If there’s one question that Cynthia Biggs, Commercial Attaché for the U.S. Commercial Service in Bucharest, Romania, gets more often than not, it’s ‘Why Romania?’

Last month’s NATO meeting in Romania, the largest NATO summit in history, may help get the word out, but Biggs points out that a recent ambassadorial ‘road show’ to the U.S. will likely answer that question for American companies a little better.

“We’re the best-kept secret in the EU,” she says, listing an impressive group of statistics—a population of over 22 million, eight consecutive years of GDP growth, low inflation and labor rates, and an educated workforce that posses excellent foreign language skills.

And, having joined the EU on January 1, 2007, together with Bulgaria, Romania is eligible for roughly 20 million euros in structural and cohesion funds from 2007 through 2013. While this is clearly a boon for the country, it also represents an opportunity for U.S. companies who can partner with a Romanian company, Biggs explains.

One company that has already gotten in on the action is San Francisco-based Bechtel Group, which is heading up construction of a $3.2 billion, 258-mile divided highway (the Autostrada Transilvania) that will become a vital link in the country’s infrastructure when it’s completed in 2011. The highway is significant on several fronts. For starters, it will nearly halve the driving time from Cluj-Napoca (an industrial hub in the center of Romania) to Vienna, which is a major gateway to Western Europe. Currently, the trip takes about 9 hours.

The project is also laying the groundwork for major foreign investments. Nokia already announced the closing of a German factory in favor of relocating it to Cluj, says Biggs, while St. Louis-based Emerson Electric has plans to build a major manufacturing facility there too. “It’s a win-win for everyone,” she says. “All of the earth-moving equipment is coming from Caterpillar and you’ve got a huge transfer of knowledge. There are also about 3,200 people working on the project, most of them Romanians.”

While the project itself may not have figured prominently in Ford Motor’s decision to take over Romania’s Automobile Craiova plant in March, there’s an obvious synergy to the development. According to John Fleming, president of Ford of Europe, the company’s $1 billion investment would position Romania as the biggest auto producer in southeastern Europe. The first vehicles are expected to roll off the assembly line in 2009, and beginning in 2010, Ford will manufacture a small, spacious, and inexpensive car that will only be made in Romania. In four years’ time, Ford expects to produce 300,000 vehicles annually.

Biggs says there will be substantial benefits for other companies as well, considering that Ford will continue to procure auto parts and components from U.S. manufacturers.

Although the road and rail links are in need of upgrading, the country’s Port of Constantza on the Black Sea is a modern facility that some say is on its way to becoming the ‘Rotterdam of Eastern Europe.’ The claim may not be too far-fetched given that Constantza ranks as the largest port on the Black Sea and handles millions of tons annually of coal, oil, metals, grain and other goods, both bulk and containerized. The port also enjoys a strategic location between Western Europe and the former Communist bloc and Turkey.

Biggs says the country’s three international airports are also fairly modern, but that with the EU accession, they are undergoing significant upgrades to comply with international safety and security regulations.

Another sector that is very attractive to U.S. exporters and investors is Information Technology. “About 85 percent of the products on the market are of U.S. origin,” notes Biggs. Indeed, Romania’s potential in this sector was not lost on one of the world’s most well known leaders in the field—Bill Gates. Last year, Gates traveled to Romania to inaugurate Microsoft’s Global Technical Support Centre in Bucharest. “When asked why he chose Romania, Gates said the country had a great geographic location, and a workforce that possessed great IT skills and language skills,” says Biggs. “It’s interesting to note that there are over 300 Romanians working on Microsoft’s campus in Seattle,” she adds. “This is quite a testament to Romanians’ IT skills. Oracle, IBM, you name them, they’re here.”

In fact, the country was also chosen to receive a grant from the Bill & Melinda Gates Foundation, which will provide Romanians with free access to computers, the Internet, and technology training in public libraries and reading rooms. According to the Foundation, only 20 percent of Romanians have Internet connections at home—and most people with access live in cities. Biggs says the grant will also have positive effects for Romanian businesses.

Biggs offers some advice for U.S. companies interested in Romania. “Start with your local Export Assistance Center (the U.S. Commercial Services’ network of trade specialists located in more than 100 U.S. cities and over 80 countries worldwide). You can access a wealth of information and intelligence on a variety of markets. We’ve just uploaded the Country Commercial Guides to the Web site, too. These are in-depth market research reports that are updated each year. You can also find out about the Gold Key matchmaking service or participate on a trade mission. There are so many resources available to U.S. companies.”

Slovakia and Poland

Slovakia and Poland both joined the EU in May 2004. And, while the two countries have much in common from a potential investor’s perspective, there are just as many differences, say the U.S. Commercial Service’s Senior Commercial Officers stationed there—David Ponsar in Slovakia’s capital city, Bratislava, and John McCaslin in Warsaw.

Like Romania, Slovakia’s auto parts and components sector is one with tremendous potential. “In the past several months, Slovakia has become the largest producer of cars per capita of any country in the world,” says Ponsar, who adds that the market is dominated by three manufacturers—Volkswagen, Peugeot-Citroen PSA, and Korea’s Kia Motors. “Most of the U.S. investments here are in the auto parts and components sector. It accounts for between 30 and 35 percent of the entire GDP of the country.”

Last November, Milwaukee-based Johnson Controls, one of the world’s leading suppliers of automotive interiors, electronics and batteries, opened its new Automotive Business Center in Bratislava. According to a company executive, “Bratislava’s central position and good infrastructure with available workforce capabilities were the decisive factors in choosing this location. As important, the growth markets in Eastern and Central Europe can be equally well accessed from here,” he said.

Cadillac and Corvette were introduced to the market last year, says Ponsar, “and they’re selling very well, especially the new Cadillac design, which has a more European look to it.” Every year, the U.S. Commercial Service takes a large delegation to the popular SEMA aftermarket auto show in Las Vegas, says Ponsar, and “it’s always a huge success.”

One of the biggest tips Ponsar has for U.S. companies new to the Slovak market is to focus on after-sales and service, which in his opinion, “is a make-or-break proposition for American companies.” He says that if an American company comes to Slovakia and appoints a representative, but doesn’t provide them with the proper training or know-how on repairs, that company will soon lose its credibility in the market. “Western European companies are the biggest competitors, and they can easily say, ‘Just send it back to us in Germany. We’ll fix it right away and send it back to you.’”

Furthermore, Ponsar admits that the Slovak government has had a less than stellar reputation for following through on contracts in the past, but that it’s getting better. “When a U.S. company is bidding, we follow them through the tendering process to make sure it’s fair and transparent. If we see any signs of irregularity or corruption, especially from our Western European competitors, we’ll take action, government-to-government, to advocate for the American company.” Ponsar says things are improving. “It’s been a year or so since we’ve heard of any complaints here at the U.S. Embassy. In other countries that I’ve served, it seems that every other week there were corruption complaints. The transparency here, while not as good as in the U.S., is a lot better than other places.”

Ponsar characterizes Slovaks as very easy to do business with. “I know that sometimes Americans complain about doing business with Central and Eastern Europeans, but Slovakia is not that way. I actually served in an adjoining country in a previous post, and I assumed the culture would be similar here, but I found it to be much different. They’re more open; they’ll consider the business deal, not just the person’s nationality. Americans can probably make more ‘mistakes’ here than most other countries and not suffer because of them.”

Poles share the positive image of Americans too, remarks McCaslin. “They really like Americans here. We share a lot of history and there’s a large Polish population in the U.S. Poles really appreciated U.S. support during the Cold War. They loved President Reagan—he was a hero to them. There is a lot of goodwill that Americans can bank on here.”

But, he cautions, “You still need to deliver a good product at a good price.” Poland is a very sophisticated market that’s growing very quickly, McCaslin says. “If you want to sell your goods and services here, you need to be very competitive. You’re up against the Germans, the French, the Italians, increasingly sophisticated domestic producers, and even the Chinese, the Turks, and the Koreans. Overall, I think Americans underestimate the sophistication of the Polish market,” he emphasizes. “They’re ‘Europe’ now; they’re part of the European Union. It’s very much ‘the West.’”

McCaslin says that while several countries in the region boast of being at Europe’s crossroads, “Poland really is at the heart of Europe, geographically speaking.” The country has benefited greatly from EU accession and is developing into a major manufacturing hub. “It has many advantages, including the largest domestic market in Eastern Europe with 38 million people, and one of the fastest-growing economies. You can export of lot of what’s produced here to both Western and Eastern Europe (Poland’s exports are in the double-digits),” he notes.

Along with auto parts and components, Poland’s top sectors for investment include defense, security, IT and telecommunications, and building materials and equipment. “There is a lot of construction going on in Poland, and it’s attributable to the broad-based economic growth that’s occurring. The new construction spans both residential and commercial. There’s also a huge opportunity for building roads,” he says, adding that Poland does not yet have a four-lane highway. The government that’s been in place since last October has road construction plans “on paper,” says McCaslin, “but so far we haven’t seen any new construction, only repairs on old roads. But, [the government] is still new, so we’ll give them until the end of this year.”

One thing that may give road construction a jumpstart is a decision by the UEFA (European Union Soccer Nations) to choose Poland and Ukraine to co-host the European soccer championships in 2012. Italy had been expected to win the rights to the event, which is estimated to be worth $3 billion in tourism and construction value. “Stadiums, hotels, roads, airports—they’ll all require major expansions and upgrades,” says McCaslin. “The government and people are very excited about this, however, the UEFA will move the championships to another country if Poland does not meet its deadlines in preparing to host the event.”

Meanwhile, another sector that holds much promise for U.S. exporters and investors is environmental services, says McCaslin. “For years, Poles have neglected the environment, so there’s quite a bit of clean-up to do with water, air, and land.” He mentions the EcoFund, the organization founded in 1992 by the Paris Club, which was the first “debt-for-environment swap” initiative created to help Poland pay off its debt to Western creditor nations by creating environmental protection projects. The U.S. was the first country to contribute to EcoFund through the debt-swap option, followed by France, Switzerland, and Sweden. Under current agreements, total contributions to EcoFund through 2010 (when most of these agreements expire), will reach approximately $474 million, the highest value of debt-for-environment swap funds to be managed by any single institution.

The EcoFund is obliged by its statute to provide grant support for projects in Poland that address: transboundary air pollution of sulphur and nitrogen oxides; pollution and eutrophication of the Baltic Sea; global climate change gases; biological diversity; waste management; and the reclamation of contaminated soil.

According to McCaslin, who serves as an official with the organization, “We’re making sure that U.S. companies are getting into the environmental clean-up opportunities. One U.S. company has just been approved for a project involving methane gas in coal mines. Poland has Europe’s largest coal reserves and they need to use this energy source, but it needs to be done efficiently and cleaner.” wt