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Slovenia’s appeal for German companies does not wane

Companies not present in Slovenia will miss out on opportunities for growth as the CEE region is firmly on track to recovery

German companies have built up their presence in Slovenia in the past 30 years and their confidence in return to growth after a grim 2009 is high. The regular annual survey of the business sentiment among the companies in Slovenia with German capital conducted at the start of 2010 by the Slovenian-German Chamber of Industry and Commerce, member of the German Chamber Network (AHK), reveals that optimistic thinking has not been dented by the overall sluggish results in 2009. On the whole, the respondents have maintained a positive attitude and continue to think of Slovenia as an attractive location for investment.

For Slovenia to be a leader of the pack of 18 countries of central, eastern and south-eastern Europe in the annual survey of companies with German capital proves the statement that the country of the Alpe-Adria region is “the best kept secret of Europe”. The majority of German companies with operations in Slovenia are manufacturers and 47 per cent of the respondents expect to earn more this year, 66 per cent hope to keep the current headcount and 24 per cent will add new jobs to their payrolls. 57 per cent of respondents are satisfied with labour costs and productivity, as well as with the conditions for research and development and the quality and availability of local distributors. The respondents have no complaints about the efficiency of Slovenia's public administration but the majority finds taxes to be too high and the tax system in place has got thumbs down from 52 per cent of respondents. The percentage of those who describe public infrastructure in Slovenia as good is 96, legal security got thumbs up from 87 per cent of respondents, and the anti-crisis measures of the Slovenian government should be more “goal-oriented” according to the respondents.

Slovenia as a location of choice for German investors

Christof Droste, managing director of Hella Saturnus Slovenija, shares the opinion of his counterparts at the helm of foreign-owned companies that operate in Slovenia that of the CEE countries Slovenia is more attractive than the Czech Republic, Croatia, Hungary, Poland or Russia. Low labour cost is not enough to tip the scale in favour of the countries where wages are lower than in Slovenia. Quality and productivity matter according to Mr. Droste and true as it is that labour costs are higher in Slovenia than in the Czech Republic or in Slovakia, it is still competitive for the reasons of quality and productivity. The company’s operating results confirm that Hella Saturnus (headlamps and fog lamps) with 500 new people employed is on track to another profitable year. Namely, Hella Saturnus Slovenija increased output by 90 per cent in the first six month of the current financial year running from June to the end of May.

The testimonial of Rudolf Kloetscher, managing director of the Slovenian arm of B/H/S Bosch and Siemens Home Appliances Group, is equally encouraging. The company employed 90 people in 2009, of which 20 are highly qualified in effort to strengthen its market share in the Western Balkans despite a fall in purchasing power of households across Europe.

Bilateral relations: Slovenia-Germany

The members of the German Chamber Network, the AHKs, are present in 80 countries at 120 locations of particular interest for the German industry and commerce where they provide services in support of both German and host country companies in the development of their business.  The Slovenian-German Chamber of Industry and Commerce (AHK DESLO) established in 2006 has over 140 member companies (20 from Germany). The Slovenian members are able to make use of opportunities provided by the wider Germany-led chambers network. The fact that Slovenia is a developed country with traditionally good ties with Germany in economy, politics and culture explains why preserving Germany's status as Slovenia's most important foreign trade partner is seen as one of key goals for His Excellency Matthias von Kummer,  German Ambassador to Slovenia. Taking bilateral cooperation between the governments of the two countries to a new level in many areas with the emphasis on the plans for the modernisation of the Slovenian railway infrastructure. Having more Slovenians learn German l would be a step in the right direction since investors are sometimes put off by language barriers from investing in certain countries and even though command of foreign languages is at a high level in Slovenia, German can be very useful. As regards the Slovenian workforce, the education and productivity levels are seen by German employers worth paying, as opposed to the matters such as access to subsidies, tax burden, transparency of public tenders, labour market flexibility and payment delinquency.

 

According to Ms Gertrud Rantzen, president of the Slovenian-German Chamber of Industry and Commerce, economic cooperation between the two countries is good with Slovenia's exports to Germany currently exceeding imports. There are some 300 German companies with operations in Slovenia employing some 20,000 people. With new investments in Slovenia worth some 300 million euros to be made in the next three years, Germany will challenge Austria, Switzerland, the Netherlands and France – four largest emitting countries for inward FDI.

While generating 7.5 billion euros in revenues last year, the companies with German capital are trying to avoid laying people off and have used the government funding for additional staff training, being aware that a better trained work force will be needed once we put the crisis behind us.

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