come in the next 10 years from Romania, Bulgaria, and the Ukraine.”

Robert Colvin • [email protected]