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Czech Republic: Plzen Grasps Its Opportunities

Prague, 15 October 1997 (RFE/RL) -- The Czech city of Plzen is a good example of an old-established industrial city which is determined to prosper in Central Europe's post-communist era.

The 700-year old West Bohemian city, famous above all for its beer brewing, has been hard hit in recent years by the re-structuring of the giant company Skoda.

Skoda Plzen, which specializes in electrical and heavy engineering, has long been the town's main employer, and in the communist era provided 40,000 jobs. But in the last few years this workforce has been slashed by more than half to 18,000 people, as Skoda battles to meet today's more competitive conditions.

The city authorities, led by mayor Zdenek Prosek, decided the city must not be allowed to waste away as part of a decaying Bohemian "rust-belt". Prosek and his team set their sights on attracting modern high-technology industries, and they knew they had some singular advantages as a manufacturing center for Central Europe.

Firstly, Plzen has by tradition a skilled workforce and it shares the low wage costs common to other areas of the country. It is situated in the central west of the Czech Republic, close to the markets of Germany and Austria, and also to Poland, a market of great potential. The highway to Prague and the east was recently completed, and the highway to Germany and the west opens next month.

One of the most notable characteristic of the Plzen team is how thoroughly they laid the groundwork for their marketing effort. First came a period of analysis to identify strong and weak points and to develop an overall strategy. Expert advice was sought, from the Encheda University in the Netherlands, from American economic experts, and from the Massachusetts Institute of Technology in Boston.

The city created a special office of economic development, plus a business relations center, and not least, a culture of openness and worldliness among officials and staff. The Czech defense ministry was persuaded to part with an old helicopter landing field, which has been transformed into the Borska Pole high-tech industrial zone. A package of incentives for foreign investors was organized.

But only the "right" sort of companies are wanted, says mayor Prosek with more than a touch of pride. "We are not offering our location and our skilled labor to just anybody," he says firmly. "We offer excellent conditions to good investors". In an interview yesterday with RFE/RL, he reeled off those conditions: cheap, fully serviced land at Borska Pole, continuous and detailed support from the city for companies moving into the area, guarantees on timely completion of building work, and other incentives.

In addition, there is what the mayor describes as a very aggressive marketing campaign to promote Plzen around the world, from Europe, to the United States to Asia. Prosek's own travels are part of this campaign to build close contacts in the world business community. His latest excursion was to the heart of high tech, California's Silicon Valley. That visit is part of the drive to attract to Plzen the big computer company Intel, which is planning a new microchip factory outside the United States. Plzen is competing with sites in Egypt and Portugal for the Intel factory. Another Silicon Valley company the city is seeking is Flextronics.

Two major foreign companies which have already moved into Borska Pola are Matsushita of Japan and Carrefour of France. Matsushita is now building 1,000 television sets a day in Plzen for the European market. It plans to triple its rate of production by early next year, when it will be employing 600 people. Corporate planning chief Frantisek Nekola says Matsushita has had a problem-free start to production in Plzen. He says the level of the city's support to Matsushita was the key factor in its decision to settle in Plzen rather than in Poland, Hungary or elsewhere in the Czech Republic.

In addition, says Nekola, Plzen is a pleasant place to live, with its opera, its stately buildings and its clean countryside.

Mayor Prosek offers this advice to other cities struggling to build a future in transition. He says take a realistic view of your strong and weak points, choose your strategy based on sound judgment, find your own tools to implement that strategy, then put maximum effort into marketing yourself.