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Sumitomo Rubber choosing between three locations in Slovenia

Ljubljana, 02 August (STA) - Sumitomo Rubber Industries is yet to decide on the exact location of its planned site in Slovenia, currently considering three options with the final decision to be taken in near future.

The Japanese company's officials talked to reporters in Ljubljana a day after the corporation announced it was planning to establish a new production site in central Slovenia to manufacture rubber parts for medical applications in an investment valued at EUR 34m.

The Slovenian site would be a subsidiary of the Swiss company Lonstroff, which Sumitomo Rubber acquired in 2015. Lonstroff manufactures and sells rubber parts for pharmaceutical primary packaging and rubber parts for medical applications to major pharmaceutical and medical companies.

The Slovenian plant would put out 2.5 billion pieces annually, which would enable Sumitomo Rubber to triple its production capacity in Europe in this segment by 2020 compared with 2016, as well as to disperse risks, Lonstroff CEO Urs Bahnmüller told reporters in Ljubljana on Wednesday.

Naofumi Harada, a senior executive at Sumitomo Rubber, said the new production site would also enable them to optimise production and supplies between Japan, Switzerland and Slovenia. He would not make estimates about the revenue at the Slovenian site, saying it would depend on the situation in the market.

Lonstroff employs about 170 people in Switzerland. In Slovenia they plan to employ about 200 staff at different levels, from production workers and mechanics to engineers, chemists with university degree and middle management.

Bahnmüller said they needed reliable, responsible and motivated employees, something that would be reflected in pay. There are no plans for a development department in Slovenia at the moment.

The Lonstroff CEO acknowledged there was some concern among the employees in Switzerland for their jobs considering lower labour costs in Slovenia. "It is my job to tell them we don't plan to move production, but rather to diversify...and get new business."

For major clients, the company is the only supplier in certain segments, for example solutions for infusion, a critical equipment in medical care which are subject to strict requirements and need approval from the authorities.

"Having only one production site is a risk, so we plan to produce these parts in Switzerland and Slovenia, to have two production sites which are approved by the authorities, to reduce the risk of business for Lonstroff, for our customers and also for patients," said Bahnmüller.

The company believes that its production will not have a significant impact on the environment. "Our products are used within or on the human body, so per definition they cannot be toxic - we cannot use toxic materials in our production, so the impact on the environment is acceptable," Bahnmüller said.

A request for a building permit for the Slovenia site will be submitted this year, as soon as the plant's design is completed, said Peter Weber, who will head the Slovenian company Lonstroff medicinski elastomeri.

Bahnmüller said that they would have to go through all the procedures as required by Slovenian legislation, so they did not have any guarantee they would in fact get a permit. However, Economy Minister Zdravko Počivalšek and PM Miro Cerar expressed their support and promised speedy procedures.

Contractors to build the Slovenian plant will be sought through a solicitation of bids, expectedly at the end of this or early next year. The overall investment is planned at EUR 34m, with the cost of construction estimated at some EUR 10m. Sumitomo expects the investment to pay within two years.

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