Upon receiving the information from the Ministry of Economy and Regional Development of the Republic of Serbia on the possibility of investing into an existing industrial complex in Zaječar, Gorenje diligently and thoroughly examined the offer presented and negotiated with the Serbian Ministry and the authorities of the City of Zaječar in the recent weeks the starting points for a successful implementation of this investment project.
The industrial complex in Zaječar includes two manufacturing halls with a total area of 18,000 square meters, standing on a property of 14 hectares. The halls will host Gorenje's assembly line for washing machines and driers at the complex. All washing machines and dryers will still be manufactured at the parent company plant in Velenje; however, assembly of appliances bound for sale in Serbia and some Eastern European countries will take place in Zaječar, which will allow reaping the advantages of a free trade agreement that Serbia has signed with Russia and some other countries in the region. As a result, Gorenje will boost their sales in these markets which are highly important for the Group's profitability. Moreover, the Zaječar investment will thus positively affect the output of washing machines and dryers at the Velenje plant, allowing the company to maintain the jobs at the parent company location.
Furthermore, Gorenje is planning to set up a manufacturing plant for plastic bathroom basins which are currently made by the Gorenje Home Interior subsidiary (Gorenje Notranja oprema) at the Šoštanj plant as a part of the Bathroom production program. However, basin production is no longer economically viable at this location. Relocating this part of the Bathroom program to Serbia will result in the reduction of the number of employees at the Gorenje Home Interior company in Šoštanj from 132 to approximately 50 presumably in the second half of the year. In keeping with the corporate practice to date, Gorenje will seek to find alternative employment for the surplus workers from the Šoštanj plant elsewhere within the Gorenje Group.
The Zaječar location also offers possibilities for manufacturing components and expanding the Gorenje Group's activities in the field of ecology, consistently with the Group's Strategic Plan to become the leading provider of all-around waste management services in Southeastern Europe.
Gorenje will launch the planned business operations in Zaječar within 12 months from the signing of the relevant binding contracts, providing employment for 300 people in the period of three years. The initial investment is planned at approximately EUR 2.9 million.
Pursuant to its proactive job creation program, the government of the Republic of Serbia will support Gorenje's project with a grant and investments into the industrial complex's infrastructure.
Gorenje already has operations at two other locations in Serbia: a refrigeration appliance plant in Valjevo, and a water heater plant at the manufacturing complex in Stara Pazova. The decision to invest in Zaječar was adopted in compliance with Gorenje's strategic policies which include partial internationalization of operations, i.e. relocating the production of low priced products to low cost countries while maintaining the production of high value-added products in Slovenia.
The partners believe that the government of the Republic of Serbia, City of Zaječar, and Gorenje will have signed the agreement on Gorenje's investment in Zaječar by the end of January 2011.
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