Daimler is to invest 800 million euros to build a new assembly plant in Hungary. It will be the carmaker’s first Mercedes factory in Eastern Europe. It is also going to spend 600 million euros expanding its Rastatt site in Germany. The investments are part of its increased emphasis on making more smaller so-called compact cars including two new models.
Hungary beat rival sites in Poland and Romania and Hungarian Prime Minister Ferenc Gyurcsány said this is the biggest single investment in the country’s history and boasted that in choosing Hungary, Daimler had opted for quality.
Work on building the new plant will start next year in Kecskemet, about 80 kilometres southeast of the capital Budapest. Daimler expects it to be operational in 2011 and to produce 100,000 vehicles a year. The Hungarian government said 2,500 people will work at the plant and it will indirectly create 10,000 more jobs at suppliers.
Daimler hopes to boost profits and become more competitive with this move. Workers in Hungary earn on average less then 10 euros an hour compared with 44 euros an hour in Germany.