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22nd November 2007
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Which of the following most accurately describes the problem?

As the demand for trucks in Eastern Europe rises western manufacturers are casting an acquisitive eye over the region. But as more trucks with familiar badges are built out east, will western operators feel the pinch? 011ie Dixon investigates.

I you take the numbers at face value, and accept the hyperbole. then you have to conclude that the 'East' —Eastern Europe, le CIS (comprising 11 former soviet repubcs) et al — represents a Klondike-like boom )r European truck manufacturers.

On one level. this should give us all a feeling f warmth. After all, its nice to see people oiling on, and with figures for the first half of J07 showing registration increases of 20.2% the Czech Republic, and a mind boggling 5:1% in Poland, anyone selling trucks in ither of these markets will have nothing to Jaw] ai n about.

The UK's truck operators have certainly oticed this trend. Lead times for new tractor nits now stretch out some way beyond the orizon; on current form if you order from „rtain manufacturers today it will be 2009 efore you take delivery.

No manufacturer is going to pass up the pportunity presented by Eastern European/ IS growth, but there has been a marked npact on their ability to supply customers in -left traditional Western European markets. The economics of truck manufacturing reclude turning capacity on and off at the rop of a h at, so if that same capacity is rnaxed ut. lead times will inevitably lengthen. At ante point, a decision has to be taken about ie sustainability of demand. Ultimately, you ither write a cheque for additional capacity, r you don't.

And the chequebooks have been dusted off uring 2007. This year alone, AB Volvo has tarted work on an £80rn truck plant in the :ussian region of Kaluga, south-west of Moscow. This is due to bear fruit in 2009 with an annual capacity of 10,000 Volvo and 5,000 Renault trucks.

Earlier this year. Knorr-Bremse signed a declaration of intent that will lead to a joint venture (JV) with Russian manufacturer Karnaz; also in Russia, Iveco has recently added to its existing heavy truck-oriented .1V with UralA7, and has struck a similar deal with Samotlor-NN for the production of the Daily range. Parent company Fiat has signed a similar deal with Russian manufacturer Severstal that appears to include its range of light CVs.

Russian site

The newly renamed Daimler Trucks is believed to be looking for a Russian site in fact according to recent press reports it might be looking to establish the Freightliner and Sterling brands within the CIS. Scania has long been rumoured to he looking to establish a truck plant in Eastern Europe, adding to its two bus body factories in Poland, and earlier t his year it struck a supply deal with Hungarian supplier Raba Axle.

Paccar was, apparently erroneously, reported to be contemplating adding a plant to its newly unveiled parts distribution site in Hungary. In Serbia, Iveco holds a 46% stake in Zastava Kamioni, and just for good measure India's second biggest truck manufacturer Ashok Leyland — in which Iveco used to hold a 15% stake — acquired the Czech manufacturer Avia in 2006.

In sum, Eastern Europe is where it's at.

It's definitely where MAN is at last month

it officially opened a 250,000m2 plant at Niepolomice near Cracow in Southern Poland. It's on a 142-hectare site, and represents an investment just shy of .E70m. At present,400 staff are employed at the site, the workforce is scheduled to rise to 650 by the end of 2010.

Annual capacity Trial production started in July. When it's running at full tilt Niepolomice will have an annual capacity of 15,000 units from a single shift. Production will centre around the TGAWW ( World Wide) ran ge,which is a toughened variant of the outgoing TGA designed to cope with the tough operating conditions in Eastern Europe, the CIS and the Middle East —markets MAN expect to grow fast.

Why locate here? After all. labour rates in Poland will inevitably rise, eventually getting close to parity with Western Europe, so the short-term saving on labour costs is bound to diminish.Similarly,while the Eastern European and CIS markets are currently rocketing upwards. over time this too will settle down, and demand patterns will shift towards those seen in Western Europe.

MAN's view is rather more bullish, The Niepolomicc plant is not just about reducing pressure on its Western European manufacturing capacity; it's also about meeting what it expects to be long-term and sustained demand from non-traditional markets.

While it is forecasting that the overall European market above six tonnes will rise by 6% during 2007, its predictions for the Polish market suggest that business here will increase by 60%. In fact MAN chairman Anton Weinmann believes more MAN trucks will be sold in Poland next year than in the UK. Furthei East and demand for MANs in the CIS ha risen by no less than 800% since 2005.

That said, the site has considerable room for expansion. Of its 142 hectares, only 25 are currently in use. In part, this is because 80% cent of components are shipped direct to the line — the building is surrounded by loading bays — with major assemblies such as cabs and axles unloaded from trucks and taken almost immediately to the vehicle for which they are destined.

In any case there's plenty of room to develop a supplier park on site. MAN's management seems keen to do this, so Niepolomice it set to become a components centre as well as an assembly plant.

Additional capacity Demand from Eastern Europe seems to have taken most of the European manufacturers surprise, but they're reacting fast: the Niepolomice plant has gone from its ground breaking ceremony to full production in little over a year.

MAN must be hoping that its forecasts fat Eastern Europe and the CIS come true. But in the meantime this additional capacity will ease the pressure on MAN's other factorie!. around Europe and, crucially for operators in search of a truck, it may allow lead timm to be reduced. We're used to seeing trucks. leaving Western European factories and heading east — it looks like that flow is about to go into reverse. •

Tags

Organisations: MAN
People: Anton Weinmann
Locations: Moscow

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