Business News

Hidria Boss Projects 25-30% Sales Growth (interview)

Idrija, 28 September (STA) - Hidria, the Idrija-based industrial conglomerate, is seeing strong growth rates, especially because of the extremely positive trends in the automotive industry. Chairman Iztok Seljak says that Slovenia should use the exceptional development potential of this industry.

Hidria, which supplies innovative solutions in green mobility for the automotive industry, and in air-conditioning, heating and ventilation of buildings, will increase sales by at least 25-30% this year on the year before, Seljak has told an interview with the STA.

Nevertheless, he calls for caution in the face of "mixed signals". "China is seeing an exceptional growth and Europe has good growth rates with Germany as the main engine, but... the latest unemployment figures for the US show it will take a while before the population's purchasing power can pick up."

The crisis has reflected differently in each of Hidria's main segments. The car industry began to pick up in the second half of 2009 owing to subsidies and other stimulus measures taken by European governments and with a new rebound this year it is close to pre-crisis levels, while the crisis in construction is only deepening now.

"In the depths of the turmoil in the first quarter of 2009, we were down 35-40% on the 2008 levels in the car segment, even down 60% in the heavy commercial vehicles segment. Now this fall has been nullified, which is certainly unexpected, as we predicted to be back to these levels in 2011.

"It's all a bit premature, for one thing because of the subsidies which reflected mainly on the growth in small cars. This is certainly not sustainable, as we're already seeing the negative effects on the markets that don't have these subsidies anymore."

Seljak expects positive figures in the car segment this year in terms of quantity, quality and results. These are so strong that they will prevail the less positive trends in the construction sectors.

"But we don't want to project further than we have orders for. Just like the fall two years ago was huge and hard to understand, the impetuousness of the current volume of orders is probably not sustainable. We expect the current growth rates to stabilise by the end of the year."

Asked about the government crisis measures, Seljak says that the reaction was too slow, but that measures such as subsidized working time and subsidized forced leave were good as has been the positive role of the SID export and development bank in subsidizing investment in research and development.

"On the other hand, we have been warning that the public sector is an integral part of our competitiveness. It's not just companies competing on the global market, but also the state by creating competitive conditions. And mainly by reducing the tax burden on the economy."

Seljak deems it absurd that not only has the public sector not been rationalised, downsized, and not increased productivity, "but we're even facing a strike with demands for higher pay, which is totally incomprehensible in the eyes of the real sector".

Hidria chairman believes that while slashing costs that do not create added value, Slovenia should follow the example of Germany, which is investing heavily in the public sector, in improving the energy efficiency of public and government buildings.

"In this way we could respond to the requirements for green technologies, make big savings in the use of energy, and at the same time give a positive impulse to the domestic industry so it could work, generate added value and contribute to the budget in return. This would start a positive spiral."

Seljak sees a big potential for Slovenian companies in the automotive industry, which accounts for 10% of the global GDP and represents 70% of the newly created intellectual property in Europe. The EU has made it one of the three key priorities for the next five, ten years.

"Considering its importance, it should have the same place in Slovenia's macroeconomic policy... We're development, pre-development suppliers in Slovenia, and we have the competences to use these extreme growth potentials of energy and environmental trends."

Slovenia should realise it cannot be successful in all industries, but should focus on the industries that create above-average value, have a competitive advantage at the global level, Seljak says in response to Economy Minister Darja Radic's idea of Slovenia's opportunity as a country of suppliers.

Given a proper comprehensive support environment, including target-oriented economic diplomacy, and given the fact that Slovenian companies already have excellent competences as suppliers, Seljak is confident that Radic's idea is not only viable but will be put in effect.

Seljak also believes that the government should promote green technologies by setting a positive example through investment in public buildings as well as by tackling unclarity in legislation, as for example in the case of solar panel installations.

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