Iskra — successful transition to a
market economy

Dusan Sesok
President, Iskra holding d.d.

Which economy is not in permanent transition? The name of the game is to get the most out of the invested money with minimum risk. Entrepreneurs in all economies realise that they can achieve the best results and best use of the disposable resources by permanent innovation of their programme and management of these resources, satisfying all the shareholders, its customers, environment and people employed. There are always new competitive products and technologies evolving, new approaches to customer needs and protection, new understanding of quality and costs and new approaches to how to motivate the workers to be actively involved so as to ensure the best long-term result.

To better understand the specific Slovenian approach to transition it is necessary to understand the state of the economy and some events that have taken place in the past.

Changes in the CEE countries (Central and Eastern Europe) had of course been more profound and radical. The best economists in the world were trying to find the right transition formula. It is obvious that there is not one single approach that could be generally applied.

Slovenia was the most developed part of Yugoslavia and generated the biggest proportion of the hard currency revenue. Contacts with the market were established and Slovenian products were widely accepted.

Unlike other countries in CEE Slovenia did not have a state-planned socialist economy. The self-management system of Yugoslavia had assigned responsibility for the programme and marketing decisions to the management of the enterprises that were 'social' property. There was a lot of state interventionism and protectionism. The enterprises had to understand the market and to start exporting because of the hard currency shortages and economy of scale. Of course, the overdriven protectionism kept them in a kind of incubator. But the managers had the opportunity to get into contact with the western world and realised that they had to adopt the products and services to the market demands. The frontiers were open and the contact of the Slovenian people with their more developed neighbours was very close. The climate for technical science was favourable, but there was not enough urgency to develop a knowledge and feeling for the economy. Employees have felt the influence of their work in the success of the enterprise.

When the transition in CEE started and after the disintegration of Yugoslavia, Slovenia lost a lot of its former markets. The import barriers disappeared and global competition entered our home market. Slovenia had to adjust many of its existing regulations and prepare new ones to come into line with the regulations valid in other European countries.

The Slovenian government tries to attract foreign investors with a very low income tax, which is 25 per cent at the moment. The cost of labour is lower than in EEC countries. All the infrastructure and qualified workers are available.

Iskra started its activities in 1946, and with 50 years experience and tradition in electronics, it has become the biggest electronics company in Yugoslavia. Iskra has established a strong marketing network and has exported over 40 per cent of its production to western markets.

The change in economic conditions and loss of traditional markets was a strong blow for Iskra's business, especially as it happened at the time of the recession in western markets and increased precaution amongst the partners due to the risk of war, though all supplies remained constant during the civil war. Iskra had to stop many of its programmes that became uncompetitive in the new environment and had to reduce its number of employees. In the process of privatisation some of Iskra's enterprises have been bought by big international concerns and some were merged with partners.

At present Iskra is a group of enterprises organised as a holding, with many business-wise independent enterprises. The majority of Iskra enterprises are owned or co-owned by Iskra holding d.d..

The owners of Iskra holding d.d. are: 15 per cent development fund, 15 per cent investment fund, 30 per cent pension fund, eight per cent indemnity fund, 25 per cent internal stockholders, seven per cent others.

Iskra has succeeded in finding its place in the electronic industry of Europe. It is a regular supplier of different electronic and electromechanical parts to leading electronic and automotive enterprises. It is active in the following fields:

Electronics and optoelectronics (lasers, tamale imaging and optical communications), telecommunication, information processing and transmission (terminals, optical and power line transmission, radio transmission, data transmission, cellular and personal communication, equipment for control, protection management and communication of electro energy supply and distribution, general and satellite antennas, stationary antennas for mobile telephony, car aerials and aerial amplifiers), measurements (measuring instruments and measuring equipment for all types of electric units), automation (components and systems for production automation, railway and road safety and protection of persons and property), automotive (rotation machines for automotive applications and DC motors for the mobile hydraulics, ignition systems for small engines and components for cold start of diesel engines) and electronic and electromechanical parts, assemblies and systems (foil and electrolytic capacitors, EMI filters, overvoltage protection components - varistors and suppresser diodes, fast and ultrafast rectifiers and zener diodes, bridges and arrays, ferrite cores, transformers and chokes, ceramic parts, potentiometers and presets, zinc-chloride batteries, professional batteries without mercury and cadmium, hybrid circuits, switches, relays, etc.).

In its 50 years of operation in the international market and the good co-operation of its development laboratories with local and foreign universities and R&D; institutes, Iskra has been in permanent contact with the latest technical achievements and market demands and has established good partner relations and developed a lot of products and new technology. Iskra has created good industrial infrastructure and a resource of well-trained workers and specialists for various technologies. Many officers for new government offices were recruited from Iskra's specialists. Iskra management is well-informed about the technical and managerial trends in the world and is continuously adopting its business strategy and introducing new approaches, especially in innovating the production programme and management of market-driven quality. So Iskra is reaping the benefits of competition.

Being relatively small, Iskra enterprises are oriented mainly towards niche products with higher added value and better market prices. New developments are introduced into production and a new market and quality-oriented culture has been established. Iskra enterprises work in accordance with the requirements of ISO 9000 standards and many have been certified according to ISO 9001.

Iskra sells worldwide. Over 70 per cent of the revenue is realised in the EU (European Union) market, but Iskra products are also widely accepted and competitive on the American continent, in South Africa and in the Far East. Total revenue of Iskra enterprises exceeds DM650 million with 8,000 employees.

Iskra has sold its know-how for some products to some new emerging electronic producers.

Iskra's management and workers are proud to have created and preserved the good reputation of the Iskra trademark.

Iskra is interested in preserving and establishing even closer relations with its existing partners and also seeks new partners. Iskra is open to investments in existing enterprises and establishing new facilities. Iskra is also interested in participating in new production facilities opened in Slovenia. We are sure that investment in Slovenia - so centrally positioned in Europe - would be more attractive than investments in countries on the borders of Europe. Despite the fact that the cost of labour in Slovenia is higher than in other CEE countries, it is much cheaper than in EU countries. The technical knowledge and experience of Iskra exceeds that of many of its competitors.

Therefore we invite investors to join our efforts and take part in our ventures and success.

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