High start-up costs have cut into the profitability of Samsonite's luggage-producing Šamorín factory.Courtesy Samsonite
After a full year of production, world-wide luggage giant Samsonite officially inaugurated and opened its plant in Šamorín, a town in southern Slovakia. Company managers said they believed the Slovak site would further develop and expand in coming years, while town officials welcomed Samsonite's presence, saying the firm lends their town a new, more European character.
"The Šamorín production plant will become a main player in the Samsonite softside organization," said Marc Matton, Samsonite Europe's vice president and managing director for Softside Products, at the official inauguration of Šamorín factory on June 16. Matton added that the plant will be able to keep this promise because of the company's faith in its employees and the plant's economically strategic location.
Why Šamorín?
Matton explained his company's decision to choose Šamorín as resting on three key points. "The first reasonÉ[was] the availability of dedicated, skilled workers, people with talent and craftsmanship," he said, referring to the tradition of soft-side baggage production in Šamorín.
The Samsonite plant inherited a building formerly used by Kožatex, a leather-luggage producer operating until Samsonite bought the facilities. "We know that Samsonite tried some another cities as well, but the tradition [of producing softside baggage] made them choose our city," said Ján Babej, mayor of Šamorín.
Šamorín offered Samsonite another benefit: convenient location. "Our factory in Šamorín is extremely well located," said Matton. "It is very close to the largest softside production unit in Hungary and to subcontractors in neighboring countries."
Finally, Matton pointed to Slovakia's economic environment. "Some aspects of the Slovak climate are favorable for companies such as ours which want to invest," he said, referring specifically to lower service and overhead costs.
A welcome addition
Babej stressed that Šamorín was on a very good terms with factory management. "We welcome Samsonite's presence in our city," he said. "Its contribution is mainly in giving new work options [to the people who lost their jobs when the old factory closed]."
The company plans to increase employment to a total of 200 positions within the next year, bringing it within striking distance of making up for the 204 jobs that were lost when the previous plant was closed.
According to town representatives, the company's presence has made the town a launching pad for other foreign companies. "To have a company like that in our town makes it more attractive for other investors," said Babej. He added that a possibility exists of creating a Samsonite European Center in Šamorín.
Vladimír Ožvolda, Samsonite Slovakia's managing director, approved Babej's idea of the center, but noted that the process is still at the stage of negotiations. "The company intends to create a center for material supplies somewhere in this area, but we cannot say now whether it's going to be Šamorín or some other city of Central and Eastern Europe," said Ožvolda.
Plant's progress
Samsonite blossomed quickly in Šamorín. The plant was bought in May 1997; one month after acquisition, the factory started production with 30 machine operators. Today, 126 employees underpin the production of a wide array of softside product lines.
But the 60 million Slovak crowns ($1.73 million) investment required for start-up ensured that the factory was a loss-maker in its first year of operation, said Ožvolda. Complicating matters was the fact that Samsonite received neither tax breaks nor financial incentives to settle in Šamorín. "We bought the factory from the previous owner, so the city was not in the position to be a benefactor," Ožvolda explained. Neveretheless, he said, Samsonite Europe's head office is projecting that the factory will be on song and make a profit of almost a million Slovak crowns ($30,000) by the end of 1998.
In total, the Samsonite plant has more than 70 sewing machines, in addition to several riveting machines and punching equipment. Daily production levels sit at about 800 pieces per day. After production, all goods are transported to Belgium, where Samsonite's European headquarters and warehouses are located. From there the products are distributed to luggage dealers.
In Slovakia, distribution is organized by Eurokontakt, which sells to 30 outlets in the country (10 of which are in the capital city of Bratislava). "We are the only company to import Samsonite products in Slovakia," said Anna Dobríková, Eurokontakt sales manager.
From a sales perspective, Samsonite is shooting for major growth this year. In 1996, its first year of distribution in Slovakia, the company pulled in about five million Slovak crowns ($140,000). This year Samsonite is shooting to triple its 1996 figures, projecting more than 13 million Slovak crowns in earnings. Samsonite sells nearly 10,000 products every year in Slovakia.
Ožvolda explained that the company's actual inauguration ceremony occurred a year late because "the official opening was an act of promotion - we wanted to let people know about the factory."
