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Hidria Boss Wants Level Playing Field for Slovenian Companies (interview)

Ljubljana, 28 February (STA) - Slovenian companies expect no privileges on the domestic market, they merely want to be put in an equal position with other tenders for state-funded projects, the boss of industrial conglomerate Hidria, Iztok Seljak, says in an interview with the STA. At present, bidders are chosen by interests groups, he believes.

Growth at Hidria picked up in the second half of 2009 and in 2011 sales surged 47% to top EUR 300m. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased from EUR 18m in 2010 to EUR 25m last year.

"This is the result of a successful takeover of German company Bausch at the end of 2010 and a number of new projects, products and innovative solutions we started supplying for new models of vehicles in 2010 and 2011."

This year, orders are expected to stay level, so the results will be similar or better than last year. In construction, Seljak expects that after three years of crisis things will turn for the better both in Slovenia and SE Europe.

"This is confirmed by developments in Russia, which is an important market for us in construction and air conditioning. It is similar with Germany, which made some wise stimulus moves, including in construction and investments in infrastructure, so this market grew even during the deepest crisis."

In the car industry, where Hidria has been present since 2004, Seljak has ambitious plans. "We started in 2004 with a turnover of EUR 15m and we have made an extraordinary breakthrough with a clear strategy of innovation in steering systems, internal combustion engines and now hybrid and electric vehicles."

In 2009 and 2010, Hidria's sales in this segment reached EUR 70m and EUR 80m, respectively. Last year, the figure stood at EUR 135m, which Seljak says propelled the company among the leading innovative manufacturers in this industry in Europe.

"In the future we will be present in virtually all diesel versions of new vehicles by Peugeot, Citroen, Ford, Jaguar and Volvo," Seljak is confident.

As a preferential supplier for Bosch, Hidria also has a special place in the planned projects for vehicles of the future, for the years 2017 and 2018, he says.

Another milestone for the company is its participation in the concept of hybrid vehicles by Volkswagen, which is to be presented in 2013.

A key project for Hidria in the next decade will be a new system of ignition for EURO 7 diesel engines, which will be mandatory after 2018 according to European standards and will radically cut emissions while improving performance.

As regards the accessibility of plug-in and hybrid vehicles to Slovenian buyers, Seljak believes this will depend on state subsidies. In different countries, these vary from EUR 5,000 to EURO 7,000 per vehicle. The network of charging stations for these vehicles will also be a factor.

The Slovenian car industry has made enormous progress in the period of economic recovery and it now accounts for more than 10% of GDP and more than 20% of the country's exports, according to Seljak.

"One important element that encourages this development is definitely the long-term presence of Renault in Novo mesto."

The government should therefore support the investment into new models by Renault and Daimler. The Slovenian car industry is striving to increase its share in the supply to Renault and the Renault-Nissan alliance as part of the Automotive Cluster.

While agreeing that cost cutting announced by Economy Minister Radovan Žerjav will be necessary, Seljak believes the government should not cut on investments in development.

However, another problem is that state-funded projects are often entrusted to companies from abroad, which often proves costlier and brings lower quality, Seljak says.

"Nobody expects any privileges, but the fact is that we are in an unequal position, because certain narrow interest groups make sure that other companies get such projects.

"We want and demand to be the first among equals both in terms of competitiveness and quality."

This is the way big investments should be carried out, for example the construction of the sixth generator at the Šoštanj thermal power plant (TEŠ 6), Renault's investment, hydro power plants, energy-saving refurbishment of buildings and investments in health.

That way, the domestic economy could be kick-started and its competitiveness boosted, according to Seljak.

He also supports systemic solutions announced by the new government, such as tax breaks and the introduction of a cap on social contributions. "If the government implements these measures correctly and timely, I believe they will have the expected positive results."

Seljak advocates a transition to green technologies modelled on Germany. Slovenia could focus on energy renovation of buildings. This would help the construction sector, create new jobs, fill the state budget and provide a fast return on investment.

At the same time, the state would reduce the use of fossil fuels and avoid penalties which it will otherwise have to pay in the coming years. Such projects would also get European funds.

Feniks, a Slovenian-Serbian construction consortium of more than 35 companies, will present a proposal for one such project shortly, he announced.

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