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Slovak cement producers lured home by construction boom

After several years of struggling to survive by competing on the export markets of Germany and Austria, Slovakia's leading cement producers are now turning their attention back to the growing domestic construction market, according to a report in the Slovak business paper Trend.
When construction in Slovakia suddenly stalled following the fall of Communism in 1989, Slovak cement producers decided that their fate for the near future depended on accessing foreign markets. But since these faltering companies did not have the resources to compete in western Europe, they started to be privatized in 1992 - some to foreign investors.
An 84 percent stake in the biggest Slovak cement producer, Hirocem in Rohožník, was acquired by Holderbank Financiere Glarus - the world's largest cement producer with more than 75 cement plants in 45 countries - which also bought 97 percent of Stredoslovenské Cementárne in Banská Bystrica.

After several years of struggling to survive by competing on the export markets of Germany and Austria, Slovakia's leading cement producers are now turning their attention back to the growing domestic construction market, according to a report in the Slovak business paper Trend.

When construction in Slovakia suddenly stalled following the fall of Communism in 1989, Slovak cement producers decided that their fate for the near future depended on accessing foreign markets. But since these faltering companies did not have the resources to compete in western Europe, they started to be privatized in 1992 - some to foreign investors.

An 84 percent stake in the biggest Slovak cement producer, Hirocem in Rohožník, was acquired by Holderbank Financiere Glarus - the world's largest cement producer with more than 75 cement plants in 45 countries - which also bought 97 percent of Stredoslovenské Cementárne in Banská Bystrica. Also privatized by foreigners were Cemmac in Horné Srnie, which is now Austrian-owned, and Cementáreň Lietavská Lúčka, which is German-owned. The leading producers that were privatized by Slovak buyers are Cementáreň Turňa in Turňa nad Bodvou, Považská Cementáreň in Ladce, and Zeocem in Bystré.

With the new capital, these firms went from exporting only 44,000 tons of cement in 1990 to selling 1.57 million tons abroad by 1995. But while Slovak producers were improving their quality and contacts, so were producers in Romania and Bulgaria, thus minimizing the price advantages Slovak firms had over western European competitors.

Those market forces combined with the Slovak construction industry's revival over the past two years have encouraged Slovak cement producers to shift their focus back to the home market. Slovak cement exports declined to 1.19 million tons in 1996, while domestic consumption hit 1.60 million tons.

Domestic cement consumption is not yet back up to its pre-Velvet Revolution level, but Slovak producers are optimistic.

Holderbank plans to invest 200 million Sk ($6.25 million) annually to raise Hirocem's current 27 percent share of the Slovak market to 50 percent. In so doing, they aim to reduce emissions from the production of white cement and to increase the use of alternative fuels in the production of Portland cement. At the same time, Holderbank is investing in Stredoslovenské Cemetárne and increasing that plant's emphasis on domestic sales.

Holderbank is not alone in its commitment to future growth. Cemmac's Austrian owner, Hamag Holding, plans to invest in production facilities, which could include a new furnace worth 1 billion Sk ($31.25 million).

By modernizing their equipment, Slovakia's cement producers are decreasing their energy consumption and their negative impact on the environment. But to remain efficient and competitive, they will have to continue to cut employment, which has already fallen by 32 percent from 4,296 workers in 1990 to 2,887 last year.

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