While the auto industry in Europe has many strengths, such as innovative and well-engineered products and a presence in all major world markets, it continues to face challenges, as well.

Some experts say that the European auto industry is less consumer-oriented than the robust U.S. industry, and that there is a lack of brand loyalty among European consumers.

Additionally, outside forces and competition, notably by Japanese manufacturers, will continue to be forces to be reckoned with.

However, the auto industry is a substantial contributor to Europe’s overall economy and is largely driven by demanding consumers. Additionally, historical events have played an important role in the progression of Europe’s automotive industry in recent years.

The fall of the Iron Curtain in 1989 opened the door to new opportunities in Central and Eastern Europe.

Automakers have been steadily setting up shop in those areas since that time to take advantage of a waiting work force comprised of well-trained and eager people who also happen to be affordable.

While the European auto industry continues to have a strong foothold in countries such as France, Italy, Spain and the United Kingdom, emerging players like the Republic of Slovakia, Hungary and the Czech Republic have gotten in on the action, as well.

Kia Begins Production in Slovakia

In a much-heralded project, South Korea-based Kia Motor Corp. has begun production on Europe’s newest car at the company’s first-ever manufacturing facility in Europe.

The company has bold plans to establish new benchmarks in productivity by manufacturing 100 cars per employee per year at its new plant.

Those plans moved closer to reality in December when Kia’s new cee’d five-door hatchback began rolling off the production lines at the facility in Zilina, Slovakia, northwest of Bratislava.

The plant is part of Kia’s strategy to become a major player in the European automotive market.

“To achieve further growth in Europe, we needed to fully understand our customer’s requirements, learn exactly what European customers want and develop a European-style car, to be made locally in Europe,” said In-Kyu Bae, president and CEO of Kia Motors Slovakia (KMS). “Another important aspect is that Zilina will cut down delivery times for European customers. Compared with our Korea-built vehicles, the distance from factory to showroom is so much shorter, and by building cars in Europe we no longer have to pay import taxes.”

Kia will build the cee’d in five-door, three-door and wagon varieties, there are also plans to build the Sportage SUV, as well as an undisclosed third model.

Perhaps most notably, the new Kia plant is not only Europe’s newest car factory, but also it’s most environmentally friendly.

KMS executives said they have an opportunity to make this the most competitive and most productive car factory in the world.

Full annual capacity is expected to reach 300,000 units by 2010. That translates into a rate of one unit per minute. KMS anticipates recruiting 3,000 employees to run the three-shift operation by the end of 2009.

Kia is not the only automaker to find a good business fit in Slovakia.

PSA Peugeot Citroen, Europe’s second-largest automaker, recently opened doors to its new plant in the western Slovakia city of Trnava.

The French automaker announced plans in 2006 to close a plant in England as it seeks to shift operations from Western Europe to Eastern European countries where lower wages and taxes equal lower overall operating costs.

A Multinational Raceway to New Markets

For many companies in the auto industry, collaboration is key to gaining a lucrative edge in a highly competitive environment.

One of the most recent companies to go the collaboration route is United Kingdom-based Stadco, a tier-one supplier of body-in-white (BIW) services to vehicles makers. Stadco is partnering with Russia-based Severstal-Auto to build body stamping and assembly facilities in Russia.

The arrangement is aimed at offering modern, high-quality stamping and assembly facilities to a growing number of manufacturers that moving into Russia.

Stadco also hopes to also establish its own BIW facilities in the St. Petersburg and Moscow regions during the next two years.

Acquisitions are also commonplace in the industry as companies strive to build on core competencies as they expand into new markets.

In eastern Germany, Freudenberg NOK Mechatronics recently acquired Delphi’s Berlin plant for the production of large flexible printed circuits.

The company is anticipating significant growth, thanks to the increased use of electrical and electronic technology in cars. The company has subsequently said it would add new jobs in development and production.

Freudenberg NOK Mechatronics is a joint venture between Germany-based Freudenberg & Co. and Japan-based NOK Corp.

Nissan opened a new engine center in Barcelona last year, which will result in the creation of 400 jobs. The facility will be home to production and design activities of diesel engines.

There is little doubt that as time goes on all auto companies will seek to maximize their efficiency, productivity and profits. This is essential for success in the global marketplace.

In the European automotive market, automakers and suppliers will likely continue their expansions and transitions into Central and Eastern Europe where many of these goals can be achieved thanks to lower operating costs and an ample supply of a highly skilled work force.

For MORE NEWS BRIEFS SORTED BY COUNTRY, click here.