ZF's Focus on Eastern Europe

Dec. 2007 -- ZF is focusing on growth and expects sales in Eastern European to increase by 10 percent. The aim is to gain access to the markets in the East. Any company interested in doing business with Eastern European vehicle manufacturers needs to have a local presence in these countries. All of the major volume manufacturers have developed production capacities in the East, and all ZF competitors have established themselves here. Without a presence in Eastern Europe, ZF could runs the risk of being driven out of the market in Western Europe by low-cost suppliers from Eastern Europe. The same applies to Japanese and Korean vehicle manufacturers who have been joined in Eastern Europe by their Asian suppliers. ZF wants to get in on the action as a partner for Asian manufacturers.

ZF in Eger, Hungary

ZF Hungária in Eger is a 90-minute drive northeast of Budapest. This is where the ZF Group set up its first Eastern European plant 11 years ago. In 1996, the first year of operation, 3,000 transmissions were produced in Eger. Just 10 years later, this number increased to 85,000 and is expected to reach 114,000 this year. Sales in 2007 are estimated at €190 million – a 40-percent increase. The Hungarian workforce has grown steadily in recent years. Starting out with 313 workers in 1996, ZF currently employs more than 700 people in Hungary.

ZF Lenksysteme set up a subsidiary, ZF Lenksysteme Hungária kft., in Eger in June 2003. This company is located in close proximity to ZF Hungária. Workers at the Eger plant assemble rack and pinion power steering systems, steering columns, steering shafts, and pumps for passenger cars and commercial vehicles. Cost-effective manufacturing of these products is virtually impossible at plants in Germany. Sales revenues generated by ZF Lenksysteme Hungária have risen as rapidly as the number of employees. Annual sales in 2003 totaled €6 million. This figure increased to €120 million in 2006 and further dynamic growth is forecast. In 2007, the Eger plant is expected to manufacture steering systems and pumps valued at €160 million. Starting out with a workforce of 35 employees in June 2003, the plant now employs 450 people.

Trnava plant in Slovakia

The ZF plant in the small Slovakian town of Trnava also offers significant advantages when it comes to low wage costs and flextime work schedules. These benefits allow ZF to manufacture low-volume products including driveline components for cars and commercial vehicles, clutches and torque converters, that are no longer cost-effective in Western Europe. ZF is planning to open another plant in the area soon. A new ZF plant is currently being built in the Levice Business Park. ZF is investing €70 million in the new facility that is scheduled to launch operations in 2008. The company expects to generate annual sales of €150 million within the next four years. Complementing the existing range of products manufactured in Slovakia, ZF is planning to engineer suspension components, including shock absorbers, suspension struts, antiroll bars, and control arms in Levice. “For all of the major vehicle makers,”

Joint venture in Russia marks two years

ZF activities in the East are complemented by the company’s two years in the Russian Federation. The ZF Group operates a joint venture with the Russian truck and bus manufacturer, Kamaz – one of the world’s ten largest commercial vehicle manufacturers – in Nabereszhnye Chelny in the Russian Republic of Tartastan. The ZF Ecosplit transmission for commercial vehicles is currently being assembled at this plant. Sales volume (2006: €12 million) and the number of employees (2006: 60) are relatively modest in comparison with the other Eastern European plants. This situation will change in the near future when Kamaz trucks are equipped exclusively with ZF transmissions. Kamaz is anticipating major quality benefits from this move. Transfer cases and axles will soon be manufactured by ZF Kama in Tartastan. So it is only a matter of time before sales figures and workforce levels start increasing in this region.

In July, ZF acquired a major engineering center in Pilsen in the Czech Republic. This is where the company is setting up ZF Engineering Pilsen with 60 highly qualified employees. According to ZF CEO Hans-Georg Härter, “This is an important element in the expansion of our technological leadership and engineering expertise.” ZF plans to establish centers of excellence in electronics, mechatronics, and design at the new site.

Source: ZF

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