Pirelli and Continental, the Italian and German tyre producers, will jointly invest 40 million euros over the next three years in a plant in Slatina for the manufacture of metallic cords (a basic component in tyre production), according to the Romanian Agency for Foreign Investment (Agentia Romana pentru Investitii Straine - ARIS).

The move confirms the interest of major players in the tyre business in Eastern Europe, and particularly in Romania, where low labour costs allow them to cope with the difficult economic environment of the global car market (the main customer of tyre producers).

"We estimate demand for metallic cords to be twice higher than the supply at the moment," say ARIS representatives. The 30,000 tonnes of metallic cord produced at the Slatina-based Pirelli-Continental plant annually will go to the Eastern European market.

Both Pirelli and Continental already produce on the Romanian market.

Through its Cables & Systems unit, the Italian group controls a plant in Slatina that produces electrical and optical wires and cables. Last year, the plant made net profits of over 3 million euros, against a turnover of almost 37 million euros.

The new metallic cord plant will in fact be located close to the plant owned by Pirelli Romania, Cabluri si Sisteme SA.

Pirelli's plan to develop a metallic cord plant goes back some time. Last year, ARIS announced Pirelli was interested in buying Cord Buzau, whose shareholder was the Bulgarian EP Commerce Ood company, and planned to invest about ten million euros. This project was not completed, however, and the Italians opted instead to build a plant from scratch, which was when Continental came into the picture.

Cord Romania, who in effect will carry out the investment in the Slatina-based cord plant, will be 80% owned by Pi