romania - opportunities in industrial and automotive manufacturing 2010

A FRD Center Market Entry Services Publication

www.market-entry.ro email: [email protected]

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MARKET AND INVESTMENT OPPORTUNITIES

IN

INDUSTRIAL PRODUCTION AND AUTOMOTIVE

MANUFACTURING IN ROMANIA 2010

DEMO REPORT

BY

FRD CENTER MARKET ENTRY SERVICES



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1. Industrial manufacturing in Romania – new opportunities ................................. 3

2. Automotive manufacturing ...................................................................................... 4

2.1 Manufacturing of auto vehicles................................................................................... 4

2.1.1 Statistics............................................................................................................... 4

2.1.2 Producers of auto vehicles in Romania (OEMs) .................................................. 5 2.2 Manufacturing of auto components............................................................................ 7

2.2.1 Examples of Romanian producers of auto components ....................................... 7

2.2.2 Examples of foreign producers of auto components with facilities in Romania.. 10 3. Manufacturing of basic metals .............................................................................. 13

4. Manufacturing of electrical equipment ................................................................ 16

5. Manufacturing of chemicals and chemical products ........................................... 19

6. Manufacturing of textiles and garments............................................................... 22

7. Manufacturing of rubber and plastic products ................................................... 24

8. Examples of recent investments in industrial manufacturing ............................ 27

9. About FRD Center Market Entry Services .......................................................... 29



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1. Industrial manufacturing in Romania – new opportunities

The dynamic industrial manufacturing sector in Romania offers new opportunities for

exports and investments alike, in sub-sectors such as tooling, precision moulding, raw

materials, equipment, automation, metal stamping, spare parts, aftermarket, technology,

know how, quality control etc.

Romania enjoys a strong automotive industry as well as traditional metal stamping and

forming, oil equipment manufacturing, electrical equipment, chemical, plastic,

pharmaceutical and textile manufacturing sectors.

According to the National Institute of Statistics, taking into account the unadjusted series of

indices, in the first eight months of 2010 compared to the same period of the previous year,

the industrial production in Romania increased by 5.3%. This growth was sustained by:

- the production and supply of electricity, gas, steam and air conditioning (+10.4%)

- the manufacturing industry (+5.5%).

In the manufacturing industry in the first eight months of 2010 compared to the similar

period of 2009, increases were recorded in the following sectors:

- the manufacturing of motor vehicles, trailers and semitrailers (+36.3%)

- the manufacturing of basic metals (+34.9%)

- the manufacturing of electrical equipment (+34.4%)

- the manufacturing of chemicals and chemical products (+12.0%)

- the manufacturing of textiles (+9.6%)

- the manufacturing of rubber and plastic products (+4.9%)

The labour productivity in industry registered an increase by 19.5% during the first eight

months of 2010 compared to the same period of the previous year.



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2. Automotive manufacturing

2.1 Manufacturing of auto vehicles

2.1.1 Statistics

According to the Association of the Automobile Producers and Importers (APIA), 257,950

auto vehicles were produced and assembled in Romania in the first nine months of 2010, out

of which:

• 238,899 passenger cars

• 19,027 commercial vehicles under 3.5 t GVW

• 24 commercial vehicles of over 18 t GVW

The production and assembling of auto vehicles in Romania in the first nine months of 2010

recorded a growth of 21.3% compared to the similar period of the previous year.

Production and assembling of

auto vehicles in Romania - evolution

200,000

220,000

240,000

260,000

280,000

Jan - Sept 2009 Jan - Sept 2010

units

Source: APIA



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2.1.2 Producers of auto vehicles in Romania (OEMs)

2.1.2.1 Automobile Dacia

In the first six months of 2010, Automobile Dacia, owned by the Renault Group, sold

181,826 auto vehicles, up by 18.2% compared to the similar period of the previous year. This

increase is mainly based on the demand from the external markets. Dacia exports its

products in France, Germany, Italy, Spain, Algeria, Turkey, Belgium, Austria, the

Netherlands, Switzerland etc.

On the domestic market, Dacia sold 19,294 auto vehicles in the first six months of 2010. In

Romania, Dacia had a market share of 33.5% in the first semester of 2010, up by 3.5%

compared to the similar period of 2009.

The evolution of the Dacia sales in the first semester, during the period 2005 – 2010, is

presented below.

Dacia sales - evolution

60,000

90,000

120,000

150,000

180,000

210,000

H1 2005 H1 2006 H1 2007 H1 2008 H1 2009 H1 2010

units

Source: Automobile Dacia



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2.1.2.2 Ford

Ford Motor acquired Automobile Craiova in 2007, following a transaction of 57 million

EUR.

In the first nine months of this year, Ford produced in its plant in Romania 6,300 Transit

Connect commercial utility vehicles.

Starting with September 2011, Ford intends to launch the production of a new model on the

B segment in its plant in Craiova.

2.1.2.3 Roman

Roman produces auto trucks in its plant in Brasov. The company intends to produce also

tractors during the next period.

In the first seven months of 2010, Roman produced 15 auto trucks. The company’s entire

production in the first seven months of this year was exported.



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2.2 Manufacturing of auto components

2.2.1 Examples of Romanian producers of auto components

2.2.1.1 Compa

Compa produces turbo-charger components, windscreen wipers components, injector

components, steering gears and columns, shock absorbers components, hot and cold coiled

springs, drive shafts, stamped parts, welded parts, brake equipment and pneumatic brake

cylinders, die casting parts etc.

At present, the exports represent some 90% in the company’s turnover. Compa is listed on

the Bucharest Stock Exchange. The company is controlled by the Employees’ Association

(54.5992%) and other shareholders (45.4008%).

In the first three quarters of 2010, Compa recorded a net turnover of 70 million EUR, this

representing a growth of some 71% compared to the similar period of the previous year.

Turnover dynamics - Compa

30

40

50

60

70

80


mil EUR

Source: Bucharest

Stock Exchange

Compa hired some 290 persons in the first half of 2010 in order to face the growing number

of orders, coming mainly from its foreign partners, Delphi and Bosch.



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2.2.1.2 Rombat

The local producer of auto batteries Rombat has an annual production capacity of 2.3

million batteries. The company forecasts a production of three million batteries in 2015.

At present, the company’s main clients are the Renault and Peugeot Groups. Rombat is in

talks with Ford in order to deliver, starting with 2012, batteries for the hybrid cars that the

US company plans to manufacture in its plant in Craiova.

In 2009, Rombat exported 1.2 million auto batteries.

Rombat recorded a turnover of some 50 million EUR in 2009. The company estimates a

turnover of 60 million EUR in 2010 and of 93 million EUR in 2015.

Turnover dynamics - Rombat

40

50

60

70

80

90

100

2009 2010e 2015e

mil EUR

Source: Ziarul Financiar newspaper

The company is owned by Rombat Invest SRL (approx. 58.16%) and employees (approx.

41.84%).



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2.2.1.3 UAMT

The producer of auto components UAMT recorded a net turnover of 9.3 million EUR in

the first three trimesters of 2010, up by some 56% compared to the similar period of the

previous year.

Turnover dynamics - UAMT

5

6

7

8

9

10

11


mil EUR

Source: Bucharest Stock Exchanger

UAMT is listed on the Bucharest Stock Exchange. The company’s shareholders are: the

Employees’ Association (56.1328%), FICAMT Oradea (11.6407%), others (32.2265%).



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2.2.2 Examples of foreign producers of auto components with facilities in Romania

2.2.2.1 Autoliv

In 2009, the Swedish Group Autoliv increased its business on the Romanian market and

reached almost 275 million EUR, following the transfer of some production contracts from

other European plants to its units located in Brasov and Lugoj.

In the first semester of 2010, Autoliv Romania recorded total sales of 194.5 million EUR.

The company estimates a turnover of 363.4 million EUR in 2010.

Turnover dynamics - Autoliv Romania

0

50

100

150

200

250

300

350

400

2005 2006 2007 2008 2009 2010e

mil EUR


At present, the exports represent 90% in the business of Autoliv Romania, compared to

some 52% in 2008.



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2.2.2.2 Trelleborg

The Swedish Group Trelleborg entered the Romanian market in 2007 through the opening

of a plant in Dej (Cluj county). The plant has some 210 employees and produces engines,

systems of chassis assembling, anti-vibration systems, car body parts etc.

Trelleborg invested in its plant in Dej over ten million EUR. At present, some 70% of the

company’s production is exported. The company’s main clients are BMW, VW, Ford,

Nissan, PSA, Automobile Dacia and Renault.

Trelleborg Automotive Romania estimates for 2010 a turnover of approx. 35 million EUR,

up by some 40% compared to the previous year.

Turnover dynamics - Trelleborg Automotive Romania

20

24

28

32

36

40

2009 2010e

mil EUR




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2.2.2.3 Kuhnke

Kuhnke Production Romania, part of the German Group Kuhnke, produces electrical and

electronic components for the auto industry. The company estimates a turnover of approx.

20 million EUR in 2010, this representing an increase by some 30% compared to 2009.

Turnover dynamics - Kuhnke Romania

10

15

20

25

30

2009 2010e

mil EUR


Kuhnke Production Romania works for Volkswagen, Audi, Porsche, Daimler or BMW and

produces in its plant located in Sibiu coils and electrical components for the mother-

company in Germany.



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3. Manufacturing of basic metals

3.1 Alro

Alro produces primary aluminium products, such as wire rod, billets, slabs, foundry alloys

and ingots and processed aluminium products, such as aluminium plates from soft, medium

and hard alloys including non heat-treated plates, heat-treated plates, sheets, coils, tread

plates, embossed sheets and coils, corrugated and heat treated sheets and extrusions.

Alro is owned by Vimetco NV Amsterdam (84.1898%) and other shareholders (15.8103%).

The company is listed on the Bucharest Stock Exchange.

In the first semester of 2010, Alro produced 118.630 tones of primary aluminum and

23,583 tones of processed aluminium. The Alro’s customers include end users and metal

traders. Over 80% of the company’s output is sold on the international market through

the London Metal Exchange and based on direct contracts with long-term customers in

25 countries.

The company’s net turnover during the period January - September 2010 recorded an

increase by some 31% compared to the similar period of the previous year.

.

Turnover dynamics - Alro

200

240

280

320

360


mil EUR

Source: Bucharest Stock Exchange



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3.2 Mechel Targoviste

The steel producer Mechel Targoviste is part of the Mechel Group. The company produces

steel products, such as laminated, calibrated and forged products. In 2009, the company

produced 321,123 tones of crude steel.

Mechel Targoviste is listed on the Bucharest Stock Exchange.

In the first three trimesters of 2010, Mechel Targoviste recorded a net turnover increase by

some 57% compared to the similar period of 2009.

Turnover dynamics - Mechel Targoviste

80

100

120

140

160


mil EUR




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3.3 Electrocarbon

The producer of electrodes Electrocarbon is listed on the Bucharest Stock Exchange. The

company is owned by: Vivaio Campina (50.8495%), Metaleuroest Campina (21.1180%),

Ekomin Titu (20.5993%), others (7.4332%)

In the first semester of 2010, the company recorded a net turnover of 18 million EUR, up by

121% compared to the similar period of the previous year.

Turnover dynamics - Electrocarbon

6

10

14

18

22

H1 2009 H1 2010

mil EUR




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4. Manufacturing of electrical equipment

4.1 Electroarges

Electroarges produces household appliances, electrical lighting panels, electrical drilling

machines, concrete compacting vibrators, automotive electro pumps, accessories for vacuum

cleaners etc. The company exports its products in Germany, Italy, France, Belgium, UK,

Spain, Bulgaria, Serbia, Hungary etc.

Electroarges is owned by: GM Invest (14.0556%), Mr. Ion Gavrila (12.8954%), others

(73.0490%). The company is listed on the Bucharest Stock Exchange.

In the first semester of 2010, Electroarges recorded a net turnover of 12.5 million EUR, this

representing an increase of some 48 % compared to the first semester of 2009.

Turnover dynamics - Electroarges

6

8

10

12

14

16

H1 2009 H1 2010

mil EUR




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4.2 Bega Electromotor

Bega Electromotor, owned by Mr. Valentin Marius Cristescu and Mr. Emil Cristescu, is a

significant producer of electrical motors of medium power. The company produces single

phase and three phase electric motors, electric motors for lifting equipment, motors for

washing machines, pumps etc. Some of the services offered by the company are: electric motors wiring and rewiring,

aluminium diecasting etc. Bega Electromotor is listed on the Bucharest Stock Exchange.

In the first six months of 2010, the company recorded a net turnover growth of some 3.5%

compared to the similar period of the previous year.

Turnover dynamics - Bega Electromotor

1.0

1.1

1.2

1.3

1.4

H1 2009 H1 2010

mil EUR




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4.3 Electroputere

Electroputere produces electric apparatus (circuit breakers, disconnecting switches,

instrument transformers, medium voltage switchgears, starting rheostats, starting

autotransformers etc), rotating electrical machines, power transformers etc.

Electroputere is listed on the Bucharest Stock Exchange. The company is owned by: Al-

Arrab Contracting Company (86.2803%), others (13.7198%).

In the first trimester of 2010, Electroputere recorded a net turnover growth of some 7%

compared to the first trimester of 2009.

Turnover dynamics - Electroputere

12

14

16

18

T1 2009 T1 2010

mil EUR




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5. Manufacturing of chemicals and chemical products

5.1 Oltchim

Oltchim produces inorganic products (caustic soda, liquid chlorine, hydrochloric acid,

sodium hypochlorite, hydrogen peroxide), macromolecular products (vinyl chloride

monomer, polyvinyl chloride, polyether polyols), organic synthesis products (propylene

glycol, polypropylene glycol, oxo-alcohols, dichloroethane) etc.

Oltchim is listed on the Bucharest Stock Exchange. The company’s shareholders are: the

Ministry of Economy (54.7905%), PCC SE (12.1581%), individuals (18.2169%), juridical

entities (14.8344%).

In the first nine months of 2010, the company recorded a net turnover of some 217.5

million EUR, up by 16% compared to the similar period of the previous year.

Turnover dynamics - Oltchim

180

190

200

210

220

230


mil EUR




20

5.2 Azomures

Azomures produces chemical fertilizers, melamine, gases and other products.

Azomures is listed on the Bucharest Stock Exchange. The company’s shareholders are:

Eurofert Investments LLC New Castle USA (56.8254%), Azomures Holdings LLC

Wilmington USA (19.0505%), others (24.1241%).

In the first semester of 2010, Azomures recorded a net turnover of 130.4 million EUR, up

by some 69%, compared to the similar period of the previous year.

Turnover dynamics - Azomures

60

80

100

120

140

160

H1 2009 H1 2010

mil EUR




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5.3 Chimcomplex

Part of the SCR Group, Chimcomplex produces inorganic products (chloralkali and

inorganic chlorides) and organic products (solvents, alkylamines, pesticides). The percentage

of the exports in the company’s turnover exceeds 60%.

Chimcomplex is listed on the Bucharest Stock Exchange. The company’s shareholders are:

A2 Impex SRL (83.8158%), AVAS (12.8956%) and others (3.2886%).

In the first six months of 2010, Chimcomplex recorded a turnover of 18.6 million EUR, this

representing and increase by some 75% compared to the first semester of 2009.

Turnover dynamics - Chimcomplex

4

8

12

16

20

24

H1 2009 H1 2010

mil EUR




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6. Manufacturing of textiles and garments

6.1 Vastex

Vastex produces fabrics for bed sets, dresses, blouses, work equipment and home textile,

fabrics type satin, fabrics for military equipment, ready made textiles, cotton carded yarns.

The company exports its products in Germany, Belgium, France, Portugal etc.

The company is owned by: Castrum Corporation (71.0741%), SIF Moldova (13.9352%),

others (14.9907%). Vastex is listed on the Bucharest Stock Exchange.

In the first semester of 2010, Vastex recorded a net turnover of 3.2 million EUR, up by

some 23% compared to the first semester of 2009.

Turnover dynamics - Vastex

1

2

3

4

H1 2009 H1 2010

mil EUR




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6.2 Pasmatex

Pasmatex, a 100% Romanian private company, manufactures ribbons, textile bands, woven

and knitted elastic bands, printed articles, rigid and elastic girths, woven and printed labels,

curtain bands, hook and loop.

Pasmatex performs complete technological processes: warping, quilling, weaving, dyeing,

confections, finishing, wrapping. The materials and fabric used by the company are:

polyamide, polyester, cotton and cotton-like materials, polypropylene, rayon, natural rubber,

elastomers, dyes and chemical textiles auxiliaries.

Pasmatex is SR EN ISO 9001:2001 certified.

6.3 Carpatex

The company produces worsted fabrics and ready made garments (overcoats, jackets,

trousers for men and women, skirts, tailor-made suits for women). The company exports its

products in countries in the European Union, USA and Japan.

Carpatex is a 100% Romanian private company.



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7. Manufacturing of rubber and plastic products

7.1 Teraplast

In the first semester of 2010, the producer of plastic products Teraplast recorded a net

turnover increase by 21% compared to the similar period of the previous year.

Turnover dynamics - Teraplast

16

18

20

22

24

H1 2009 H1 2010

mil EUR


At present, the exports represent some 10% in the company’s turnover. Teraplast exports its

products in Ukraine, Slovakia, Hungary, Bulgaria, the Republic of Moldova etc. The

company targets an increase of its exports in the next future.

In the first six months of 2010, the company finalised the relocation process of its

production units to Saratel location in Bistrita Nasaud county.

Teraplast is listed on the Bucharest Stock Exchange. The company is owned by: Mr. Dorel

Goia (34.2651%), Mr. Emanoil Ioan Viciu (10.1519%), SIF Banat Crisana (10.4824%),

others (45.1006%).



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7.2 Romcarbon

Romcarbon produces air, oil, fuel and industrial filters, polyethylene products (foils, bags

etc), PVC products (pipes, tubes, fittings, foils, packages etc), polypropylene bags, expanded

polystyrene trays and plates, protection materials, active carbon etc.

In the first semester of 2010, Romcarbon recorded a net turnover of 13.9 million EUR, up

by some 64%, compared to the first semester of 2009.

Turnover dynamics - Romcarbon

6

8

10

12

14

16

18

H1 2009 H1 2010

mil EUR


Romcarbon is listed on the Bucharest Stock Exchange. The company is owned by: Living

Plastic Industry Buzau (32.8539%), Unitai International Corporation Road Town Vir

(20.8459%), Eastern Eagle Fund Ltd Winward Cym (20.2908%), others (26.0094%).



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7.3 Ducatex

The company produces rubber compound, rubber foam, rubber hoses, rubber gaskets etc.

Over 75% of the company’s production is exported.

In the first six months of 2010, the company recorded a net turnover of 1.2 million EUR.

Ducatex is owned by Mr. Gabriel Dumitru. The company is listed on the Bucharest Stock

Exchange.



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8. Examples of recent investments in industrial manufacturing

• The Swedish producer of auto components Autoliv announced investments of 13

million EUR for 2010 in Romania in order to adapt the transferred production lines and

to start the production of new auto components.

• For the next period, Trelleborg Automotive Romania intends to increase its production

capacity by some 10% as a result of the new contracts forecasted for 2011.

• The German producer of auto components Kuhnke announced investments of some

two million EUR for 2010 in equipment and new production lines in Romania.

• Johnson Controls will launch a production unit within the Ford plant in Craiova,

following investments of over ten million EUR. The company has already started the

recruitment process for this plant, which will start the production in 2012 and will have

some 160 employees.

• The US producer Key Safety Systems (KSS) finalised the construction of its fourth plant

in Romania, located in the Arad - Curtici Free Zone, which will produce safety systems

for the automotive industry. This unit represents the biggest KSS plant in Romania and

covers 12,000 sqm. The plant will have an estimated number of 450 employees in 2011.

• The local producer of batteries Rombat will invest 15 million EUR in the expansion of

the production capacities and in the production of accumulators for mini-hybrid auto

vehicles.



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• The producer of auto components Continental announced investments of 70 million

EUR in 2010 in Romania. Out of this amount, 30 million EUR are allocated for activities

of research, development and production of auto components and 40 million EUR are

allocated for the tyre plant in Timisoara.

• The German producer of the auto components Draxlmaier implements a programme at

its plants in Romania in order to start the production of the components for the hybrid

auto vehicles. The company announced investments of eight million EUR for 2010.

• The producer of auto filters Mahle Romania announced investments of 2.8 million EUR

for 2010.

• The French tyre producer Michelin targets new projects on the domestic market for the

truck tyre plant located in Zalau. Also, the company intends to manufacture electric car

tyres in the Floresti plant during the next period.

• The producer of auto lighting equipment Elba announced investments of 8 - 9 million

EUR for 2010 in order to finalise the construction of a new plant in Timisoara and to

modernize the production lines.

• The producer of plastic products Teraplast invested some two million EUR in the first

six months of 2010 in its plant and for the expanding of its portfolio of products.

• The chemical producer Azomures will invest 82 million EUR for the modernisation of

its main production installations, with the purpose to increase the production capacity

and to reduce the raw material consumption.

• The producer of aluminium products Alro intends to increase the production of the

processed aluminium in the next five years and to reach some 120,000 tones per year.



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9. About FRD Center Market Entry Services

This demo report is produced by FRD Center Market Entry Services – www.frdcenter.ro - a

privately owned market entry consulting firm based in Romania.

FRD Center offers tailor-made market intelligence, B2B matchmaking and market access

consulting services to foreign companies interested to enter the Romanian and regional

market as exporters, consultants, investors or joint-ventures, to relocate their operations, or

to source in CE and SE Europe.

Since 2000, FRD Center has been the trade consultant for the Irish Government Agency,

Enterprise Ireland. Other clients include companies from: Argentina, Austria, Canada, Czech

Republic, Denmark, Germany, Greece, Ireland, Israel, Jordan, Lithuania, Norway, Poland,

UK, USA, South Africa, Spain, Switzerland etc.

Our services include:

- partner search: identification and qualification of B2B distributors, importers, suppliers etc.

- product presentation and assessment of interest from clients / partners

- market research, investment opportunities assessment, sectorial studies, market briefs

- market opportunity assessment

- pre-M&A business support and research

- identification of market opportunities: exports, sourcing, B2B sales etc.

- trade missions, business itineraries, inward buyer missions

FRD Center is the Global Intelligence Alliance Research Partner for Romania, a member of

the Global Consulting Network-GCN, of the Expansion Alliance Group, of International

Subsidiary Development Inc. and of EMERGY International network.

Disclaimer:

Whilst every care is taken in compiling this report, no responsibility is taken for errors or omissions.

FRD Center guarantees that this information, collected and generated, has been operated in a

professional manner and best efforts were applied with a view to offering accurate and complete results.

However, FRD Center will not be held liable for any damage or loss resulting from the use of the

information contained herein.

Sources consulted for this report: business mass media, the companies, official sources

romania - opportunities in industrial and automotive manufacturing 2010

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