Transcript Синдикати - Economic and Social Committee
Slide 1
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 2
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 3
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 4
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 5
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 6
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 7
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 8
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 9
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 10
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 11
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 12
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 13
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 14
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 15
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 16
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 17
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 18
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 19
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 20
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 21
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 22
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 23
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 24
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 25
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 26
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 27
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 28
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 29
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 30
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 31
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 32
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 33
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 34
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 35
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 36
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 2
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 3
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 4
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 5
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 6
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 7
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 8
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 9
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 10
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 11
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 12
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 13
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 14
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 15
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 16
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 17
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 18
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 19
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 20
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 21
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 22
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 23
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 24
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 25
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 26
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 27
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 28
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 29
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 30
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 31
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 32
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 33
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 34
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 35
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36
Slide 36
Restructuring of the Bulgarian sector of
electrical engineering
Dr. Rumen Atanasov
Bulgarian Association of Electrical Engineering and Electronics
Bulgaria, Latvia, Lithuania and Slovakia – Comparison of
industrial transition models
CCMI Conference, Sofia, 6-7 October 2008
The Sector of the El. Eng. and Electronics
Employed in the ELECTRA sector
as % of the employed in industry
share in WGDP and EE sector
22%
21%
EU
21%
19%
USA
30%
7%
Japan
12,3%
China
11%
China
11,7%
USA
8,2%
EU
8,0%
18%
% in WGDP
Japan
% in EE sector
The leading sector after WW2
The basis of the technology development in the last 60 years
It is the leading European industry
The most important for the Bulgarian industry, defines the technological level
of the whole machining industry.
07/10/08
bassel
2
The Electrical Engineering in Bulgaria has a long history
The roots
1878/79 – first electrical lighting system; facilities for telegraph network
delivered by SIEMENS
1888/99 – first electrified factories, collieries
1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS;
tramway in Sofia starts to roll
1909/19 – regular import of bulbs & utility material from Austria. SIEMENS
wins tender for first 3000 posts distribution telephone exchange; permanent
representation agencies of SIEMENS-SCHUCKERT for HV technique and
SIEMENS-RHEINIGER for medical equipment
1920/35 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated;
regular import of radio receivers; first X-ray device imported; production start
of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs,
switchgear; first 320 kVA transformer
1934/45 – construction of automatic telephone exchanges; high-frequency
installations; repair workshops for radio sets, telephone and telegraph
appliances, el. motors, transformers, heating devices
07/10/08
bassel
3
Subsectors included (acc. NACE codes)
29.41 Manufacture of portable hand held power tools
29.71 Manufacture of electric domestic appliances
31.1 Manufacture of electric motors, generators and transformers
31.2 Manufacture of electricity distribution and control apparatus
31.3 Manufacture of insulated wire and cable
31.4 Manufacture of accumulators, primary cells and primary
batteries
31.5 Manufacture of lighting equipment and electric lamps
31.61 Manufacture of electrical equipment for engines and vehicles
33.3 Manufacture of industrial process control equipment
Subsectors not included
Office technique, computers and other electronic facilities
Communication technique
07/10/08
bassel
4
Development in Bulgaria after WW2
Specialists obtaining higher education in Germany, Italy, France,
Czechoslovakia available
Administrated market of the former Soviet Union orientated
development
Natural way of development without ill-founded political
solutions
Presence of some subsectors (electric motors, transformers,
cables, batteries) on the free markets
Intensive development of specific subsectors in the eighties,
licenses from leading companies
State monopoly on export and import; sales of manufacturers
used to be prerogative of the state
Exorbitant industrial development
07/10/08
bassel
5
The period after 1990
Disappearance of administrated markets: internal and COMECON
Suspension of supply sources of raw materials, components and elements
Drastic decrease in production, closure of enterprises
Former state-owned factories performed social functions maintaining
redundant personnel
Difficult access to capital – as a result loss also of free markets
Liberalization of the trade
Establishment of many small and micro enterprises, initially in the field
of services
1997 - Start of privatization of the big state-owned factories
Different forms of privatization, in many cases owners without ideas
about development of the factory – profiting from assets only
Restructuring – ownership, markets, products, management
07/10/08
bassel
6
Now 100% private industry
The former state-owned enterprises of the electrical engineering
industry are utilizing only 30-35% of their previous capacity. Some of
them are not-existing anymore. In the last years – new technologies,
new equipment (usually second hand). Personnel is optimized. During the
last 3-4 years, a process to discover “real owners” of the factories is
running
A great number of newly established (after 1990) SMEs; new
technology, new facilities
In the last 5-6 years – investment into new production sites & buildings,
new equipment even into some of the former state-owned factories
The sector comprises about 590 enterprises, 350 of them – actively
operating; 20 are large (more than 300 wplcs), the rest – small and
medium
Labor force in the sector – about 20 000 employees
Restructuring still not completed, clusters – in highly introductory phase
07/10/08
bassel
7
The most important for the sector - FDIs
USD m
120
100
80
60
40
20
0
2004
2005
2006
Companies 85; Private persons 124
07/10/08
bassel
8
Factories of important foreign investors
(former state-owned factories)
ABB: MV&LV switchgear; 250 wplcs
HYUNDAI HEAVY IND.: power trafos, tap-changers; 600 wplcs
SCHNEIDER: LV breakers (the old one)
SPARKY: el. hand tools; 1300 wplcs
SET: PCBs; 280 wplcs
MHT: magnetic heads; 200 wplcs
DZU-VIDEOTON: small household appl’s, el.mech. devices; 650 wplcs
NAYDEN KIROV: LV installation products; 300 wplcs
AROS QUALITY: small trafos; 290 wplcs
07/10/08
bassel
9
Factories of important foreign investors
(green field projects)
ABB: 2 factories; LV, 150 workers.; now 3th LV/MV, 600 wplcs,
start May 2009; 4th planned
LIEBHERR: fridges, 1500 wplcs; R&D center, 30 eng.
SCHNEIDER: new (2nd) factory, LV breakers, 800 wplcs
EPIQ: PCB assembling; 2000 wplcs
MELEXIS: PCB assembling; 200 wplcs
FESTO: sensors for automation; 200 wplcs
SIEMENS: HV measurement transformers
ARKOMAT: automotive wire harnesses, 600 wplcs
NURSAN: automotive wire harnesses
CURTIS: el. motor-control for forklifts; 140 wplcs
07/10/08
bassel
10
The success stories of FDI
The sector had a good reputation amongst global leaders: with the start
of privatization SIEMENS, ABB, SCHNEIDER, EPIQ, SPARKY,
HYUNDAI (well knowing the sector) came to Bulgaria and bought up
the state-owned factories
Subsequently, a series of green field projects were realized and were
successfully developed
For the last years - $137 million FDI. This is a very small amount
against the background of the total FDI in this country. However,
production FDI drive into the country new products and respective
markets, new technologies, new management, new industrial mentality
Production FDIs are generating a new industry of sub-suppliers in the
region, natural clusters
Some new, very large and important industrial areas have been
stimulated and established in our country
In general – all FDIs in new production enterprises are success stories.
And yet why?
07/10/08
bassel
11
FINANCIAL STABILITY Currency board since 1997
The Central Bank does not act as a lender to government and commercial
banks
The exchange rate to foreign reserve currency (EURO) is strictly fixed,
1 € = 1,95583 BGN
The Central Bank will issue only one unit of local currency for each unit
of foreign reserve currency it has in its vaults
The country has not the ability to set monetary policy according to
domestic considerations
POLITICAL STABILITY
NATO member country since April 2004
EU member country since January 2007
All political parties support NATO and EU membership
No ethnical problems
07/10/08
bassel
12
4
FAVORABLE INVESTMENT CLIMATE
Corporate Tax:
10%
Manufacturing companies
in high-unemployment municipalities:
0%
EU TECHNICAL LEGISLATION IN FORCE
Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery,
lifts, gas appliances, simple pressure vessels, pressure
equipment, toys, NAWI, refrigeration appliances, hot water
boilers, noise emission, etc.
WEEE (effective from 01.07.06);
RoHS (effective from 01.01.07);
Batteries (since 2005)
Transitional period - Directives on medical devices
Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi
07/10/08
bassel
13
17
WELL EDUCATED AND HIGHLY SKILLED LABOR
FORCE
43 Universities; 45 000 graduates (BA or MA) annually
350 vocational technical colleges, 65 000 graduates annually
30 000 Bulgarian students in foreign countries
THE LOWEST PRICE LEVEL IN EU !!!
07/10/08
bassel
14
13
Price Level Indices 2005 (%)
100
EU Average
76
Slovenia
Estonia
64
Hungary
64
60
Poland
Czech Rep.
58
Slovakia
58
57
Latvia
55
Lithuania
53
Romania
Bulgaria
43
Annual average gross wages,
EE sector BG, EUR
2400
2200
2000
el.eng.
electronics
1800
1600
1400
1200
1000
2003
07/10/08
bassel
2004
2005
2006
15
15
Monthly emoluments in electrical
engineering sector, large cities, EUR, 2006
Position
Gross salary
Total cost
Low-skilled worker
110
136
Skilled worker
190 to 300
236 to 372
Engineer (MSc)
330 to 450
409 to 558
Manager
400 to 500
496 to 620
07/10/08
bassel
16
Productivity rises, but still too unsatisfactory
Produced/employed (BGN/empl.)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1999
07/10/08
2000
2001
bassel
2002
2003
2004
2005
17
Labor productivity in 2006 – GDP per employee
on PPP basis as a percentage of the EU–27 average
Top 5 states
Country
07/10/08
% of the
EU-27
average
Bottom 5 states
Country
% of the
EU-27
average
Luxembourg
183.3
Poland
61.5
Belgium
134.9
Lithuania
58.5
Ireland
132.1
Latvia
52.8
France
125.2
Romania
38.3
Austria
121.1
Bulgaria
35.3
bassel
18
Important el. eng. sub-sectors
Power equipment (transformers, switchgear)
Motors, generators, alternators
Cables and wires
Batteries, start and traction
LV apparatus, building installation products
Control, measurement and automation devices and systems
Industrial electronics, PCBs, electronic modules and systems
Automotive parts
Lighting fixtures
Optical devices
Household appliances
Sub suppliers (plastics, metal parts, ceramics etc.)
07/10/08
bassel
19
Production and export, EUR m
800
production
export
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
20
Production of electric motors,
batteries, switchgear
€m
140
120
100
80
60
40
20
0
2000
2001
2002
2003
motors, transformers
07/10/08
bassel
2004
2005
batteries
2006
2007
switchgear
21
Export of assembled PCBs, € m
80
70
80
60
50
52
40
41,9
30
33,2
20
25,2
10
0
17,3
8,2
7,7
2000 2001 2002 2003 2004 2005 2006 2007
07/10/08
bassel
22
Production
of electrical household appliances, pcs
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2001
2002
2003
fridges
07/10/08
2004
2005
2006
geysers
bassel
23
Import of electrical household appliances, pcs
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
2002
refrigerators
07/10/08
2004
2003
washing machines
bassel
2005
vacuum cleaners
24
Human resources
Proportion of the population aged 25–64 with
completed secondary education
80
70
60
50
EU27
EU15
BG
40
30
20
10
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2006
25
Proportion of the population aged 25–64 with
higher education
25
20
15
10
5
0
2000
07/10/08
2001
2002
2003
bassel
2004
2005
2005
EU25
2005
EU15
26
University graduates in science and technology
per 1,000 population in the age group 20–29
14
12
10
8
EU27
BG
6
4
2
0
1999
07/10/08
2000
2001
2002
bassel
2003
2004
2005
27
Lifelong learning – proportion of the population
aged 25–64 involved in training and education
12
10
8
EU27
EU15
BG
6
4
2
0
2001
07/10/08
2002
2003
2004
bassel
2005
2006
28
Number of graduates
in electrical engineering subjects, 2005
There are 5 technical universities and 65 vocational
schools with el. eng. & electronic disciplines
Subject
Bachelor
Master
Total
Mech. engineering
247
0
130
263
113
24
34
106
360
24
164
369
El. engineering
El. devices
El. installation
07/10/08
bassel
29
State economic strategy
According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”,
published July 2007 by the Ministry of Economy and Energy:
DELOITTE’S SURVEY - most perspective sectors and
competitive advantages in Bulgaria are: IT, outsourcing,
electrical engineering and electronics;
UNCTAD’S SURVEY 2007/2008 - electrical engineering and
electronics is most perspective industrial sector for
investments in Bulgaria
Sector strategy
A “National Strategy for the Development of the Electrical
Engineering Industry in Bulgaria up to 2013” was jointly elaborated
with the Ministry of Economy and Energy. Yearly Action plans.
07/10/08
bassel
30
R&D expenditures in ELECTRA (% of the GVA)
Japan
24%
USA
17%
EU
11%
R&D expenditures, % of GDP
China
0%
n.a. ?
2,5
2
EU15
1,5
EU27
1
BG
0,5
0
2000
07/10/08
2001
bassel
2002
2003
2004
2005
2006
31
Bulgarian National Innovation Policy
NIF - Projects financed by
NIF Session
Projects
Submitted
Projects
Selected
Success
Rate %
Agreed
Subsidy
( BGN m)
Average Value of the
Financed Project (
BGN)
1st session
118
43
36
6,7
156 000
2nd session
120
67
56
8,3
124 000
3rd session
146
108
74
16,6
154 000
4th session
168
102
61
16,9
166 000
Projects’ leading sectors
ICT - 26.5 %
electronics and electrical eng. - 15.7 %
biotechnologies & food industry - 13.7 %
mechanical eng. & metal processing - 10.7 %
07/10/08
bassel
32
Other instruments to promote innovations
Voucher scheme;
Techno-starter scheme;
Tax incentive scheme;
Loan guarantee scheme;
Venture capital scheme
07/10/08
bassel
33
But !?
R&D %
GDP
Share of
business
for R&D
07/10/08
Lisbon
2010
BG 2003
Nat’l Str.
2006
Nat’l Str.
2010
3
0,43
0,45
0,51
67
22
18,8
23
bassel
34
Social Dialogue
Sector councils for social collaboration with the Ministry of Economy
and Energy
Law on health preserving and safe conditions of work, including a
separate system for social dialogue at national, sector, regional,
company level
Two trade-union partners of the Association.
A collective labor agreement is signed for the EE-industry between
the sector organizations of employers (NCEEB) and the trade unions
Very strange!. The dialogue between employers and trade unions is far
more spontaneous and constructive than between business and the
state administration.
07/10/08
29/02/08
bassel
nceeb
35
Thank you for your kind attention
07/10/08
22/04/08
bassel
nceeb
36