GM Plans to Build Car Plant in Poland : Autos: The move comes after Warsaw turned down the company's bid to take over a state-owned factory.

From Reuters

General Motors Corp. is planning to build a car plant in Poland after apparently losing a race with South Korea's Daewoo to take over the state-owned FSO factory, officials said Thursday.

GM's German unit, Adam Opel, has sent a letter to the government offering to invest $280 million in a project to build 100,000 cars annually beginning in 1998, industry ministry spokeswoman Beata Nawracka said. An Opel spokesman in Dusseldorf, Germany, confirmed the plan.

Nawracka said the government welcomes the offer but needs more details before formal negotiations can begin.

"Talks can begin as soon as we know more details about the planned investment, such as where it will be located, who will be employed and financial aspects," Nawracka said.

The ministry's car industry analyst, Tomasz Bryzek, said Opel is likely to place some of its investment in the new economic zone in the southern Poland town of Mielec, where investors are offered breaks on the country's 40% corporate tax.

GM earlier wanted to take over the Warsaw-based FSO plant, offering to invest $340 million there, but the proposal was rejected as being too modest and involving big layoffs.

GM continues to assemble Opel Astra cars under a joint venture with FSO, in which it has invested $20 million, even though the factory is close to concluding a deal with Daewoo.

In August, the government signed a letter of intent with Daewoo that would give the South Korean firm 60% of a joint venture created out of the outmoded FSO.

Daewoo would invest $1.1 billion in the plant to produce 220,000 passenger cars by 2001. The final agreement is expected to be signed by the end of the month.

By acquiring FSO, Daewoo would create in Poland a strong foothold for expansion in Europe, as it has already taken over another Polish plant, the utility car plant FSL.

Analysts say Poland's booming economy, large market and strategic location in the former East Bloc make it an increasingly attractive base for car producers.

Poland's biggest car maker is Fiat Auto Poland, owned by Italy's Fiat Auto, which last year sold more than 130,000 cars. Among companies that assemble vehicles in Poland are Ford Motor Co., Germany's Volkswagen, Mercedes-Benz and Volvo.

Ford, the latest arrival, opened a $54-million plant last month that will assemble 30,000 of its Escort cars and Transit vans annually. The company plans to move into full production later.

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