Iraq auto unit gets wheels moving for industry

In a country only slowly recovering from the impact of war and economic sanctions, Iraq's state-owned car assembly plant is a hive of activity. Workers bustle around, fixing tyres and bumpers on to trucks. The sprawling plant in the town of Iskandariya, 40 kilometres south of Baghdad, is filled with brand new vehicles. It has contracts with Scania, Mercedes-Benz and Renault, and has also linked up with China and Iran, importing car parts from those countries to be assembled in Iraq where China's Chery, as well as Toyota and BMW, are popular brands. Most of the country's dilapidated factories are still lying idle more than eight years after the US-led invasion. High electricity costs, neglect, a huge overhang of workers at state factories, lack of investment and the influx of cheap imported goods also impede recovery. Article continues below Iraq's industrial sector contributes only 2 per cent to the country's gross domestic product. In an effort to revive the sector, Iraq has pumped $2 billion (Dh7.34 billion) over the past three years into some of its 260 factories, owned by 76 firms. Signs of recovery "Most of our factories were losers," said Adel Karim, a deputy minister of industry and minerals. "Now we have eight companies which are profitable and by the end of the year we hope to reach 20." The State Company for Automotive Industry, established in 1976, lay idle from 1991 until 2005 when a series of contracts helped restart work at the plant. It signed a $42-million contract with Volkswagen's Swedish brand Scania in 2008 to assemble 500 trucks and has also entered into deals with Germany's Mercedes-Benz and French carmaker Renault to assemble vehicles, mainly trucks. In May, another contract with Scania was won to assemble 5,000 trucks and buses over a five-year period, with an annual production target of 800 vehicles. "Until June 2010, the company was considered a loss-making company and our sales did not exceed 500 million Iraqi dinars [Dh1.56 million] a month. We have currently reached 8.5 billion [dinars] a month," said Adnan Razeen, director general of the State Company for Automotive Industry.