Skoda Automobilova a.s.

Skoda Plzen is today unrelated to the auto-maker Skoda, though both companies share a common history. At the beginning of December 1895 the mechanic Václav Laurin and the book-seller Václav Klement, both bicycle enthusiasts, started manufacturing bicycles of their own design, patriotically named Slavia in the nationalist atmosphere of the end of the 19th century. A few years later, in 1899, the Laurin & Klement Co. began producing motorcycles, which were soon successful and gained several racing victories. After initial experiments at the turn of century, producing of motorcycles was gradually replaced by automobiles form 1905 onward.

Like the motor cycles, the 1st Laurin & Klement automobile, the Voiturette A was a full success, later becoming the archetype of Czech automobile classic. It soon formed a stable position for Company in the developing international automobile market, so that the Company could soon start operating on a wide scale. The volume of the production increased and soon exceeded the potential of a private enterprise, and in 1907 the founders of the Company initiated conversion to a joint-stock company. The international character of ŠKODA’s operations became increasingly important. The production facilities were extended constantly and after 1914, ŠKODA took part in the production for the armed force.

Due to the country’s economic development, the joint venture with a strong industrial partner became essential in the nineteen twenties in order to strengthen and modernize the Company, which was at that time producing numerous types of passenger cars, trucks, busses, airplane engines and agricultural machinery. In 1925, fusion with the Pilsen ŠKODA Co. was accomplished, marking the end of the Laurin & Klement trademark. In early 1930s, the automotive business was again organized as a separate joint-stock company within the ŠKODA Group (Automobile Industry Co., ASAP). After the crisis, the Company achieved a break-through with the Type ŠKODA Popular. The German occupation in 1939 to 1945 caused a considerable disruption in the history of the company, which was integrated into the industrial structure of the German Empire. The civilian production program was immediately limited and production was turned to its needs.

In the course of a large-scale nationalisation which began immediately after the end of the war, the Company became a national enterprise named AZNP in 1946. Within the political and economic changes of that time, it acquired the monopoly of passenger car production. Based on the traditional production processes and past success, the Czechoslovak economy managed to maintain a relatively good standard in the post/socialist period for several decades, in spite of the changes brought about by planned economy and efforts at unduly rapid growth. This standard only became questionable towards the end of the nineteen sixties due to development of new technology in the western world. The permanent stagnation of the economy started after the seventies, also affecting the Mladá Boleslav automobile manufacturer in spite of the company’s leading position in the East Europe marker. Production grew again only when the model range ŠKODA Favorit went into production in 1987.

After the political changes of 1989, under the new market economy conditions the Government of the Czechoslovak Republic and the management of ŠKODA began to search for a strong foreign partner whose experience and investments would be capable of securing long-range international competitiveness of the company. In December 1990, the Government decided on cooperation with the German Volkswagen Group. The ŠKODA – Volkswagen joint venture began to operate on 16 April 1991 under the name ŠKODA, automobilová a.s., becoming the fourth brand of the Volkswagen Group alongside VW, AUDI a SEAT.

In 1992, the company was privatized by the so-called Czech method. It began expanding its production activities (e.g. by acquiring the TATRA and LIAZ vehicle works and constructing a plant to produce aluminium drinks cans). This expansion put the company's financial stability in jeopardy. In 1999, it concluded a standstill agreement with its main creditor banks, and restructuring of the entire capital structure of the Skoda group was launched. The result was legal and financial stability at the company.

Skoda remains the major Czech car manufacturer, eastern Europe's oldest car manufacturer, whose main plant is located in Mladá Boleslav. Taken over in the early 1990s by the German company Volkswagen and thoroughly modernized, Skoda became the Czech Republic's biggest export earner in the early 2000s, accounting for about one-tenth of the country's overall exports. In the Czech Republic, Volkswagen transferred skills to indigenous managers following its acquisition of Skoda by having pairs of managers, one Czech and one expatriate, work together as a team and by sending its Czech managers abroad to study and work.

A region known for Skoda cars, Zetor tractors, and Tatra trucks, by 2005 the Czech Republic had become the major car manufacturer in the Central/Eastern European region. With new auto investments in neighboring Slovakia, Hungary and Poland, this region was fast becoming the Detroit of Europe. Once there was only one dominant car manufacturer in the Czech Republic: SKODA AUTO, a member of Volkswagen Group, with production of 410,000 cars in 2003. A major investment of TPCA of CZK 50 billion ($ 2.17 billion) in the City of Kolin and a following inflow of its suppliers - dramatically increased the importance of the Czech automotive industry. In 2005, the new manufacturing facility of Toyota- Peugeot-Citroen (TPCA) started production with capacity approximately 300,000 vehicles per year.

The present plant and its employees continue in the footsteps of their predecessors - albeit in entirely different conditions - carrying on the traditional production programmes and introducing others corresponding to the requirements set for companies intending to earn for themselves a leading place in international technical and economic competition.