At the end of this year or at the beginning of next year, construction machines are expected to start rumbling in Gomilsko, only an hour’s drive from the Slovenian capital. BSW Timber, a Scottish family company with an almost 170-year tradition, chose Slovenia for its large new investment. If everything goes according to plan, the Scottish saw will be heard in Gomilsko in two years.
The arrival of BSW Timber in Slovenia is a positive example that the third most forested country in Europe is open to the internationalisation of its economy even when it comes to the management of such crucial strategic assets as wood or strategic industries such as the forestry and wood industry. The Scottish company is, no doubt, aware of Slovenia’s extraordinary potential. In search of growth outside the United Kingdom, the company first resorted to Latvia a few years ago. As much as 60 per cent of Slovenia is covered in forests, making it the ideal location due to the accessibility of this raw material.
In Slovenia, BSW Timber does not only intend to build a high-tech wood processing centre with the largest sawmill in the country, but three production centres which are expected to employ 170 people. In addition to the sawmill with the capacity to cut 300,000 cubic metres of wood annually, the Scots’ plans include a pellet production plant and wood biomass cogeneration, the production of palettes and wood packaging. They will also produce wood products for various industries, from shops to construction and the wood industry, for example structures, fences, terraces, etc.
A small market is no barrier to foreign investments
Ten years ago, Slovenia with its two million residents was deemed a country that was rather closed to foreign investments. In recent years, this has changed. Slovenia has become more open to foreign capital, and foreign investors have been showing more interest in investments in this Central European country nestled between the Alps and the Mediterranean. Next spring, the Canadian–Austrian automotive giant Magna Steyr will open a new paint shop in Hoče near the Slovenian–Austrian border, which is expected to employ 400 people. But this is not the end of its ambitions, as it has been preparing the ground for the second stage of its investment, after which car production would be established in Slovenia.
The Japanese Yaskawa, one of the leading multinational companies in the field of propulsion technology, robots, systemic engineering and industrial automation in the world, also picked Slovenia for its new factory in Europe. The Japanese corporation will not only produce robots in Slovenia, but it will also have its distribution centre here.
By planting a Japanese cherry and a Slovenian linden tree, the Swiss company Lonstroff, which is owned by the Japanese concern Sumitomo Rubbers Industries, marked the beginning of the construction of its new facility for the production of elastomers for medical applications in Slovenia. If everything goes according to plan, the fifth largest producer of rubber in the world, which also produces rubber products for medical applications, will open its new facility, which is expected to employ 180 people, in April next year.
Slovenians are full of enthusiasm and will to work
“There are many reasons why Slovenia is a good country for investments,” stresses Alex Brownlie, Commercial Director of BSW Timber. In addition to high-quality natural resources (of wood) and its eurozone membership, the Scottish investor particularly points out, as important advantages, Slovenia’s geostrategic position between Western Europe and South-Eastern Europe, its strong in-country logistics and well-developed infrastructure. An important role is assumed also by the Port of Koper near the Slovenian–Italian border as a logistics and distribution centre for Central and South-Eastern Europe. “Slovenia’s geographic location facilitates good access to Central European markets, North Africa, Middle East as well as global markets,” stresses Brownlie. Slovenia is also at the intersection of two important transport corridors, namely of the fifth transport corridor that connects Lisbon to Kiev and the tenth transport corridor that connects Munich to the Greek port of Thessaloniki.
According to Brownlie, the advantages that attract foreign capital to Slovenia also include the country’s positive business climate, Slovenians’ good technical and commercial knowledge as well as their enthusiasm and will to work and achieve strong positive results. “This can be further enhanced and directed with the higher technological level that BSW brings with our investment and our presence on the global market. We also expect that our presence in the Slovenian market will result in an increasing number of companies being involved within the wood processing chain and increasing the amount of timber processing at higher levels of difficulty with state-of-the-art technology and innovation ensuring that the value stays in Slovenia rather than exporting raw logs out of the country,” he stressed.
The long tradition, knowledge and rich experience of the Slovenian wood processing industry are also important for the Scottish investor. “Slovenia has a lot of hidden potential in the wood processing industry, and together, we can utilise this potential for the benefit of Slovenia and BSW Timber,” emphasises Brownlie. His answer to the question of whether Slovenia can become a hub for British companies after Brexit was that this can happen independently of Brexit.
According to the number of employees, Titus Dekani ranks first among companies with British capital. Titus Dekani deals with the development, production and sales of various parts of furniture fittings and employs 512 people in Dekani near the Slovenian–Italian border. Since 2005, the company from Dekani has been part of the British group Titus International Ltd., the largest producer and the leading brand in cabinet hardware for home assembly. The British multinational company GKN Driveline, which produces automotive components, has found its new home on the other side of Slovenia in Zreče near the Slovenian–Austrian border. GKN Driveline entered Slovenia in 1998 by purchasing the factory GKN Driveline Slovenija, where prop shafts, homokinetic joints and tripods are produced today for most European and numerous overseas car brands.
Has Slovenia been overtaking the states of the Visegrad Group?
Respected Slovenian economist Mojmir Mrak, who distinguishes three groups of factors, emphasises that Slovenia has been relatively successful in attracting foreign investors in recent years. In addition to relatively favourable economic trends at the global and EU levels, the fact that Slovenia is a more attractive destination for them today than it was a few years ago, particularly in comparison with its traditional competitors, namely the states of the Visegrad Group, contributed to the growth in foreign investments.
“The states of the Visegrad Group are rather saturated with foreign investments, so some of them have problems providing the workforce required for new investments, and salaries in these states have risen in recent years more quickly than in Slovenia. Slovenia is no longer relatively so much more expensive for foreign investors than perhaps a decade ago, making it relatively more interesting for them,” stresses Mrak.
The respected economist points out the better climate for foreign investors among the important factors for attracting foreign capital to Slovenia. For that, he credits the last government which, unlike its predecessors, was significantly more enthusiastic about, and successful in, attracting foreign investors and providing conditions which are the basis for the investors’ decisions to invest in Slovenia. “Together with a significantly better climate for foreign investors, our traditional characteristics, such as a well-educated workforce, decent infrastructure, and geographical location in combination with EU membership, became more evident than they had been in the past,” points out Mrak.
An almost five-per cent economic growth launched Slovenia among the countries that have grown twice as fast as the EU average, mainly thanks to successful export companies that sold EUR 28 billion worth of goods to other countries (or by 13.1 per cent more than in 2016) and imported EUR 27.5 billion worth of goods (or by 14.2 per cent more than in 2016). According to the latest forecasts, economic growth will exceed four per cent again this year.