Germany's Kayser Automotive System has chosen the city of Pleven, in northern Bulgaria, for its next manufacturing facility for automotive components. The company has already rented a building and is installing equipment and hiring people, with production planned to begin this summer. The investment is expected to reach around 10 million euro over five years and provide 500 jobs.
Manufacture
The plant in Pleven will manufacture various tube systems (including plastic tanks, valves, etc.) for both classic and electric cars. It is planned to work for different customers but the company does not specify which ones, only noting that they are major manufacturers in Europe.
Production is expected to begin by the third quarter of this year at the latest. The auditing procedure by customers is underway and the first employees have already been hired. Their number is expected to reach 50 to 100 people by the end of the year and about 500 over the next 5 to 6 years.
The German company will relocate production lines from Poland to Pleven. "The capacity there is full, so we will transfer some current projects," said Kayser Automotive Systems' COO Hajo Matthies, who also manages the Bulgarian entity. Kayser Automotive Systems Bulgaria was registered at the beginning of April this year with a capital of 50,000 levs.
According to Matthies, the exact investment in Bulgaria is difficult to estimate at this point, as negotiations with customers are ongoing and it depends on whether the company will win the projects. However, the investment is expected to reach about 10 million euro over the next five years.
Rented building
The company will operate in a rented building located in the BPD Pleven logistics park. The building has an area of 5,269 sq. m and includes a production hall, a warehouse, an administrative sector, a utility sector and technical service facilities. Kayser Automotive Systems is renting it for an initial period of 10 years.
The German company can also rely on an additional area of about 5,000 sq. m in the park, which allows for future expansion. The availability of such an option is a traditional requirement of investors and Kayser is no exception, although expansion is not currently on its agenda.
The entire property of the logistics park is about 37,000 sq. m and includes a production building, which was put into operation in 2015, and warehouses. The production building was constructed under a build-to-suit model for Elektrokabel, the local subsidiary of Germany's Nexans Autoelectric (part of France's Nexans group). The company leased the building for ten years but at the end of 2018 the headquarters decided to stop the production of wiring systems in Bulgaria and relocate it to other plants elsewhere. Until the end of the lease, the building was subleased to the sewing factory AlergoTex Medizinische Textilien, a German company producing anti-allergy bed covers. Its operation, however, did not last long.
The advantage of the building is that it is made as flexible as possible, according to BPD. "When we make build-to-suit buildings, we strive to adhere to certain standards. That makes it easier to transform them for the next tenant," explained Minko Bordzhukov, director of business development for Romania and Moldova at BPD, who is also responsible for the project in Pleven. According to him, this is why three other automotive companies have shown interest in the building.
The modifications to the building were minimal, with BPD assisting with the design and permits, including coordinating investment intentions with the environmental inspection. "In our case, we have experience, including in the city. Its lack is usually a difficulty for international investors and that is how having a partner in Bulgaria adds value," said Bordzhukov.
Delayed decision
Kayser Automotive Systems began searching for a new production location as early as 2020, considering Bulgaria and Serbia as options. However, the pandemic hit the automotive industry and put off the plans. The search resumed two years later and the final location in Pleven was chosen for several reasons. "Bulgaria is in the European Union, which is important. Additionally, we found a good base for hiring labor and a good logistics network here. Another advantage is that we found a ready factory where we can start production almost immediately. Our partners BPD and Forton did a lot of work to enable us to enter the factory quickly," explained Matthies.
Consultants Cushman and Wakefield Forton told the Capital Weekly that the German investor was offered an extensive list of over 20 locations and properties across Bulgaria. "Pleven turned out to be the ideal place, considering Kayser's requirements to choose a location where it can attract workforce and be close to suppliers," said Zoro Angelov, head of industrial space & land development at Forton. The company's desire to start production as soon as possible shortened the list of possible options, he added.
Green energy
Kayser will also be able to rely on green energy for its production operations, although this is not yet required by all its customers. "But having green energy was part of our discussions with BPD, so that if customers request it, we can be prepared," said Matthies.
Green energy is part of another BPD project, Industrial Zone-Pleven, which is developed in partnership with housing developer FairPlay and is located a few hundred meters from the factory. The property is about 20 ha large and is certified as an industrial park. Currently the companies are installing 5 MW solar trackers on it, with construction expected to be completed within two months.
Germany's Kayser Automotive System has chosen the city of Pleven, in northern Bulgaria, for its next manufacturing facility for automotive components. The company has already rented a building and is installing equipment and hiring people, with production planned to begin this summer. The investment is expected to reach around 10 million euro over five years and provide 500 jobs.
