Business News

SG Automotive Expects a Bumper Year (interview)

Slovenske Konjice, 11 January (STA) - SG Automotive, the Slovenske Konjice-based car electronics specialist, expects a record year after sales rebounded in 2010, having halved in 2009 amidst the worst of the crisis.

Sales halved to EUR 26m in 2009 but rose to EUR 42m last year. "The plan for this year is EUR 67m, but we don't intend to stop here," majority owner and director Robert Grah told the STA.

The reason the company recovered so quickly is that several competitors folded. "We managed to win new contracts and last year growth was fastest in the final quarter," he said.

The car industry remains the main source of revenue, but the company, specialising in car lighting, has diversified to LED street lamps.

"At the moment 80% of sales are related to the automotive industry, but this year we are ramping up production of street lamps and could achieve a 70:30 ratio."

Grah's family holding, Grah Automotive, currently employs 450 at SG Automotive in Slovenske Konjice, 250 in Serbia and 130 in Blejska dobrava, where it owns plastics maker Tehnoplast.

Expansion plans are in the works, but the company failed to get a building permit for land in Slovenske Konjice and intends to expand production in Serbia, where it is making wire harnesses.

Production of wire harnesses was relocated to Serbia's Batocina in 2006 and will be expanded. "This segment was loss-making in Slovenia, but in Serbia we are making a decent profit due to lower labour costs," Grah explained.

However, despite the higher costs high-end production will remain in Slovenia. "In Slovenske Konjice we will have more sophisticated and automated production. I don't think we will ever get to below 350 workers."

The company has made a big bet on energy-saving LED street lamps and has applied for all local public tenders in Slovenia.

"If we manage to win a contract for a major municipality, we can count on up to EUR 70m; we already have contracts worth EUR 62m," Grah said.

Most such projects are co-funded by the EU, but Grah is disappointed that EU rules do not determine that products need to be made in the EU.

"In the end it may happen that municipalities get money from the EU but buy products in China instead of buying from European producers."

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