Nov. 15 (Bloomberg) -- Grundfos A/S, the world’s biggest maker of circulator pumps, will open a new factory in Serbia in the first quarter of 2013 to meet rising demand for its products in central and southeastern Europe.
Construction at the site northwest of the capital Belgrade will start on Feb. 3 and take one year to complete at the cost of some 50 million euros ($68 million), along with preparations to have more components produced and assembled locally, General Manager Jim Toft Nielsen said.
“We want as part of our globalization strategy to expand the production platform in the region,” he said. “There’s a significant market around us here and also continuously strong demand in other parts of Europe.” Grundfos, which is present in 55 countries, expects 7 percent to 8 percent growth in 2011 and “hopes this growth level can be maintained” amid the “challenging” outlook for the global economy.
Weakening growth prospects on the continent are not expected to undermine the plan as many Grundfos products are seen as “defensives, essential for water supplies, sewage systems” and heating, he said. “You have to have water and you have to have heating.” The 25,000 square-meter (269,097 square feet) facility will employ some 350 workers.
“Even if all growth stops, there will still be replacements” of pumps that account for as much as 80 percent of sales, Nielsen said. “Besides, when you have production in a region, you create more sales” and having local manufacturing improves chances of winning local tenders.
The executive declined to specify a product range or production volume at the future plant, saying only it will be mostly smaller pumps for households. Grundfos’s current output in Serbia is a single assembly line with a few dozen workers in a rented facility. An application for incentives from the state is being reviewed by the Serbian Investment and Export Promotion Agency.
Shortly after the 15-hectare (37 acre) lot for the new plant was bought in 2009, plans were briefly suspended to assess the impact of the economic crisis on the region, Nielsen said. Preparations resumed in 2010 and gained new momentum when the European Commission recommended in October that Serbia be accepted as a candidate for membership.
“Serbia is progressing in the right way, the candidate status will help a lot,” he said.
--Editors: Douglas Lytle, James M. Gomez
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