The global situation is affected by geopolitical tensions, rapid technological disruptions, trade policies such as new tariffs and a pervasive sense of insecurity. How are Slovenian businesses coping with this new reality?
The global situation is affected by geopolitical tensions, rapid technological disruptions, trade policies such as new tariffs and a pervasive sense of insecurity. How are Slovenian businesses coping with this new reality?
According to the BCG’s Transform and Special Situations Index study the branches most hit by these turbulences include automotive, chemical, transportation, and logistics industries. Even though the Slovenian automotive industry is well geared – no pun intended – for the era of electric cars, it has still taken a severe hit as its main customers are in Germany and elsewhere in Europe. One of the key answers to this challenge is diversification. Tech oriented automotive firms like Kolektor or Hidria are looking for opportunities in new markets, particularly China. The Slovenian metal industry, such as aluminium producer Impol, is also very dependent on their European automotive customers. Impol is diversifying its product line and putting stronger emphasis on foils for the pharmaceutical and food industries. Slovenian Steel Industry (SIJ) is also developing new materials for electric car drives.
Even though the pharmaceutical industry is relatively immune to the crisis, Krka, one of the two leading Slovenian pharma companies, is exposed to the situation in Russia and Ukraine. Pharmaceuticals are exempt from the sanctions and the company has even managed growth in these important markets. Nevertheless, Krka is hedging its bets and building a new plant in Hyderabad, the centre of Indian pharmaceutical industry – a joint venture with the local company Laurus.
Not everybody is going in the same direction. Lelosi, a fast growing Slovenian textile producer, is partially moving its production from China to Slovenia because of the higher quality of the workforce, proximity to major markets, better flexibility, and higher quality of production. Improved efficiency is another answer to pressing challenges. This is mostly achieved by increased digitization and automation of production processes. Only a few years ago Slovenia was among the 20 most robotized nations in the world. The latest report of the International Federation of Robotics puts Slovenia in seventh place. This trend is not limited to larger companies: small family businesses like orthopaedic footwear manufacturer Migi and textile company Rogač are increasingly implementing new digital technologies into their processes.
Slovenian companies are technologically strong niche players with one outstanding weakness – they are mostly quite small. So, it is essential for them to join forces and pool resources to stay competitive in toughened conditions. The defense industry cluster includes 135 companies – up from 58 last year! The rearmament of Europe is clearly a huge opportunity and cooperation efforts in the field are enjoying strong government support. Pharma and biotech companies have joined forces with academia through the Biotech Hills accelerator. Three major Slovenian universities joined the accelerator this year to speed up the transfer of knowledge and ideas to healthcare and biotech, one of Slovenia’s key industries.
The flexibility of Slovenian industry, consisting mostly of SMEs, and the speed with which these companies responded to the global situation are clearly positive signs. However, no one can predict the outcome of the current turmoil. We can only hope that the global situation will soon become at least a trifle less “interesting”.
