Upper Reach meets with Danica Fleischerová, Chairman of the Board of Directors and Executive Director of VUKI, who discusses her company’s standing in the electrotechnical sector in Slovakia and beyond, and her plans to take the business into more challenging markets
Slovakia has a small but highly diversified economy, with a lot of opportunities right now. It is currently celebrating its 20th anniversary, and looking back over history after it separated from the Czech Republic, what would you say are the key sectors that enabled Slovakia to be so successful?
Firstly the euro first gave us a degree of stability for new investors. Secondly there was an appetite to invest in Slovakia; because we’re a relatively unknown country with many possibilities, many foreign investors invested a lot of money into the country. Exports are very important; we export 25% of goods, which is quite a lot. The third important milestone were the funds from EU. After entering the European Union, Slovakia received over €4 billion. Only 35% was used, but the Government is trying to do better with diminishing bureaucracy. The next point to highlight is an abundance of qualified stuff. Many qualified workers can be found Slovakia. That is a big plus. Take VUKI
for example, where we have people who have been working here for 40 years, and providing tailor-made solutions for our customers. In our past, we used to be a research and development institute, and many professionals are still working here, bringing new solutions and innovations.
And how did this affect the electrotechnical sector in particular?
The automotive industry was the sector that benefited most, because a lot of opportunities for the electrotechnical sector arose. It is not just cars; it is everything you need, including the components and electronic equipment which you need to put the cars together. The automotive sector was and still is very important. Automotive companies built many plants that provided employment for many people. The economic growth of the Slovak Republic is highly dependent on exports and therefore the success of the EU countries reflects on our economic situation as well.
As you’ve said, VUKI started off as an R&D company, and it has been transforming ever since. Where is the company now compared to where it was before?
We have established ourselves well in the market over the past 60 years and we are well-known in the Slovak market. There are only two cable producers left here. Knowledge is a great advantage for us, because we are not a huge factory that produces many kilometres of cables. What’s more, we can provide tailor-made solutions. We are well-known for the quality of our goods. We have many special certificates for cabling for instance, local certificates for nuclear power plants. In Slovakia, we are the only one that has this kind of certificate. VUKI’s stability is based on three divisions: cables, impregnating resins and wires. So if one goes down, you can handle things with the second or third division.
What is VUKI’s financial state currently, and what are your objectives for the future?
I know 2013 is going to be a very hard period for us. All the big projects were stopped or pushed back, and as a cable producer, we are quite dependent on large projects. We were supposed to deliver cables for a power plant Mochovce, but the project was postponed. If it goes ahead, in 2013, we will have a good year. We are doing quite well, but we are not achieving our objectives. Apart from stopped projects we face the situation where our customers are declining orders especially in the impregnating resins division.
Do you have agents in other countries?
Yes, we do. Mostly we export impregnated resins. We are trying to get to Germany and the UK. But for cables, over 90% is for the Slovak market. We are now trying to get to the Hungarian and Czech markets. That was the target for 2012, because Slovakia is only as big as it is, and you cannot make it larger. We have to get into other markets, but it is quite difficult. For example, in the Czech Republic, you have many other larger producers and in Hungary you need to pass different tests and obtain certifications.
Many of the certifications you are talking about concern the environment. How are you ensuring that these standards are in line with EU standards?
We have an established quality and environmental management in accordance with international standards ISO 9001 and ISO 14001. In terms of certifications each country follows their own standards, especially in cable production, which wary from country to country.
One of your greatest assets is your people and the tradition of R&D. How do you keep abreast of new technologies? How do you train your people?
We are planning to build a completely new lab next year and enlarge the research team. We have started to cooperate with the universities here. Our strategy is to educate young people and give them a place where they can start work from school. We mostly do research for impregnating resins. In cable production we focus on tailor made solutions.
We are trying to get ahead with impregnating resins and find new and more ecological solutions. When it comes to modern technology, we are investing about €300,000 to €400,000 every year either in cables, impregnating resins or wires. We try to allocate this money to a different division each year, depending on the market’s requirements. Three years ago we invested in a completely new cable line, which cost us almost €1 million. This year we invested a total of €250,000 in impregnating resins. We do our best to meet the highest level of modern and automated plants.
In 2010, the UK imported electrotechnical supplies to the tune of US$5.4 billion. In that same year, Slovakia exported around US$7.5 billion of electrotechnical supplies, so it is clear that you can export a lot. What are your thoughts on this, and what potential is there for the UK market?
From my point of view, it is quite difficult to get into the UK market. The UK has a deep-rooted tradition, relying on its brand name as well as on tight cooperation with their well known business partners. That’s were I recognise the key obstacle in entering the UK market. Regarding potential, Slovak companies are very open for new business co-operations and ready to offer flexible solutions.
What added value do you provide to your position as a woman?
I think women are more systematic and organised, and they can look at things from a global perspective. Frankly speaking, women do not have “a man’s ego”, which is very important in business. I think it is a big plus for a company. You either get the respect or you do not, and it does not matter if you are a man or a woman. You either have the knowledge or you don’t.
One of the main issues when it comes to reaching the UK market is that they do not know you. What do you think that UK readers and potential investors should know about the electrotechnical sector, VUKI and Slovakia?
VUKI is a typical, traditional Slovak company, and people from the electrotechnical sector know us. We are well known for research and development, not only in Slovakia but also in Czech Republic and Russia. Many producers learnt how to produce cables from us. During more than 60 years we have transformed VUKI into a well known customer-oriented company. We offer solutions and products in the field of cables, impregnating resins and winding wires. Our biggest plus is our knowledge and quality. We make over 6,000 kilometres of cables and over 750 tonnes of impregnating resins. When you buy a VUKI cable you may be sure it is of a high quality. At VUKI quality is the most important issue.
The producers here in Slovakia are looking at any option to grow, and I think that is very important. Whoever wants to invest here or import from Slovakia, the producers here are doing everything they can to provide the best solutions at the level customers require. Slovakia is very open to any kind of opportunity, and that is all producers, not just in the electrotechnical industry. It is very difficult for producers in any sector to get into foreign markets, especially the UK. Any kind of opportunity is very welcome.
If we were to come back to Slovakia in five years’ time, how would you like us to find VUKI?
As a stable, modern company with satisfied customers. I hope that VUKI will go back to a point where R&D is very important. That is my goal for the future – R&D and knowledge, and to try to develop a new generation that can create new ideas and new products. During the debt crisis, you can still have a stable position in the market, although you may lose some money. You have to think ahead and invest. Even though things are not going well financially, we are trying to invest each year in new technologies and knowledge. Those are the top objectives in VUKI’s strategy.