Relevant sectors in Slovakia

1. Relevant sectors in Slovakia Mária ŠÁŠIKOVÁ, BIC Bratislava, EEN Slovakia

2. Textile industry – general overview • Tradition • Significant development in industrial production of textiles – 1860s • Rapid development started at the end of 19th and beginning of 20th century – drapery plants in Trenčín (town of fashion) , Čadca, Rajec, cotton spinning mill and thread production in Bratislava • Crutial development after 1948 within the framework of industrialization of Slovakia (reconstruction, new factories, modern technology) • In 1985 – more than 74 000 employees • After 1989 – decline in the rate of production and employment

3. Extremely high export involvement • More than 85% of the number employed in industry are womenin higher age groups • The textile and garment industry in Slovakia is characterized by relatively low labor productivity, which is partly reflected in low levels of wages • Low wages - the average monthly wage in the large textile enterprises is not at two-thirds of the average of the slovak industry, in the sector of the apparel it is just over half • Crucial part of the industry capacity is allocated in the less developed regions of Slovakia

4. Textile Industry Subsectors: • Manufacture of textiles • Manufacture of wearing apparel Number of enterprises Source: Statistical Office of the Slovak republic, 2012

5. Textile industry Largest companies of the Slovak Textile industry 2011

6. Average number of employees • Sept. 2012 – 35 143 (Manufacture of textiles, apparel, leather and related products) – 30 % decline in comparison with 1990 Source: : Statistical Office of the Slovak republic, http://portal.statistics.sk/files/Sekcie/sek_500/Priemysel/publikacia/2011/el.publ.01_2012h.pdf

7. Trends in development • Stagnation, the declining share of this sector on GDP • Poor labour productivity • Decreasing employment • Only a few top producers remained (Makyta Púchov, Odeva Lipany, Ozeta Neo, Trenčín). • Number of businesses are in crisis, respectively on the verge of bankruptcy • Chinese expansion, strong import growth and the pressure of cheaper, especially Asian garments and textiles (China, Thailand, India)

8. Success story – MAKYTA Púchov • Has overcome the transition from socialism to a market-driven economy • Makyta has started it´s production in 1944 • Pre-war times times – production of uniforms • Largest manufacturer of women´s outwear in Slovakia • 620 employees (in 2001 company had 3 200 employees) • Main customers: Armani, Prada, Versace, Valentino, Max Mara, Lacoste - high quality in small batches

9. Structure of Makyta production

10. Suggestions for futher actions • Non-price (quality) competition • Producing high quality innovative or luxury products • Production of technical textiles • Exports products to the markets of the EU and third country markets

11. Leather industry • Subsectors: • leather • leather products • shoe industry • Long time tradion - Liptovský Mikuláš (Northern Slovakia) – tan dissapered, Bošany (Bošianska Koželužňa, s.r.o.) • Shoe industry: Partizánske, Bardejov, Bánovce n. B., Komárno • SlovTan Contract Tannery - manufacturing programme covering the entire process from entry of raw hides up to the dispatch of finished leathers • Just manufacturing of leather products (K CERO)

12. Number of enterprises Source: Statistical Office of the Slovak republic, 2012

13. Largest companies of leather, boot-and-shoe industry producing leather products in Slovakia

14. Trends in development • Production increased because of the automotive industry (Eissmann Automotive Slovensko - automotive interior components made of leather and artificial leather for VW, Volvo, Jaguar, Audi), Adtool (Považská Bystrica) – driving wheel, interior components • 2010 – post crisis growth – most businesses have not received the level before the crisis • Under the pressure of global competition • Footwear and leather industry covers the current domestic consumption only slightly- saturated market (imported footwear)

15. Suggestions for further actions • Prospective area is custom-made leather, fur and shoe manufacturing, which will focus on the individual approach to customers and create products according to their specific needs and wishes.

16. Paper industry • Cellulose is produced by the largest firm in this sector in SR - Mondi SCP, a.s., Ružomberok and Bukóza Holding, a.s., Hencovce. The largest processors of waste paper are Metsä Tissue, a.s. Žilina and SHP Harmanec, Convetis, s.r.o. (Štúrovo)

17. Paper industry – brief overview • The consumption of paper in Slovakia is very high (85 kg p.c.) • Yet domestic production is higher than consumption • Growing consumption also significantly helps wrapping-paper producers. • Paper producers active in Slovakia are mostly export oriented • Problem: lack of wood - Slovakia is not using any fast growing plants (import of wood mass from Ukraine, Hungary and Belarus) and growing prices of energies, coniferous wood

18. Major companies in paper industry

19. Average number of employees Source: Statistical Office of the Slovak republic,http://portal.statistics.sk/files/Sekcie/sek_500/Priemysel/publikacia/2011/el.publ.01_2012h.pdf

20. Trends in paper industry • Total earnings of the paper industry in 2010 decreased as a result of termination of production in Smurfit Kappa Štúrovo. • Export revenues decreased also in other companies operating in the Union of pulp and paper industry of SR. • Current economic crisis: decline of revenues – decrease of prices but with stable volume of orders • Situation reflected also by international companies – e.g. Mondi Business Paper decreased their manufacturing capacities by 14% and sold certain plants abroad. Smurfit Kappa located in Štúrovo faced significant difficulties and ceased production and dismissed all 350 employees as the result of demand decrease in 2010.

21. Chemical industry

22. Chemical industry • Traditionally held and still holds a strong position (strategic sector) • 1990 – process of transformation (strong production base, a well-developed research capacity, very good level of human potential): • Orientation of exports changed • Negative impact - production units did not survive the competition (costs, ecological requirements, quality parameters) • Problems: were related to the lack of financialresources, expensive bank loans and a rise in the price of raw materials which could hardly be reflected in the prices of the final products due to the competition.

23. Number of enterprises (4 subsectors)

24. Average number of emploeeys • Source:

25. Important localities of chemical industry • Most important producers: Slovnaft (Bratislava), Duslo (Šala) • Pharmaceutical products: Slovenská Ľupča (Biotika a.s.) , Hlohovec (Zentiva a.s.), Nitra (Mevak SK), Šarišské Michaľany (Imuna Pharm a.s.) • Manufacture of rubber: Púchov (Continental Matador Rubber, Continental Matador Truck Tires), • Manufacture of plastics products: Trnava , Nitra (Plastika, HTP Slovakia, Bourbon Automotive Plastics, Sehwa SK), Žilina (Quinn Plastics Slovakia)

26. Largest companies in chemical industry 2011

27. New trends at the beginning of millenium • the strengthening position of Asian competitors, • the growth of the Slovak economy, driven by FDI - employment in the chemical industry has been growing since 2004, mainly thanks to the development and large investments in plastic production • the strengthening of the Slovak currency – a negative impact on Slovak exporters • globalization tendencies • Slovakia's accession to the European Union (TNK in chemical industry)

28. 2007 – new legislation REACH - control and registration for most of the chemical substances used in industry in a volume higher than 1 ton per year. • the costs of REACH at cca. 32 million EUR per year • 2008-2009: fully influenced by the global economic crisis. refinery production – 30 % sales reductions, limited access to credit bank loans as a direct result of the financial crisis, collapse of many companies as a result of crisis, ineffectiveness of anti-crisis measures. • Sales of traditional chemical producers fell by a fifth • Sales of plastic products manufacturers in 2009 decreased by 12% and sales of manufacturers of rubber decreased even by 25% • first half of year 2009 - entry of Slovakia into the euro area

29. Conslusion • Strongest – Chemical industry • Asian competition? • Support of SMEs - high health and social insurance payments (from 1.1.2013 – very high)

30. Contact t: 02/ 5441 7515t: 02/ 5441 7606e: info@bic.sk Mária ŠÁŠIKOVÁBIC BratislavaEnterprise Europe Network Zochova 5811 03 Bratislava www.BIC.skwww.Enterprise-Europe-Network.sk Thank you !