Investment by automotive manufacturers in Central and Eastern Europe is on the increase - and the US and West European technical textiles sectors are reaping the rewards, according to a report published recently in Technical Textile Markets.

Central and Eastern Europe as a whole -- including the ten newest members of the EU -- has become a magnet for investors. In particular, those looking to invest in the automotive industry have been relocating their manufacturing operations there. And because the automotive sector is a major user of technical textiles, the latter is benefiting from the wave of investment in the region.

In some countries growth in the automotive industry's development is dramatic. In Slovakia alone it is predicted that the country will be manufacturing over 800,000 cars by 2007. In a country with a population of only 5.4 mn, this is equivalent to 144 cars for every 1,000 of its inhabitants-a ratio which is said to be the highest in the world.

As automotive manufacturers relocate their operations, "Tier 1" suppliers-those offering major semi-built components-are being compelled to follow. Vehicle builders are insisting that such suppliers build "satellite factories" close to assembly plants in order to facilitate the operation of just-in-time manufacturing systems.

Furthermore, producers of the materials used in the manufacture of semi-built components are also becoming aware of a need to relocate their operations close to vehicle assembly plants. Such materials include the many technical textiles, nonwovens and composites which are incorporated in modern vehicles.

For example, Johns Manville recently decided to invest about US$100 mn in a greenfield factory to make glass fibre at Trnava in Slovakia. The fibre will be used in the manufacture of glass reinforced composites. The company-which has its headquarters in Denver, Colorado, USA-also makes fibre glass building insulation, commercial roofing membranes and insulation, filtration media, and mats and reinforcements.

Johns Manville says that its decision was prompted partly by the choice of Slovakia as the location for a Euro700 mn (US$865 mn) Central European plant by French car maker PSA Peugeot Citroën.

Both the new Peugeot plant, announced in January 2004, and Johns Manville's Slovakian operation will be located in Trnava-some 45 kilometres north of the nation's capital, Bratislava.

Other automotive companies to invest in the region include Volkswagen and Skoda (both investing in Slovakia), and Toyota-PSA Peugeot Citroën (investing in the Czech Republic)

Since 1993 as many as 273 companies-representing a total investment of US$9.7 bn-have established themselves in the Czech Republic. When Toyoda Gosei announced the formation of TG Safety Systems Czech in 2001, which is a joint venture with Toyota Tsusho Corporation, dozens of other Japanese companies arrived in the region to make investments.

TG Safety Systems built a brand new plant in Klasterec nad Ohrm to manufacture airbags, starting production in 2002. Recently, a leading Danish nonwovens producer, Fibertex, announced that it intended to acquire Vigona-a Czech manufacturer of needlepunched nonwovens-for around Euro4.7 mn. Through the acquisition, Fibertex will gain a significant position in the heart of Central Europe's automotive industry. Fibertex says that it will invest Euro26 mn in a new production line, in addition to implementing measures to improve the efficiency of Vigona's existing lines.

Vigona has its headquarters in Svitavy, and has three production units throughout the Czech Republic. It employs 220 people and has annual sales of around Euro8 mn. However, Fibertex hopes to be able to expand this figure threefold within three years.

The automotive sector is a key market for Vigona. Its customers include leading names such as Skoda, VW, Audi, Suzuki, Opel and Mercedes. The acquisition of Vigona will not only expand Fibertex's presence in the automotive segment, but also increase its sales across its entire technical division-which targets the geotextiles, flooring, furniture and bedding industries as well as automotive.

Growing competition from low cost imports over the years has forced traditional textile manufacturers in the USA and Western Europe to switch to technical textiles. Now, it looks as though the success of the Czech Republic and Slovakia in attracting investment is forcing the technical textile industry itself to relocate operations to lower cost regions.