Guide to Economic Development in the Global Auto Industry - S9

AUSTRIA
Toyota's
Valenciennes
plant: Local
incentives won
an expansion.

Austria on a streak
for recruiting r&d

hen Chinese SUV giant Great Wall
decided to build a new r&d center in
Europe to engineer electric drivetrains, it
avoided the obvious locations of Germany
and the U.K. It picked Austria instead.
This mountainous country south of
Germany is best known in automotive
circles for being home to Magna's contract
manufacturing firm Magna Steyr and engine
developer AVL. But it is quietly becoming a
hotbed of vehicle development.
The trend is partly due to tax breaks
available to companies investing in r&d. But
Great Wall saw the attraction elsewhere, says
Markus Schermann, the newly opened r&d
center's general manager.
Schermann cites three main factors
in Great Wall's investment: proximity to
companies that offer e-drive technology
and components; the short distance to
e-drive research facilities; and a good pool of
engineers trained in the field. "We realized
there might be some subsidies," Schermann
said. "But those were not considered during
the decision process."
Great Wall was assisted by the
government's Austrian Business Agency
(ABA), which helped the company find land
close to the Vienna airport. Anyone investing
in r&d in Austria receives a tax credit equal
to 14 percent of all expenses in the following
year. But apart from that, no special
incentives are available to automotive firms.
ABA figures show around 800 firms in
Austria are working on future mobility.
Those working on autonomous technology
can take advantage of test center ALP Lab,
which offers both simulation and test tracks.
Last September, Kreisel Electric, an Austrian
developer of high performance batteries for
vehicles, also opened a new r&d center in
Rainbach, Upper Austria.
This year, Magna Steyr in Graz started
production of the Jaguar I-Pace electric car,
after launching the Jaguar E-Pace small SUV.
It also makes the BMW 5-Series. Meanwhile
BMW said earlier this year that one in two
BMWs sold globally comes fitted with an
engine made in its plant in Steyr, Upper
Austria.

- nick gibbs

FRANCE

Local, national effort wins foreign
projects in France

he largest publicly announced investments in an automotive plant in France
this year have come not from a French company, but from Toyota and Daimler. The Japanese company announced in January that
it will spend 400 million euros ($471 million)
to upgrade and expand its factory near Valenciennes in northern France. Mercedes-Benz
plans to spend 500 million euros ($589 million) to produce a compact electric vehicle,
part of the company's new EQ line, at its
20-year-old Smart factory in Hambach, in
eastern France. It will be the first Mercedes
passenger car produced in France when production starts in 2022.
Other recent key investments have come
from PSA Group, as it revamps its European
production footprint following the purchase
of Opel last year. PSA is ramping up production of gasoline engines at its plants in Tremery and Douvrin, adding a night shift to produce vans in Hordain, building a facility to
produce automatic gearboxes under license
from Aisin at its own site in Valenciennes,
and increasing production of manual gearboxes in Metz. PSA has not revealed the cost
of the projects.
Toyota produces the subcompact Yaris for
buyers in Europe, the United States and Canada at Valenciennes. Although a slow seller in

the U.S. market, the car sold nearly 200,000 in
Europe last year. More significantly, Toyota's
investment will modernize its French factory
and prepare it to produce a second car on Toyota's New Global Architecture. Valenciennes'
annual capacity will increase to 300,000 vehicles a year, up from 230,000 currently. About
300 temporary workers will be hired, with the
possibility of an additional 400 new positions.
The project is a win for French industry
investment. Toyota had been considering an
alternative of investing in Eastern Europe,
but the French government agreed to provide
project support of up to 4 million euros. The
city of Valenciennes committed 5 million euros, and the regional government 11 million
euros. Those commitments won the project,
Xavier Bertrand, the regional governor, told
the French newspaper Figaro. "Five percent of
the investment is what made the difference,"
he said.
French President Emmanuel Macron
made the trek to France's economically depressed north to announce the investment.
Macron toured the factory with Didier Leroy,
Toyota's executive vice president who was the
inaugural director of the factory, and saluted
the employees for their culture of "productive social dialogue."

- peter sigal

E C O N O M I C D E V E L O P M E N T G U I D E / J U LY 2 0 1 8

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