Third of Fiat's mysterious model to be made in Serbia - Italians to invest EUR 130m in Kragujevac by end of year

(Giovanni De Filippis)

Restructuring of existing units and construction of new ones for production of the new automobile, of which model will be kept top secret prior to May 25, has commenced in company Fiat Automobili Srbija, which occupies the surface of 1.4m square meters. What the Italian group has already announced is that between EUR 120m and 130m will be invested in the first phase of production of a B-class vehicle in the factory in Kragujevac. According to some earlier announcements by the media, the new automobile, which will primarily be intended for European market, will be a heir to Punto, Grande Punto and Punto Evo.

The adaptation of the facilities of former Zastava, in which no investment has been made over the last two decades, should be finished by the end of the year, while new Fiat's model should appear in the market in early 2012 - Fiat Automobili Srbija CEO Giovanni De Filippis announced.

According to his words, negotiations with the network of suppliers will commence at the end of this month. It is expected that between 20 and 30% of the components for the future model will be made in Serbia. The new factory, which is designed to employ total of 2,500 workers, will be producing about 300,000 vehicles per year.

- Our aim is to be ready for the production of automobiles by the end of the next year, while mass production of the new model should start in 2012. Our projected turnover for the next two years is EUR 1.5bn per year - De Filippis announced at the last night's (May 13, 2010) meeting of the German Business Association in Belgrade.

As he explained, the factory in Kragujevac will be using the world's cutting-edge automobile production technology, including everything from presses to assembly lines.

- When we first came here, it was impossible to use the factory and install new machines and introduce modern production processes in it. We will now have an integrated unit for production of bigger components, primarily plastic ones such as bumpers. Our main supplier Magneti Marelli will get over 36,000 square meters on the factory's grounds. Also, we plan to have a logistic center built at 700 to 800 square meters for the future suppliers.

A new painting unit is also being built on Zastava's grounds, as well as the base for the world's most modern computerized and robotized technology.

(Climate chambers)

Aleksandar Ljubić, the adviser in the Ministry of Economy and Regional Development of Serbia, announced for today's issue of newspaper Blic that the first phase of adaptation included replacement of 400,000 square meters of roofs and 100,000 square meters of floors.

He pointed out that the factory was ecologically completely clean for the first time in its history because Fiat had made the state-of-the-arts unit for waste water treatment.

- At the same time, 1,000 tons of chromium and 10,000 tons of waste oil were eliminated from the factory, while the factory's 12 facilities made of asbestos have been torn down - said Ljubić.

Third of components for Fiat's models to be made in Serbia

Filippis said that Fiat maintained high standards in the selection of suppliers and that there were not enough Serbian companies at the moment that could meet the requests. He expects many international companies to work for Fiat and points out that it is very likely that some of them will move their production to Serbia. Domestic factories of car parts and components will, first of all, have the opportunity to work for Fiat's automotive suppliers.

- We count on the production of about 30% of components for future models in Serbia. Larger parts such as seats and plastic parts for car interior will be, definitely, produced in Kragujevac. There is no limit on the number of potential supliers, which will be asked to present us their business plans and projects. We assume that Fiat will be the main client for some manufacturers, but that does not mean we will request to be the only client as well. The partners will be enabled to work in the future free zone in Kragujevac's Korman field, and we will also open an academy to educate the partners. We hope that that center will become the largest organization for education of partners in the Balkans. We also hope that the main suppliers will be selected within next two or three months, while other companies will join the core later - said Filippis.

As it was announced earlier, Korman field in Kragujevac, the industrial zone that is reserved for automotive suppliers, occupies the surface of 67 ha and the state will invest EUR 10m in it, while another EUR 65m will be spent on the road network and the connection with Fiat's mother factory in Kragujevac.

The State Secretary in the Ministry of Economy, Aleksandar Ljubić, said that the interest expressed by automotive suppliers was so big that Kragujevac already lacked space for all investors.

- That is why we will offer them a space in new industrial zones in Niš, Svilajnac, Šabac and Zrenjanin, where certain benefits will be provided for all companies that decide to build their units there – said Ljubić.

Fiat's debts to banks reached EUR 8.7bn

Citing its anonymous sources, U.S. agency Bloomberg announced yesterday that Fiat Group, the third largest manufacturer of vehicles in Europe, asked for EUR 5bn worth of bank loans to refinance its debts. Fiat's debts to banks amount to EUR 8.7bn, exclusive of the loans between the companies.

T.S.

FCA Srbija Kragujevac

AHK Srbija

Magneti Marelli Corbetta Italia

Ministarstvo privrede Republike Srbije

FAS

Giovanni De Filippis

Aleksandar Ljubić

punto

grande punto

Korman field