Business

01 Feb 2020, 11:10 AM

STA, 31 January 2020 - Representatives of the Slovenian companies that have offices or facilities in China told the STA on Friday they had no problems because of the coronavirus yet but they do fear the negative consequences that might follow after the New Year holidays in China are over. Fifteen Slovenian companies operate in China, according to Sloexport data.

Tool maker group Unior, which employs some 460 people in China, told the STA its facility was closed for the holidays at the moment and was expected to open again on 10 February.

The company does not feel any consequences of the epidemic yet and was maintaining business contacts via e-mail and WeChat.

Similarly, pharma company Krka, which operates in Ningbu, has suspended trips to China, as business partners there prolonged their New Year holidays.

Work in all of its business units was running smoothly because they had made enough stock before the holidays.

In the future, business contacts will be made via conference calls and e-mails.

Electronics group Iskra has a store with three employees in Hong Kong, which is operating without disturbances despite the fact that a part of its suppliers comes from China.

"We expect one- to two-week delay on the Chinese side," Iskra representatives told the STA, adding that problems would start if production halt would expand or be extended.

Andrej Boštjančič, the head of Softnet, a specialist in advanced communication technologies and services, which has four employees at its office in Shanghai, thinks the economic impact of the virus would be massive. "Production, transport will definitely be affected."

Today the Hong Kong postal operator announced it was temporarily halting a part of its postal service, he said. "It will all depend on how long all this will last," he said.

Its office will also be closed until 10 February and then they will do business via e-mail and phone.

Le-Tehnika's two companies in Suzhou, some 100 kilometres from Shanghai, employing a dozen people, producing phones and selling the company's Slovenian-made products, are also still closed for the holidays.

CEO Drago Lemut expects some delays in the supply of some materials.

The Chinese-owned household appliances maker Gorenje has not been affected by the epidemics but it did introduce some preventive measures. All employees who return from China will have to stay home for 14 days before coming to work again, the company said.

31 Jan 2020, 13:07 PM

STA, 30 January 2020 - Slovenia's national motorway company DARS and Turkish builder Cengiz signed on Thursday the master agreement on the construction of the second tube of the Karavanke motorway tunnel, a step that comes more than two years after the original tender was published. Works could start in March, weather permitting.

 "We're glad that after five rounds of appeals to the National Review Commission, we have finally signed the contract," DARS chairman Tomaž Vidic said.

Under the contract, Cengiz has 20 business days to submit a EUR 12 million bank guarantee, whereupon it will be able to start work.

Preliminary activities on the border tunnel - Austria has already made significant progress on its portion of the second tube - are to be initiated next week as DARS and Austrian motorway operator Asfinag meet to discuss the timeline.

Vidic said this was a five-year endeavour and problems may appear on either side of the border, which is why he would not venture to speculate whether Cengiz could catch up with the builder working on the Austrian section, which started works in September 2018.

"We think the problems are manageable. We have a skilled builder with a wealth of experience, which is key," he said.

Cengiz board member Asim Cengiz said Slovenian companies would be involved in the construction works. Talks with potential partners are already under way.

The contract is worth EUR 98.6 million VAT excluded and covers construction of 3,546 metres of tunnel on the Slovenian side of the border. The Austrian section is almost a kilometre longer.

Once the second tube is completed, the original tunnel, which entered service in 1991, will be closed for approximately two years for significant renovation and upgrade works.

Karavanke tunnel is one of the main transport routes between Slovenia and Austria. It is a key artery for cargo and one of the main entry points for millions of north European tourists en route to the Adriatic Sea.

31 Jan 2020, 12:34 PM

STA, 30 January 2020 - The group around the Novo Mesto-based drug maker Krka generated EUR 1.49 billion in sales revenue in 2019, or 12% more than in the year before, while net profit was up 39% to EUR 242 million, according to an estimate released by the management board on Thursday.

The group's operating profit was up by 18% to EUR 274 million, and pre-tax profit increased by 40% to EUR 283.7 million.

The core company generated EUR 1.39 billion in sales revenue, up 13% from 2018, and net profit more than doubled to EUR 248.1 million.

Last year, the Krka group generated EUR 481.2 million or 32.3% of total sales in East Europe, the largest market for Krka, with sales there increasing by 17% year-on-year. In Russia alone, sales were up by 13% to EUR 310.5 million.

Central Europe, comprising the Visegrad Group and the Baltic states, followed with EUR 339.6 million, or 22.8% of total Krka group sales. Sales there were up by 7% compared to the year before.

Sales to West Europe amounted to EUR 336 million or 22.6% of total sales, and were up by 17% compared to 2018. Germany, the Scandinavian countries, Spain, and Italy generated the strongest sales in the region.

With sales of EUR 191.3 million, South-East Europe represented a 12.8% share in total Krka group sales, and saw a 9% rise compared to the year before. Romania and Croatia were the largest markets, while the highest sales growth was recorded in Bulgaria and Serbia.

In Slovenia, sales were up by 4% to EUR 92.4 million, accounting for 6.2% of total sales. Product sales stood at EUR 52.9 million, while health resorts and tourist services yielded EUR 39.5 million.

In the overseas markets, the Krka group generated EUR 48.6 million in product sales, a 12% growth, which is 3.3% of total sales.

Commenting on the results, Krka chairman Jože Colarič noted that the group had posted its best sales result ever. Growth of sales was recorded in all regions and on the majority of markets, and sales were up in all groups of products and services, he added.

According to Colarič, the group plans to generate EUR 1.52 billion in sales and more than EUR 210 million in net profit this year. A total of EUR 134 million has been earmarked for investment in 2020, mostly in production and infrastructure.

Last year investments amounted to EUR 113 million, of which EUR 93 million was invested in the core company. Most of the funds went for modernisation of production and research, quality assurance and production and distribution centres.

In 2020, Krka plans to increase the workforce in Slovenia and abroad by a total of 3%, and is expected to have more than 12,300 employees at the end of the year, said Colarič.

The unaudited financial statements for 2019 for the group and core company will be published on 19 March, Krka said.

30 Jan 2020, 10:05 AM

STA, 29 January 2020 - The management of the Steklarna Rogaška glassworks announced on Wednesday the company would lay off up to 200 of what are presently 830 workers. It spoke of the need to increase efficiency in the face of constant changes in consumer habits and in the business environment.

The Finnish-owned company told the STA that the wish was to protect and support the very core of the glassworks and that it would closely cooperate with the workers and their representatives as the cut is made in the coming months.

Supply chain executive Mogens Hansen said this had been a very difficult decision and that the company would do all it can to provide support for the affected workers.

Announcing continuing investment, the management is confident Steklarna Rogaška, a company established in 1927, will remain an important centre for the manufacture of high-end crystal products.

Steklarna Rogaška became part of the Finnish corporation Fiskars in 2015. Fiskars has a 7,300-strong workforce in 30 countries.

29 Jan 2020, 10:49 AM

STA, 28 January 2020 - Lonstroff, the Swiss subsidiary of Sumitomo Rubber Industries, launched elastomer production in Logatec this month. Currently, the facility employs almost 40 people, with the company planning to expand its capacities and workforce by additional 50 in two months' time, reported the newspaper Finance on Tuesday.

Lonstroff, which launched test production in April last year, said at the start of the facility's construction that it planned to employ 180 people in total.

The company currently operates only one shift in Logatec since Lonstroff is waiting for buyers' approval of products, said Matjaž Klipšteter of the communication management agency Taktik on behalf of Lonstroff, adding that this procedure could take a while.

The investment in Logatec reached a price tag of EUR 48 million, with Slovenia providing up to 10% of this sum.

But even before the facility started operating, the real-estate deal for the plots on which the plant was built was in the centre of scandal involving the bad bank, and is being investigated.

The plots, owned by the bad bank, ended up in Lonstroff's hands only after the bad bank sold them to a real estate agency, which charged Lonstroff a lot more than it paid for the plots to the bad bank.

28 Jan 2020, 12:16 PM

STA, 27 January 2020 - Representatives of Slovenian builders are protesting against what they perceive as the state opening doors wide to builders from third countries. This brings disloyal competition to Slovenian companies and results in fewer jobs and lower wages for Slovenian workers, they believe.

"Foreign bidders from third countries are disloyal competition to domestic contractors," Sonja Šmuc, the director general of the Chamber of Commerce and Industry (GZS), said in a press release on Monday.

According to Šmuc, the exclusive criteria for picking contractors in public construction tenders is the lowest price, which means that bidders who are not bound with the collective bargaining agreement for the construction sector are strongly favoured.

She noted that the Slovenian construction sector had expanded by 3% last year, while its further development mostly depended on the state, as contracts awarded by the state represented 60% of the construction market.

"The contracting authority is opening doors for the construction of major infrastructural projects to companies from outside the EU much wider than other European countries do," Šmuc noted.

She added that these countries "have different welfare and worker standards" and wondered whether Slovenians would sit and watch if the state said it did not need Slovenian farmers as bread and milk could be imported from countries where people work for a few euros a day.

Jože Renar, director of the GZS's chamber of construction and building materials industry, said that what is hard to understand was the very fact that Slovenia was opening the door of its market to bidders from third countries so generously.

"What is even harder to understand is that they are allowed to pay their employees less than Slovenian companies have to pay their employees. Foreigners ignoring the achievements of Slovenian social dialogue in public tenders to get deals financed with taxpayer money defies the fundamental economic and welfare logic."

The chamber's president Kristjan Mugerli said that this way, contracting authorities undermine the efforts of social dialogue to secure higher wages and welfare standard for employees.

"By doing so, we also want to increase the extremely low interest of young people in Slovenia for construction professions, which is among the lowest in the EU," he added.

According to Oskar Komac of the Trade Union of Construction Workers, by making such decisions the state is sending a clear message to construction workers that "their wages, which are already low, are too high".

"This is social dumping in its most elementary form and consequences will be severe and lasting for the Slovenian construction sector, which has more than 60,000 workers and is one of the largest employers," he added.

Renar also stressed that thorough changes in public procurement procedures in this field were needed. "Slovenia should rethink its international economic guidelines and follow the EU guidelines on the participation of third-country bidders and goods on the EU public contract market."

26 Jan 2020, 13:04 PM

The first thing to note is that even the vague shape of the relationship between the UK and EU in 2021, when the transition period that begins at 11pm 31 January 2020 ends, remains unknown, even at this late stage of the game.

The degree of closeness will depend on the degree of alignment – the extent to which the UK continues to follow EU practices, especially in terms of state aid, standards and regulations. In just the last week Sajid Javid, the UK’s Economics Minister (or Chancellor of the Exchequer) said that businesses should get ready for no alignment, a statement that was met with shock by those who understood the implications – a bare bones deal with significant disruption for current UK-EU trade links and no immediate or obvious benefits. A sharp shock to the system. He was then forced to backtrack on his comments, reassuring British businesses – particularly those in the pharmaceutical, automotive and aerospace industries – that close alignment would still be maintained. However, without offering more specifics, or even the outline of what the UK’s negotiating aims are, businesses still have no idea what to plan for.

SURS BREXIT EK TRADE WITH EU STATISTICS.JPG

The imbalance of trade. SURS

In truth, no one knows if the UK will be willing to make the compromises needed to maintain a high level of market access, or if it will be possible to sell such a deal to Parliament and the public as “Brexit” – a term that exists in a haze of contradictory aims and positions, its final form a mystery. There’s also the small matter of the EU27 all having to agree on the deal…

Brexit and Slovenia

So there’s a lot that we don’t know, but for a Slovene perspective there’s a report from May 2019, “Analysis of the Consequences of Different Brexit Scenarios on the Internal Market and Trade Relations with the United Kingdom of Great Britain (“Analiza Posledic Različnih Scenarijev Brexit Na Notranji Trg In Trgovinske Odnose Z Združenim Kraljestvom Velike Britanije”), by Dr. Jože P. Damijan Dr. Črt Kostevc, and Dr. Tjaša Redek. It’s in Slovene, but there’s a summary in English that starts on page vii of the PDF.

Trade between the UK and Slovenia

First, the context of British-Slovene trade relations:

In 2018, exports to the UK amounted to €577 million and imports to €441 million (SURS). With a 2% share of total exports, the UK is a modestly important trade partner for Slovenia, whereby its importance is continuously decreasing. In the last two decades, Slovenia’s share of exports to the UK decreased from 3% to 2%. A similar trend can be observed on the imports side, where the share of the UK in total imports decreased form 2% to 1.4% in the last two decades. For Slovenian exporters, the markets of other old EU member states (Austria, France, Italy, Germany) and new EU member states (Croatia, Czech Republic, Hungary, Slovakia, Poland) are more important.

Slovenian exports to the UK are primarily electrical appliances and equipment (19% in total exports to UK), furniture (13%), boilers, machines and mechanical equipment (11%), cars (9%), pharmaceutical products (7%), products made from plastic (7%) and paper and paper products (3%). The main import goods from the UK to Slovenia are: mineral fuels (around 20% of total imports from the UK), electrical appliances and equipment (12%), boilers, machines and mechanical equipment (12%), products made from plastic (5%), pharmaceutical products (4%), steel products (4%) and aluminium products (4%).

SURS BREXIT SLOVENIA UK IMPORTS EXPORTS.JPG

Exports of services to the UK amounted to €191 million in 2017 and services imports amounted to €175 million. The main services exports are tourism services, while in imports the main services are business, telecommunications, and IT services.

The UK is a modestly important foreign investor in Slovenia. The stock of foreign direct investment is constant at around €300 million over the last 5 years (2% of total FDI in Slovenia), with the main British investors in Slovenia being PriceWaterhouseCoopers, Unilever, Astrazeneca, Shell and Castrol. Slovenian direct investment in the UK is extremely low – between €15 and €20 million in 2013-2016 and falling to €6 million in 2018. The main Slovenian investors in the UK are Gorenje, Krka, SIJ, Trimo, Bisol, Riko, Savatech and Unior, which mostly mainly invested in trade representative offices in the UK to promote their exports.

Hard or soft Brexit?

The study then goes on to examine the impacts of three scenarios on Slovenia : hard Brexit (no deal at the end of 2020, and the UK trading on WTO terms), deferred hard Brexit (the same, but with a longer transition period that the current 11 months), and soft Brexit, envisaged here as being similar to EFTA membership, with a high level of market access, although still below the current one. As noted at the start of this story, any of these three remain possible – along with various different flavours of soft Brexit, but the present rhetoric from London seems to be pushing for a relatively hard Brexit. That said, London talked strong in 2019 but then signed up to a Withdrawal Agreement that puts a border in the Irish Sea, so as the pressure mounts anything could happen.

The impact of Brexit on exports, imports and employment in Slovenia

The paper presents a thorough analysis of the three scenarios, with the key paragraphs presented below:

According to model simulations, a composite effect of Brexit on Slovenian exports will be in a range between a 0.06% reduction (hard Brexit) and 0.01% increase (soft Brexit). This composite effect consists of a potential reduction of Slovenian exports to the UK in the range between 3.7% (soft Brexit) and 32.3% (hard Brexit) and an increase of exports to other EU countries and the rest of the world. Hence, due to trade diversion effects, a reduction in exports to UK after Brexit would be almost entirely compensated by increased exports to other EU countries and rest of the world.

The sectoral overview shows that due to hard Brexit wood processing and furniture, public services, paper products, forestry, production of metal products and production of crops might be hurt the most, though the estimated effects are quite low. In the case of hard Brexit, gross value added in wood processing and furniture might drop by 1.1% in 10 years and by a quarter of 1% in the case of an orderly Brexit. Effects of a similar magnitude are expected also in the paper processing industry, while in other industries that will be hurt by Brexit the estimated effects do not exceed 0.3% cumulatively in 10 years. There are, however, also industries that might benefit from Brexit, in particular the car industry, chemicals, meat processing and leather industry (a rise between 0.3% and 0.9%), while for other industries these effects will not exceed 0.1% in the 10-year period.

The potential aggregate impact of Brexit on employment is estimated to be relatively low. Our calculations show that about 237 jobs (soft Brexit) and up to 900 jobs (hard Brexit) might be at risk. Most of these jobs that are at risk are in the services industries and for qualified labor. However, these employment effects due to Brexit are lower by the factor of 5 when compared to regular seasonal fluctuations in the labour market.

You can see more of the report, which goes on to a summary of corporate and consumer sentiment with regard to Brexit, here. All our stories on Brexit and Slovenia are here.

24 Jan 2020, 09:08 AM

STA, 23 January 2020 - Slovenia is slowly falling behind in the global race for talent. It ranks 31st in the latest Global Talent Competitiveness Index (GTCI), down two spots from the year before. When the index was first introduced in 2013, it placed 25th.

The survey, by INSEAD business school, temping agency Adecco and Google, ranks countries by their ability to enable, attract, grow and retain talent. It also looks at vocational skills and global knowledge skills.

Slovenia's best marks were for vocational and knowledge skills and for its ability to retain talent, categories in which it places 27th among 125 countries. But its ability to attract talent is lacklustre, earning it 47th place in this category.

Switzerland remains at the top of the rankings, followed by the US, Singapore, Sweden and Denmark.

Among Slovenia's neighbouring countries, only Austria ranks higher, at 17th.

The study also ranks 155 cities by their attractiveness to talent. New York, London and Singapore are at the top, with Ljubljana at 79th, between the Chinese powerhouse Shenzen and the Qatari capital Doha.

ljubljana competitiveness 2020.JPG

Screenshot gtcistudy.com

You see more about the index here

24 Jan 2020, 08:58 AM

STA, 23 January 2020 - Adria Airways operating licences were auctioned off on Thursday to Air Adriatic, a newly established company owned by Slovenian produce importer Izet Rastoder, at the asking price of EUR 45,000.

"The auction was successful, the licences were sold at the asking price. There were three bidders. The asking price was accepted and there was no bidding," Adria receiver Janez Pustatičnik told the press.

Apart from Air Adriatic, the registration deposit was paid by Croatian company Komforia, and Dedal Aero, owned by former Adria pilot Dejan Slodej.

The buyer has three days to sign the contract and then pay the agreed sum within a month in order to acquire the rights that come with the licences.

However, in order to be able to use the licences the buyer will have to take certain steps to meet the criteria Adria met before its licence was revoked and the receivership launched, Pustatičnik explained.

Adria has some other assets, including its registered brand and some buildings, but the operating licences were considered some of the most valuable assets.

"This had to be sold as soon as possible, so the buyer can take all the necessary steps to be able to use the licences. The Civil Aviation Agency has extended this deadline until the end of September."

The buyer will be able to use all the benefits of Adria's membership in various organisations, and rent the remaining infrastructure of the former flag carrier until it is sold. This includes the brand name, building and equipment.

"The buyer cannot land anywhere for the time being because it does not fly. First, it must take all the necessary steps. The deadline for reporting to Germany whether the summer season will be carried out is 31 January."

After Pustatičnik examines the 2,800 claims reported, Adria's brand name will be put up for sale as well.

Following Adria's receivership in October, several potential buyers expressed interest in the group's licences, including its air operator's certificate (AOC), as well as its flight school.

Only a week ago, it was reported that investors linked to the Russian state-owned aircraft manufacturer Sukhoi had also confirmed their interest, but they did not show up for the auction.

Slovenia's former flag carrier Adria Airways, which was sold to the German financial fund 4K in 2016, went into receivership last autumn after years of financial difficulties.

After its collapse, the government considered founding a new carrier to preserve Slovenia's connectivity with the world but this option was ultimately dismissed as economically unfeasible.

However, the government is reportedly still looking for a way to have Slovenia better connected with four major European hubs - Frankfurt, Munich, Zurich and Brussels - through regional air carriers.

A solution is being draw up by the Bank Asset Management Company (BAMC) and is expected to be presented at the beginning of this year.

Pustatičnik refused to speculate on why the state did not bid for the licences today, noting only that BAMC officials had been collecting information about Adria in October and November.

The representative of Air Adriatic would not comment on the auction, while Adria's former pilot Slodej, who also took part in the auction, said Slovenia could have a profitable airline. "I hope the buyers know enough about the business that a success story will now unfold," he said.

He thinks the market is big enough but that the airline should have a different business model than Adria had.

23 Jan 2020, 11:08 AM

STA, 22 January 2020 - The household appliances maker Gorenje, owned by the Chinese conglomerate Hisense, will streamline its production by reducing the number employees in support services in production by 176 in different ways by mid-April, the management said on Wednesday. Gorenje decided for the move "because of poor business results".

The measure will affect some 720 warehouse employees, dispatchers, technologists, planners, quality control, production management and similar positions, including those that have been moved from Velenje to Ljubljana as of this year.

The share of indirect production workers at Gorenje currently stands at 29.2% and is thus 8.6 points higher than in a comparable company within the group, Hisense Refrigerator.

The Gorenje management thinks this will help boost the efficiency of production, improve the use of resources and cut labour costs.

The company also plans to modernise its technological processes, increase automation, introduce IT solutions, and optimise the work process.

The management said it would conduct all procedures related to this in line with the law and in talks with the trade union. "The procedure is expected to last until mid-April."

Several workers have already been transferred to similarly paid jobs in direct production, while some will retire, the management said.

Meanwhile, the in-house trade union expressed concern, with its president Žan Zeba telling the STA that they expected the total number of dismissals to be rather high.

The total number of workers will go down also because work contracts will not be extended for nearly 240 people at the end of January, said Zeba, adding that the union was informed about this today.

"When you add up the numbers, it gets quite worrying. They are far from forecasts about production increase," he said, also expressing worry that Gorenje would start outsourcing some of the services that are now provided within the company.

In the next phase of optimisation, the group plans to reorganise the business processes in the newly founded Hisense Gorenje Europe in Ljubljana, which has employed 880 indirect production workers as of 1 January.

Last December, the Gorenje Group estimated its last year's loss at EUR 40 million. The goal for this year is EUR 30 million in profit.

All our stories on Gorenje are here

22 Jan 2020, 13:53 PM

STA, 22 January 2020 - Conventa, a two-day business-to-business event for conference tourism, got under way in Ljubljana on Wednesday, featuring 146 exhibitors from 16 countries, including a record 30 new exhibitors.

"Conventa is the only such trade show in the world where 85% of the invited guests are new," Miha Kovačič, director of the Slovenian Convention Bureau organising the event, told reporters.

He said that they turn away more than 60% of the registered invited guests in order to make the organisation of the event as high-quality as possible.

Focusing on New Europe, the event is intended for B2B meetings, conferences and motivational travels.

The exhibitors will be able to showcase their offerings to 253 international event organisers from 39 countries, 43 among them from the region and about 60 Slovenian event organisers.

The invited guests and providers agreed 4,000 meetings, which Kovačič described as an excellent result.

Coventa's development was also hailed by the Slovenian Tourist Board (STO), which aspires to best position Slovenia on the global map of convention tourism.

This type of tourism generates a high value added and multiplier effects. It is also seen as important in the efforts to spread tourism more evenly throughout the year and decentralise it.

Nevertheless, Tatjana Radovič from the Ljubljana Tourism Board, noted that convention tourism was centred on Ljubljana with results showing a high level of satisfaction among the convention guests.

On average this type of visitors spend three times the money spent by those who travel for leisure. Many conference guests extend their stay in Slovenia by combining it with their holiday, said STO official Karmen Novarlič.

Apart from the trade show, the Conventa 2020 platform also features Conventa Crossover, a festival of events and experience marketing, Conventa Trend Bar, a series of educational events, Conventa Tech & More for new ideas and Conventa Young Talents, said Gorazd Čad from Toleranca Marketing.

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