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Iskraemeco Boss Optimistic About Future of Company (interview)

Kranj, 31 August (STA) - Chief executive of electricity meters maker Iskraemeco Dieter Brunner is optimistic about the future of his company, as the economy is slowly picking up and EU legislation entails a change from old-fashioned electricity metres to smart metres. He told the STA in an interview that the company was investing extensively in R&D.

The EU-wide change from mechanical to smart metres is expected to increase demand and will be a "big part of the business in the coming years" for the company that is already one of the biggest players on the markets of the EU, the Middle East and Africa.

Meter makers in the EU are waiting for national legislators to set down regulations, which Brunner says has been delaying the business for the last two, three years. "This has nothing to do with the financial crisis, it's just because of this legislation."

EU members are obligated to incorporate the EU energy directive into their legislation by the end of April. "We think this law will define the frame of what utilities have to do....and (utilities) can start to work based on this law."

"There is a general wave coming for smart metering in our markets," Brunner said, adding that countries outside the EU, in the Middle East and Eastern Europe, are also looking into smart metering.

He is optimistic about the recovery of the market, and does not believe there will be a double dip recession. However, recovery will be slow - much slower than many expect.

Especially last year, many projects were delayed through the crisis or even cancelled, however with "a slight glimpse of market recovery, we...are looking forward to have a better year next year".

Brunner told the STA that currently, the company's results were slightly under the 2010 business plan, however they expect to "meet the budget by the end of the year". The company expects to break even at the end of the year "plus-minus 5%".

Touching on Iskraemeco's position in the global market, Brunner said that "we are tiny compared to some of our competitors, but in the markets relevant for us, we are among the big three."

In Europe, Middle East and Africa, where the company has been present for a long time, it is among the three biggest suppliers, but it does not do business in the Americas, and in Asia, it is only present in a few selected countries.

Alongside the parent company plant in Kranj, which employs some 1,000 workers, Iskraemeco has a subsidiary in Malaysia with 50 workers, while another one was just set up 18 months ago in Egypt employing 250 people, supplying Africa and the Middle East with simple electronic household metres, according to Brunner.

A restructuring process is underway at Iskraemeco, as the company is turning from the production of electromechanical to electronic devices. "Restructuring is to reorganise the processes, the way of working, also the products."

The company is slowly giving up the production of electromechanical products, as these are "dying out", and Iskraemeco's Kranj plant is one of the last producing these metres. "We are one of the late ones moving out of the business."

Iskraemeco is retraining its employees "so that we can use them in the manufacturing of electronic devices". However redundancies could not be avoided, as the production of electronic products demands much less manual labour, according to Brunner.

In the first half of the year, Iskraemeco laid off 130 people, currently there are 1,000 still working at its Kranj plant. Some 250 more will be affected as the company will stop producing electromechanical metres, Brunner said, adding that many of them will go into retirement.

He said that no further redundancies are planned, as the company hopes that the demand for its electronic products will be high and it will be able to keep as many people as possible. On the R&D side however, it is still looking for new employees with education in electrical engineering.

The company's R&D department already employs some 120 people, and Brunner said that Slovenia had excellent technical schools providing enough engineers. "What I'm missing in this country is a bit broader business education and people with international business experience."

Slovenia also lags behind in the field of human resources. HR departments in most companies deal mostly with administrative work, but fail to think about how to educate and motivate employees, he said.

Asked whether Slovenia was a business-friendly country, Brunner said that the workforce was good and open to enter an international environment, however the taxes were high and labour legislation was too rigid.

He believes that if the labour legislation and social security were more flexible, this would "help increase industrial production, or keep it in Slovenia".

"Don't get me wrong. I'm not against protecting people in a right way, but not overprotecting them...." Slovenia should create a "little bit more openness and little bit more competition on the labour market."

A company like Iskraemeco cannot be moved overnight, he said. The key part of the company is not its production line, which could be set up in China or Romania, but the knowledge in R&D, the relationships in sales, marketing and business development - "those things you can't move easily".

According to the Iskraemeco boss, the company invests between EUR 3m and 4m into new tools and products annually. Some 8% of revenue go into development. He underlined that the R&D department is also much bigger than in other companies.

In five years, Brunner wants Iskraemeco to be an important supplier of smart metres in Europe, the Middle East and Africa. "There are around 300 million metres to change... and we will play a big part."

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