Archive of articles - August 1997

ZSE signs $59 m syndicated loan

High interest rates cause lower-than-projected profits for blue chips

The Slovak equity market kept its bearish mood during the past two weeks. Share prices remained stagnant and trading volumes were generally low. 1H97 blue chip company results showed their profits significantly lower than for the same period of last year (see story, page 1).The main reason for the decline in corporate profits was the increase in financial costs caused by high interest rates. Companies without strategic foreign investors are experiencing decreasing profit margins resulting from stronger competition on domestic and foreign markets.VSŽ, the Eastern Slovakia steel mill, reported 1H97 operating revenues of 28.1bn Sk ($802m), a 21% year-on-year increase. Operating costs increased by 34.2% to total 29.1bn Sk ($829m) implying a significant operating loss of 969m Sk ($27.7m).

Economic News

" Introducing general restrictions is absolutely [against] the interest of this economy. We have just entered a period of investment, which should be used for the import of foreign technologies, but the surcharge makes them much more expensive now."Peter Mihók, Director, Svk. Chamber of CommerceAnalysis: Gov't plan has too many major holesthe Slovak Chamber of Commerce and Industry, said that Slovakia's main problem was not imports but exports. "We should export more per capita," he said. "Belgium exports eight times more per capita than we do. If we only doubled our exports, it would solve all our problems."Not only the surcharge doesn't address the real macroeconomic problem, Mihók continued, but it also creates new microeconomic difficulties. "Introducing general restrictions is absolutely [against] the interest of this economy," he said. "We have just entered a period of investment, which should be used for the import of foreign technologies, but the surcharge makes them much more expensive now."

Sending the "wrong message"?

As a frequent visitor to Slovakia, I rely on The Slovak Spectator for its accurate information and professional reporting. I applaud your recent decision to run regular editorials, all the more since the issues addressed - the aborted referendum, unregulated capital markets, and NATO expansion - are consequential to Slovakia's democratic development, prosperity, and security and merit the fullest public discussion.While it is clear that The Spectator seeks to promote a democratic Slovakia and its inclusion in Europe, it is doubtful that these goals are always well-served by your editorials. A case in point is your recent commentary on NATO expansion ("For the Sake of Stability...", July 3-16, "Slovakia Falls off the Map", July 17-August 13), which, I believe, sends the wrong message.

Ford targets Slovakia for components

Ford Motor Company is scouring the Slovak auto components market for new suppliers. In July, the American car giant opened a Central European purchasing office in Prague to coordinate the company's sourcing activities in the region. The office is charged with identifying potential suppliers and working with them to meet the quality standards demanded by Ford. The opening of the office is part of Ford's strategy to purchase components where it is selling cars."We believe that the potential of the local industry is outstanding and represents the initiation of a long lasting partnership with the Ford Motor Company which will improve Slovak exports," said Ford Purchasing Manager Štefan Tyrpák.

VW Bratislava expands production

Volkswagen Bratislava's assembly line and paint shop are in shambles. Metal rods, engine parts, and plastic wrapped bundles lay strewn across grass lots outside the company's buildings. The workers have gone home. The normally antiseptic and smooth functioning factory looks like a disaster area.In fact, the reason for the mess is that VW is gearing up for a major expansion of production at its Devínská Nová Ves factory. "We've shut down for three weeks," said Karel Wilhelm, technical managing director. "Production will begin again on September 8."In July, VW Bratislava announced that it will pump DEM 124 million this year into new buildings and equipment for production of the new Golf model.

Sachs Trnava invests in new machinery for torque converters

Sachs Trnava is investing DEM 10 million ($5.7 million) in new machinery to produce torque converters for bus and truck applications. When production starts next year, the company expects a yearly output of 25,000 converters, said General Manager Peter Doll.The Slovakia factory currently produces passenger car and truck manual clutches; yearly production is 600,000 units and 50,000 units respectively. About 300,000 passenger car clutches are supplied to Škoda, automobilova in the Czech Republic, representing 100% of the carmaker's needs. Sachs Trnava has received a quality certification from Škoda for the last three years, is ISO 9000 certified, and expects to be QS 9000 certified by February, 1998, said Doll.

Whether Bartfa, Bartfeld or Bardejov, it's beautiful

It may seem a bit strange that a room on the second floor of the Hungarian National Museum in Budapest is the ideal starting point for exploring the past of Bardejov, a town in eastern Slovakia. But as history explains to us, the story of "Bartfa -the Hungarian name for Bardejov," is closely linked with the early development of the Hungarian crown lands.It remains unclear what settlement lay before the 13th century in this picturesque corner of northeastern Slovakia known as Šariš. Whatever it was, it proved to be no more than a speed bump for westward moving Mongol armies. The real history of Bardejov begins after this date with destruction and subsequent withdrawal by the eastern invaders.In order to bolster Hungary's defenses from threats in the east, King Bela IV began fortifying towns on the frontier like Bardejov to protect the young kingdom. But that is all the dusty room on the second floor of the museum explains.

ŽSR lost 2.7 bn Sk in 1H97

Current acct. at -29.5 mln. Sk

SE invests 1.5 bn Sk in Jaslovské Bohunice

SS-23 missiles must be eliminated, US government tells Slovak officials

Less than two months after NATO Madrid summit, American government officials have asked the Slovak government to liquidate its stock of SS-23 missiles. Two days after senior Slovak officials denied having received any official request, the United States Embassy in Slovakia reiterated the request, seen by some as the first concrete result of Slovakia's exclusion from the first round of NATO expansion.Thanks to a Soviet ploy ten years ago, the Slovak Army is still in possession of six highly sophisticated SS-23 missiles that can carry nuclear warheads and have a range of 500 kilometers. The United States Embassy in Slovakia said in a press release on August 21 that the SS-23 was classified as a "mass destruction weapons carrier", and that its worldwide limitation was "one of the US Administration's top priorities."

Ad firms roll the dice with car campaigns

Selling cars in Slovakia is no longer a simple matter of booking a few TV spots. Foreign car makers are finding that the big sums they spend on classic advertising campaigns are not buying them bigger slices of the market pie. The domestic manufacturer Škoda, on the other hand, has captured almost half the market with a cheap, traditional ad strategy.Škoda is able to spend less on advertising for several reasons. First, Slovak consumers already feel a deep loyalty to the old "made in Czechoslovakia" brand, paying their respects both to the Škoda tradition as well as to the low retail price of their cars. Nor do Slovaks need to be told that Škoda service stations have the cheapest parts and the most locations in the industry. Add up all these factors and it is no surprise that the Škoda name is a top seller with minimum ad exposure.

Tune in to the TV tower's restaurant

There is a surprise awaiting when you finally arrive at the new restaurant located on Koliba inside the large TV-radio tower seen for kilometers. Bratislava has never been seen so beautiful as it appears from the towering heights of the mid-level restaurant. We recommend that residents of Bratislava or visitors alike find their way up there for the view, but don't expect to be impressed by the food.Kamzík is hard to get to - there are no trolley-buses or regular buses that go up the small mountain - so we recommend going by car or taxi. Upon entering the lobby of the tower, it costs 20 Sk per person to be whisked up an elevator to the restaurant. Stepping out you no doubt have the best view of Bratislava and the surrounding areas.

Now you can keep an eye on Big Brother

Have you ever wondered what Big Brother is up to these days? For a glimpse, log on the Internet to see Govnet at http://www.government.gov.sk. This is the regular person's only look at what in reality is a lightning-quick communication network created to link any ministry, government office, regional state office, and government employee with access to a computer.The Government Office, in charge of implementing Govnet, has nine engineers developing it. Although the site is under construction, a sizeable flock of state bodies is already represented here. However, the government discourages any would-be trespasser by veils of secrecy. Officials at Slovenské Telekomunikácie (Slovak Telecommunications) respond to questions about Govnet's purpose with hold-the-line music.

Around Slovakia

Young man sees Jesus Christ's faceSkinhead gets 11.5 years for murderHand-grenade kills four and injures a child

Foreign car sales run out of gas; Škoda leads

If 1996 was a banner year for the automotive industry in Slovakia, 1997 has seen the flag lowered on a number of sales dreams. New customs duties have jacked up retail prices crippling car importers and reducing their market share in Slovakia.Emerging as the clear market winner is the 'home brand' Škoda which expects to best last year's sales of 22,000.Any visions of the South Korean auto maker Daewoo outpacing Škoda vanished this year, as car import duties temporarily erased last year's are back in place. "Daewoo has now realized that it's impossible to be bigger and better than Škoda," admitted Martin Gärtner, Daewoo account representative at the advertising agency Image s.r.o..

Happy endings at animated film festival

Japanese Exim Bank to loan 20 billion yen