Slovakia is traditionally a very industrial country of 5 million people. Despite the severe impact of the crisis on the unemployment rate, the strategy adopted by the country’s main industries suggest a turnaround for its investors.
A close cooperation between key industrial sectors
Following the economic crisis, the Slovak industry has shown a decline in production. However, thanks to many foreign investments in the 2000s, the Slovak economy has been able to rely on the help of many partners who allowed the country to harness its industrial potential. In fact, to quote the example of the chemical industry, its restructuring in the 1990s allowed the implementation of research centers dedicated to R&D and as well as the training of the workforce. Another consequence is that the number of large factories declined while many SMEs have emerged. After 1990, were recorded for example in the field of plastics about 1100 producers, when they were previously less than 150.
Same situation for the automotive industry, which has quickly developed in Slovakia, in the benefit of the electronics and plastics industries. As a consequence, automotive components are produced to 60% on site, which has a great impact on the production costs, since many parts no longer need to be imported. Therefore, there is a growing cooperation between many sectors, mainly in the electrical, chemical, plastics, wood and automotive fields. The strategy is then quite clear: a focus on key sectors of the industry is the passport of Slovakia, which is aiming to develop on the European market.
The example of the plastics processing industry
An example to illustrate the situation of the Slovak industry is the plastics industry. The plastics industry is very unique in Slovakia in comparison with other markets due to a high concentration of automobile manufacturers. Today, the automotive industry consumes approximately 12% of the total production of plastic raw materials and therefore experienced the fastest industrial growth in Slovakia. As a result, the packaging industry consumes about 34% of the plastic produced in Slovakia when construction consumes 21% of it. In addition, total sales in 2011 corresponded to 431 000 tons of plastic. However, sales declined in 2011 on the domestic market, but increased 12% on foreign markets.
As Slovakia adopted the euro in 2009, the country is able to attract many potential investors but still has trouble penetrating the client-supplier multinationals network. Indeed, If a large number of manufacturers established in Slovakia, they happen to already have their own network of contacts with multinationals. On another hand, the branch was restructured twenty years ago, it now represents 15% of the industrial production. It also represents one of the four most competitive sectors in the country, since the production of plastics and rubber was reinforced with the arrival of big names in the automobile such as Volkswagen, Kia or PSA. Therefore, the industry willingly focuses on the production of tires and spare parts, a decision taken in the framework of the strategy to focus on a limited range of products rather than mass production in order to promote manufacturing quality.
As a conclusion, the added value of the Slovak production will enable the country to improve its competitivity, this added to the implementation of ancillary services to increase the share of customers services. So next challenge: Slovakia will have to use its best assets effectively in order to penetrate new markets without becoming a relocation country.