VW in Vogosca

On Wednesday, the board of the Sarajevo subsidiary of German-based car firm Volkswagen (VW) will approve moving a production line from Slovakia to Bosnia.  VW already has a small plant in Vogosca near Sarajevo, assembling with Bosnian partner ASA Holding about 5,000 VW and Skoda models a year -- a fraction of VW’s global output.  About 600 jobs will be created in Bosnia.  VW says that despite the move from its small plant at Martin, which makes car components, there will be no reduction in output or staffing from its Slovak operation, which is spread between Martin, Bratislava and Kosice.  Before the 1992-95 war in Bosnia, 3,500 people worked at Vogosca producing 200,000 Volkswagens a year.

There had been fears that increased competition from the EU following Bosnia’s lifting of import duties on manufactured goods from July 1 -- the result of its Stabilisation and Association Agreement -- would sweep away Bosnia’s tiny car industry at Vogosca.  Instead, the lure of lower wages appears to be stronger. VW has chosen to tap into a reservoir of skilled labour working for wages that are still low by Central European standards.  While a small step for VW, its decision to move production into Bosnia will make a big difference to the country’s renascent engineering industry.