Slovakia has emerged as the winner in a bidding war for Jaguar Land Rover's new plant, seeing off competition from Poland for a factory which could turn out 300,000 cars a year.

Over the last few months, the firm is thought to have been exploring sites in Poland, Hungary, the Czech Republic and Slovakia.

That was then narrowed down to Poland and Slovakia.

The news emerged today in a JLR press release indicating the firm has signed a 'Letter of Intent' with the Slovak government for the potential development of a new manufacturing plant in the city of Nitra, western Slovakia.

Subject to the outcome of the feasibility study, a final decision is expected later this year and the first cars could roll off the production line in 2018.

As reported recently by the Post , the Slovak government has pulled out all the stops to see off Polish competition so as to land the plant.

Last month, the government approved the setting up of the country's first strategic industrial park, 50 miles north east of the Slovak capital Bratislava and linked to the main R1 motorway.

This 1,810-acre site at Nitra is the intended location for the new JLR plant and supplier park.

"We need to get this park very quickly, because the investor will make a decision by mid-September," the Minister of Economy Vazil Hudák told the Slovak Parliament when asking for support for an accelerated project approval process earlier this summer.

"Going through the normal legislative process would mean several months and we do not have that luxury.

"For us, it is a strategic investment, thus also, after an agreement with the finance minister, we are willing to go actually to the maximum possible extent of state assistance," Hudák is reported to have said in late July.

"This means that we are speaking up to 8-9 percent of the total investment."

The JLR investment in Slovakia could be as high as £1.18 billion, the Pravda daily reported, and could create 8,000 jobs at the plant and in the supply chain.

Poland and Slovakia slugged it out, offering whatever incentives they could under EU State Aid rules.

Poland had an advantage in that industrial labour costs there average under £6 an hour, against more than £7 Slovakia (Eurostat data for 2014).

But Slovakia uses the euro, thus eliminating currency risk for selling into eurozone countries, and already has a premium automotive sector, some 320-auto supply chain firms and a skilled workforce.

Indeed, Slovakia is the fastest growing car producing nation in the central and eastern Europe.

Output rose by over 70 per cent between 2008 and 2014 when almost one million cars were produced.

VW (including its Audi and Porsche brands), Peugeot Citroën and Kia all assemble cars in Slovakia, producing in the western area of the country (in Bratislava, Trnava and Žilina, respectively).

VW announced a £353 million investment earlier this year to expand its Bratislava plant to make bodies for its new Bentley SUV (with final assembly in Crewe).

JLR's intended site, Nitra, is also in this region.

Dr Ralf Speth, JLR's Chief Executive, was at pains to stress the firm was anchored in the UK.

"The expansion of our business globally is essential to support its long-term, resilient growth," he said.

"As well as creating additional capacity, it allows us to invest in the development of more new vehicles and technologies, which supports jobs in the UK.

"With its established premium automotive industry, Slovakia is an attractive potential development opportunity for us. The new factory will complement our existing facilities in the UK, China, India and the one under construction in Brazil."

As I've noted before, part of the narrative about this eastward shift is that JLR is about to "max out" its UK operations at around 500,000 units, so needs a new plant to grow output.

But, by shifting production around and running three shifts across its three UK plants, JLR could squeeze out as many as 600-650,000 units a year flat out in the UK.

So, rather, this isn't so much about running out of capacity in the UK as (i) JLR raising its output ambitions even further and (ii) the firm being squeezed in the UK by a combination of skill shortages in the industry, exchange rate shifts, likely EU emissions fines and the UK's planned carbon price floor.

On the latter, it should be stressed a strengthening exchange rate re: the euro, plus planned energy cost rises in the UK, mean JLR has only one place to go - getting labour costs down and Slovakia offers just that.

On the former, the plant now earmarked for Slovakia suggests to me JLR has raised its output goal from around one million units a year to nearer 1.5 million over the next decade.

To put that in perspective, this year JLR output will top 500,000 units (for my reasoning on this, see my recent Post blog here).

Can JLR pull this off? Yes, but only if it gets the products absolutely right.

And a big concern for JLR's UK workers will be what happens if market sales don't keep pace. Where would that leave the UK plants?

The investment in a Slovak plant also raises the spectre of divide and rule strategies as JLR could then play off workers and governments across its European sites, as car firms do routinely.

A deal on job security will be something unions here will understandably be looking for.

Professor David Bailey works at the Aston Business School