Whirlpool Slovakia's top two executives - Errico Biondi (left) and Martin Ciran - say they've done it alone.Photo: Courtesy Whirlpool
It's early morning, but the halls of the Poprad-based plant of American white goods producer Whirlpool are already a hive of activity as workers wind assembly lines up for their daily production of 4,000 washing machines. In all the bustle, it's easy to forget that this production powerhouse is not a typical example of what happens in most Slovak factories. But it's business as usual for a firm which has been steadily increasing its output over the last eight years.
Whirlpool is one of Slovakia's most successful investment stories, one which government officials desperately want to see repeated among other firms. But to hear Whirlpool's Poprad plant director Errico Biondi and Whirlpool Slovakia general manager Martin Ciran tell it, Whirlpool's success in Slovakia has come through hard work rather than government aid.
"When we started we were completely dependent on the company we bought into, Tatramat, and had only a few thousand washing machines on the production line every year. But since then we have considerably improved our performance in Slovakia," Biondi told The Slovak Spectator June 12.
How it all began
Whirlpool showed an interest in investing in Slovakia after the Czechoslovak white goods producer Tatramat began the search for an investor between 1991 and 1992. After a year of negotiations the company signed a contract, with Whirlpool buying a 43.8% stake in Tatramat's washing machine production arm, a share which was increased to 100% in 1996. The investment remains the firm's only one in central and eastern Europe
Ciran, who was the last general manager of Tatramat under the communist regime, said that Tatramat had been in dire need of the investment. "It was almost the last chance for the company," he said.
Despite the fact that the only physical barrier between the companies is a fence which opens occasionally to allow the delivery of supplies from Tatramat to Whirlpool, the two firms have already moved so far apart in production that they have almost nothing in common.
Tatramat produces boilers as well as plastic components, metal plates and cables for Whirlpool's washing machines, but can only watch from behind the fence as Whirlpool goes from strength to strength.
When Ciran started to look for Tatramat's future partner back in 1990, he wanted to build a company big enough to compete with global manufacturers which turn out more than a million washing machines per year. Ten years later, Whirlpool is on track to reach this goal.
In 1992, when Whirlpool came to Slovakia, its production of washing machines was 72,000 per year with only one model manufactured. In 1998, this figure had risen to 520,000 with a turnover of $96.1 million, while last year the company increased its output to 767,000 and had a turnover of $144.1 million. For 2000 Whirlpool is planning to produce five types of washing machine, turning out 943,000 units.
To produce that millionth washing machine, Whirlpool plans to expand its production in Slovakia. Whirlpool's idea is to bring other investors to Slovakia and build three new production plants. The total size of this investment is projected at $25.8 million over the next two years. The plan was conditioned on the successful acquisition of land next to its current production plant, something the government pushed through at the end of May.
Whirlpool's presence in Slovakia has already attracted the Brazilian firm Embraco, Biondi said, adding that the firm had seen Whirlpool's success and hoped to emulate it. Embraco chose Slovakia ahead of other eastern European countries as its investment destination and settled in Spišská Nová Ves to produce compressors for refrigerators.
One thing that certainly draws particular interest about Whirlpool's presence in Slovakia is that its success came without any significant help from the government. According to Ciran, the company had to discuss issues with both the federal Czechoslovak as well as the Slovak government before it started to invest in Slovakia back in 1992. "But until now, apart from when we needed the government's approval for our further expansion, we haven't really asked for anything from them. We have been working in this environment ourselves," Ciran said.
However, both Ciran and Biondi hope that this will change, citing the need for the government to look again at its investment incentives. "In Slovakia, foreign investors which are already present in the country don't get much help from the government, compared to new foreign investors which are offered quite significant incentives," Ciran said.
Slovak government officials stressed the importance of Whirlpool's investment in Slovakia and said that it had brought technology, production as well as economic growth to the Poprad region. However, they denied that they had done nothing significant for the company. According to Peter Benčúrik a spokeman for Economy Minister Ľubomír Harach, the company was awarded the status of a significant investor, simplifying the process of land acquisition for Whirlpool's new plants. "I think that with this we really helped Whirlpool," Benčúrik said.
However, Ciran said that Whirlpool would like the same incentives new foreign investors are entitled to. "As an example I can mention the Czech Republic where already present foreign investors are given the same incentives as new investors," Ciran said.
Ciran and Biondi remain hopeful that this change will come. In the meantime, Whirlpool will edge ever closer to producing one million washing machines a year.
"We want this to be our future," Biondi added.
