South-East European Industrial Market 2/2024

THE INDUSTRIAL PRODUCTS & SERVICES MAGAZINE FOR THE SOUTH-EAST EUROPEAN COUNTRIES www.tllmedia.bg JUNE ISSN 1312-0670 Visit the SEEIM web site: www.SEE-industry.com issue2/2024 Automation components market in Bulgaria

south-east european INDUSTRIAL MARKET 2 South-East European Industrial Market is a bimonthly industrial products & services magazine for the South-East European countries Bulgaria, Croatia, Greece, Northern Macedonia, Romania, Slovenia, Serbia, Montenegro, Turkiye, Albania. It is distributed free of charge among the working specialists in the industrial sectors in the region, and the engineering, manufacturing and trade companies in South-Eastern Europe. Editorial Department Dilyana Yordanova - Lead Editor d.yordanova@tllmedia.bg % (+359 2) 818 3823 Lyuben Georgiev lubo@tllmedia.bg % (+359 2) 818 3808 Pepa Petrunova p.petrunova@tllmedia.bg % (+359 2) 818 3822 Advertising & Communications Petya Naydenova % (+359 2) 818 3810 Gergana Nikolova % (+359) 888 595 928 Elena Dimitrova % (+359 2) 818 3815 Maria Koyadzhikova % (+359) 889 256 232 reklama@tllmedia.bg Secretary Iveta Tsvetkova abonament@tllmedia.bg % (+359 2) 818 3811 ISSN 1312-0670 TLL Media Ltd. © All rights reserved.The artwork, layout design, the articles and all the graphical and text materials used - images, photos, texts, etc., are copyrighted and protected by the law. Unauthorized and unpermitted use is illegal and a copyright infringement. The Publisher shall not be held liable for the contents of the advertisements, advertising layouts and banners, video advertising publications, advertorials and company articles. Copyrights of all mentioned trademarks, registrated trademarkes, etc. belong to their owners.  IN THIS ISSUE: www.tllmedia.bg Publishing House 104, Acad. Ivan Geshov Blvd., entr. A, office 9, 1612 Sofia, Bulgaria % (+359 2) 818 3838 e-mail: office@tllmedia.bg ® 4 Interview with Bojan Stojanovic, Account Manager Distribution Southeast Europe, Omron Electronics 8 Semiconductor sector in Greece 12 The path to decarbonisation of Romania’s industry 16 Automation components market in Bulgaria 20 Green hydrogen opportunities in Turkiye 22 Aurubis to double annual output at Bulgarian site 22 Huf opens largest testing and validation center in Romania 23 Professionals from over 40 countries to attend The Bearing & Power Transmission World Meetings 23 More visitors from Eastern Europe expected at The smarter E Europe 2024

south-east european INDUSTRIAL MARKET 3 PAID ARTICLE How to set up an IoT network to get associated data from the sensor to the Cloud? – part II Thomas Steen Halkier – CEO of NeoCortec, and Zoltan Kiss – Head of R&D at Endrich Bauelemente Vertriebs In this paper we continue discussing the different possibilities to collect sensor data and get them into the Cloud using the E-IoT ecosystem, which has recently been using NeoCortec’s revolutionary NeoMesh protocol for having an ad-hoc, real low-power, sub-GHz mesh WLAN to collect data locally and gateway it to the Internet from a single access point. Legacy mesh network technologies on the market There are many successful mesh technologies available on the market. They usually offer adequate solutions for the original purposes they have been developed for but may have some challenges if we want to use them in the industrial environment fully battery-operated as described in the ideal network definition for the E-IoT smart sensors. Usually, those technologies go with different kinds of nodes and fulfill different kinds of tasks, such as network coordinators, routers, and end devices. For those technologies you always need a set of devices, which usually need to be powered by mains for sustainable operation, as they should continuously listen to the network, and in return the end devices have such low power consumption, that could be energized by batteries. But what if we need to connect hundreds or thousands of devices into such a mesh? Centralized network management usually limits the number of nodes to few hundred due to the inefficient routing strategies, which causes lack of scalability. This is a no go for smart sensor applications which need to cover a large area, instead of a residential house, a hotel, or a large industrial building. Furter issues come with the GHz frequency used in many of the common wireless technologies. 2,4 GHz would suffer indoor penetration problems in industrial environments and a sub-GHz technology would fit better. Asynchronous operation results in the necessity that nodes always listen, thus the entire network cannot be battery-powered. Also, there may be reliability problems with the data exchange. NeoMesh, the 2nd generation mesh network NeoCortec’s NeoMesh technology offers a different kind of mesh architecture. No more nested tree topology, no more partial mesh, or incomplete network. NeoMesh offers a fully connected mesh and a single node solution to multiple tasks, including routing, coordination and serving as an enddevice. A solution with NeoMesh as its core – the Wireless Mesh Networking Protocol, represents a paradigm shift from traditional network architectures. Unlike the conventional solution with a central Network Manager to control communication between nodes, this protocol employs autonomous intelligent nodes as its backbone. This feature empowers each node to act as an independent entity, facilitating direct communication between nodes without the need for a central authority. The result is a unified network that simply works, no matter how large or complex it grows. Adaptability and scalability are particularly valuable when extending the E-IoT platform in an area, which should be covered by hundreds or thousands of sensors. Reliable data transmission at all times One of the protocol’s most impressive features is its patented routing mechanism. It ensures that data travels seamlessly through the network, even in the face of obstacles in the RF (Radio Frequency) path or the movement of nodes within the network. Traditional networks often suffer from performance issues when nodes are blocked or dynamically change their positions. However, the NeoMesh Networking Protocol eliminates such concerns, guaranteeing reliable data transmission at all times. In practical terms, this means that the network’s performance remains unaffected by environmental factors or dynamic changes within the network itself. Whether nodes are added, removed, or repositioned, the network remains robust and fully functional, ensuring uninterrupted connectivity for all devices and users. The heart of the NeoMesh technology At the heart of the NeoMesh technology lies a robust protocol stack with integrated security and reliability features. A key aspect is the encryption of the whole wireless communication between the nodes using AES128. By employing this encryption, the payload data and the network communication remain impervious to monitoring by any untrusted entities. The system is built for longlasting performance. The power consumption is exceptionally low, enabling the batteries to last for several years. The NeoMesh network follows a time-synchronized protocol, wherein each node spends most of its time in a sleeping state. This architectural approach ensures a highly predictable power consumption pattern for every node in the network. As a result, all nodes consume nearly the same amount of energy, enabling each network node to operate efficiently for many years. The E-IoT with its Neo-Mesh local sensor network extension operates at sub-GHz frequency to overcome the problems of other protocols in harsh industrial environments. An ideal solution for smart sensors When comparing sub-GHz networking to Wi-Fi and Bluetooth, using the same antennas and transmission power, it becomes evident that sub-GHz networking offers a longer range. Due to the automating routing embedded into the NeoMesh stack running on a microcontroller, the network coordination is distributed between the nodes which then operate at low power. As a result of the decentralization, the efficient speed-routing protocol and the ad-hoc network construction a massive scalability with thousands of nodes can be achieved. Moreover, with NeoMesh the data exchange goes with cable-like reliability due to the handshake between nodes applied at each hop with 32-bit CRC and an automatic retry in case of a CRC error. Instead of communicating on a single channel, frequency hopping across 15 channels is being used to avoid noise. These capabilities of the NeoMesh Protocol make it an ideal solution for smart sensors installed across large-scale industrial complexes, such as factories, buildings, real estates, and shops, offering also a perfect local wireless networking solution to extend E-IoT concept with this important feature. To be continued in the next issue. www.endrich.com •

south-east european INDUSTRIAL MARKET 4 You’ve recently taken your current position as Account Manager Distribution Southeast Europe at Omron Electronics. Tell us more about your career path. During the last 15 years, I worked in large foreign corporations where I gained knowledge and skills which I would like to make the best possible use of to position the Omron brand in Southeast Europe. I see the greatest potential for growth in the markets of Serbia and especially Bulgaria, where we have Gemamex as a strong partner at our side. I have the benefit of knowing the mentality, problems and potential of the Southeast European market which is the key to better support Omron’s partners in their further growth. What are the perspectives for success on the market in the region? The potential of the markets in Southeast Europe, and especially in Bulgaria, is very high due to the large industrial development in the last few years, which is also of course accompanied by the implementation of automation and robotics. In the coming years, the manufacturing industry will face a number of challenges – not only economically, but also from a social perspective: the globalization of markets, changing consumer needs, carbon neutrality targets, digitalization and other advances in production technology, the declining birth rate and ageing population, the changing values of factory workers – to name but a few. To keep pace with these changes and cater to social needs essential to sustainable development, the manufacturing site must overcome these issues. For that, they need to implement sustainable automation solutions that can co-exist with the global environment and deliver high worker satisfaction while also driving the advanced evolution of manufacturing. At Omron, we created a concept by synergizing and advancing three approaches to innovation in automation: Integrated (advanced control), Intelligent, and Interactive (advanced human-machine collaboration) technologies. That is our i-Automation! concept for manufacturing innovation. For this, we have a lot of help from our distributors, Ongoing industrial development creates huge market potential in Southeast Europe Bojan Stojanovic, Account Manager Distribution Southeast Europe, Omron Electronics, for South-East European Industrial Market such as the company Gemamex, which itself strives to introduce all their partners to all the benefits of automation and robotics in production processes. What are the latest products in Omron’s portfolio that you expect would attract the attention of Bulgarian manufacturers? Omron as a company invests a lot in the development of new products from year to year. Currently, as a company, our focus is on developing products that enable robotization and automation of certain production cycles. Here I would single out our cobots, delta robots and mobile robots for which there is a great deal of interest. However, in addition to that, we as a company invest in the development of classic products that are part of an automation system. Among those products, I would like to highlight our new frequency regulator M1, which is one of the best in its class in terms of quality and price. Also, by the end of the year, we expect more new products that will be of great interest to our distributors and, of course, to end customers. Of course, our distributors and Gemamex regularly receive reports and news about the release of new products from our company and forward them to their partners. All buyers of Omron products will have the opportunity to get acquainted with our new products and to improve their technical knowledge at trainings in the new Automation Technology Center (ATC) in Stuttgart, which will be the largest of its kind in Europe and whose official opening we expect in the last quarter of this year. What are Omron’s distinctive advantages among its competitors in the Southeast Europe region? Healthy competition is important for every company, because healthy competition forces every company to be even better in all business segments. Of course, we follow what the competition is doing, but we primarily focus on ourselves and our plans. Personally, when I talk with a customer, I always focus on our strengths compared to our competitors. Perhaps our greatest advantage is the flexibility and roundness of the automation process, which combines robotization, automation and our unique Sysmac Studio software. Another thing that Omron products are known for is Japanese quality, innovation and ease of use. Those three features are always distinguished by our customers who have been using Omron products in their solutions for many years and that is why they remain loyal to us. Bojan Stojanovic (right) and Dipl. eng. Georgi Genchev, Owner and CEO of Gemamex

south-east european INDUSTRIAL MARKET 5 PAID ARTICLE PACS Solutions – solving the challenges of Industry 4.0 The main goal of the Concept for digital transformation of the Bulgarian industry (Industry 4.0) is the modernization, automation and competitive positioning of the country’s economy between 2017 and 2030. The challenges facing Bulgarian enterprises are even greater today, considering the serious lagging behind other EU member countries in terms of penetration of digital technologies in the economy and society (key indicators are tracked by the Digital Economy and Society Index /DESI/). The transition to Industry 4.0 is a natural extension of digitalization and automation processes with permanent use of the Internet, large databases, cloud structures, digital modeling and simulation of production processes through virtual reality, intelligent automation, etc. Therefore, it is of key importance that companies invest in forward-looking and sustainable software and hardware solutions to secure this transition. The Bulgarian company PACS Solutions, as a certified partner and system integrator of: Stratus Technologies – a manufacturer of faulttolerant industrial server and software platforms; ADS-TEC – a developer of advanced industrial computing and IT systems; ProLeiT – a developer of software platforms for complete automation of production processes, offers comprehensive solutions leading to the minimization of costs, downtime and errors in production, respectively increasing productivity while maintaining a sustainable level of quality and responsiveness, and solving the problems that arise in the shortest terms. The wide range of complete solutions from the comprehensive portfolio of PACS Solutions is adapted to the specific needs of each individual enterprise or production ecosystem. Stratus Technologies’ innovative zero-touch computing concept allows users to securely and remotely manage their critical applications without unwanted downtime – from the data center to the network edge, turning information into an intelligent business resource. ADS-TEC’s high-performance panel computers and HMI touchscreen monitors enable optimal control and visualization of processes, machines and systems. They are ultimately simplified and powerful, optimized down to every detail and provide long-term operational availability. Automation based on ProLeiT platforms ensures safe, reliable and highly efficient production.

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south-east european INDUSTRIAL MARKET 8 Semiconductors are the fundamental building blocks of every electronic device we use on a daily basis – from smartphones to driverless cars to the newest artificial intelligence applications. They have emerged in recent years as one of the key pillars of the modern electronic industry. Experts in the field predict that microchips will continue to play a major role in the development of electronic devices in the future. Nearly all electronics, no matter their size, today gather and process data in order to offer services to their users. Usually, this processing calls for a number of microchips, each with a specialized function. In this regard, the global digital transformation is significantly fueled by the semiconductor chip industry. Given that all advanced technology chips are produced almost exclusively in Taiwan and Korea, Europe today realizes the vulnerabilities of their dependence on foreign markets for these precious resources, following supply chain problems brought on by pandemics, and implements legislation to stimulate domestic production. The EU Chips Act, enacted by the European Union in April 2023, allocates EUR 43 billion to boost microcircuit output in Europe from 8% now to 20% by 2030. The majority of the investments made under the Act, roughly EUR 32 billion, will be used to entice foreign businesses to make investments in the industry. As a member of the EU, Greece intends to use the Chips Act to further reinforce its competitive edge and establish itself as a global hub for microcircuit design, despite the fact that the country’s ecosystem of microcircuit businesses is relatively small and virtually entirely focused on chip design. Semiconductor sector in Greece Opportunities in the sector According to the Semiconductor Industry Association (SIA), the worldwide market for microchips was valued at USD 550 billion in 2021 and is projected to grow to USD 1 trillion by 2030. Communications, including mobile devices and network infrastructure (32%), computer infrastructure (31%), consumer electronics (12%), industrial (12%), and automotive (12%) are the main client segments for microchips. In real terms, sectors like industrial production and automotive, which were formerly dominated by analog and mechanical technologies, are now growing at the most rapid pace. It appears that significant measures towards the development of a strong local semiconductor sector are now being taken in Greece, during a period when the chip shortage of the preceding months and years has set Europe on the path of further expansion of this industry. The local Ministry of Development aims to activate mechanisms for funding ventures and businesses in the sector as soon as possible. Greece is already witnessing the growth of a highly skilled semiconductor design ecosystem. There are at least 15 companies, ranging in size from startups to major multinational corporations’ software design and development centers, based in the country, which employ more than 500 specialized integrated circuit design engineers. Most of these businesses are engaged in the design of advanced high-frequency chips, such as RFICs and mm-wave ICs, for use in 5G and 6G wireless communications applications. Others create design tools, GPU and video IP circuits, sensors utilizing MEMS technology, and mixed analog-digital reading and processing circuits for industry 4.0 and Internet of Things applications. According to the International Trade Administration (ITA), securing qualified workers for the employment of high-tech enterprises is a requirement for the continued growth of the domestic ecosystem and the attraction of significant foreign investments. Greece possesses outstanding human resources, with a significant number of specialists having specialized experience in the design and development of integrated circuits and sensors. This gives the country a strong competitive advantage. Over 500 more specialist scientists are expected to be required in the next five years to keep up with the expansion of Greece’s local chip sector, ITA informs. Further plans for growth To attract new investments in the semiconductor industry and put together stable chip manufacturing, the local ecosystem must continue to

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south-east european INDUSTRIAL MARKET 10 evolve and grow, experts point out. As per the Hellenic Emerging Technologies Industry Association, it is imperative for Greece to allocate strategic resources towards the establishment of prototype production line pilots and the acquisition of infrastructure for wafer-level packaging and characterization. The development of a resilient microcircuits value chain will make it possible to acquire the presently unavailable talents. Greece has made significant efforts in the last couple of years in the digital domain, and the country has a good chance of creating a new semiconductor supply chain, ITA experts underline. “The Greek government has announced plans to create a technology hub in Athens, which would include a focus on microelectronics and semiconductors. Additionally, there are initiatives to support startups and entrepreneurship in this field, including funding and mentorship programs”, the trade administration’s current report also says. Since the Greek government has substantial background in this field, both in terms of universities and the developing business environment in the sector, it intends to promote a long-term action plan for further development including all stakeholders. The government will boost capacity building in the upcoming years, according to the local Ministry of Digital Governance, by utilizing financial tools provided by the EU Chips Act and existing national and European resources, analysts conclude. Is Greece able to become a growth driver The Association of Informatics and Communications Companies of Greece (SEPE), points out that with a share in global semiconductor production that falls short of 10% and with international competition intensifying, the European Union is attempting to accelerate its investment pace in the critical area of microchips. The semiconductor market is expected to increase significantly until the end of the decade and the main sectors driving this expected future expansion are the automotive industry and the Internet of Things. Specialists from the Association of Greek Emerging Technologies Companies (HETIA) further emphasize that having in mind that Europe has committed to investing over EUR 40 billion in this field, today Greece has a rare chance to establish the domestic semiconductor industry through targeted investments and initiatives that will have a major positive impact on the national economy and development. It takes years, substantial financial commitments, and stability for a nation to build a resilient microprocessor industry, HETIA experts point out. In this regard, Greece has been actively developing and becoming more and more stable recently. The country has significant chances to gain from the European Chip Act, which might be particularly helpful in the areas of expertise and labor sharing, allowing it to avoid having to develop everything from the ground up. There are expected to be excellent chances in this field if the local governance takes advantage of Greece’s excellent human potential in conjunction with the current economic and market conditions, specialists comment. A serious issue to be addressed though, experts underline, is the staffing problem, which is global and recognized. Substantial efforts are being made in Greece to draw talents to this relatively traditional industry, which turns out to be in competition with the rapidly expanding AI sector. Approximately 200 000 people are employed in Europe by the microchip ecosystem, and a few hundred of them are working in Greece. People with experience are scarce in this little environment, and those who do tend to have it either transfer overseas or shift between smaller organizations, start new small businesses, or offer remote services, the branch association elaborates. However, there is new and highly qualified talent graduating from Greek universities. New waves of young specialists feed the local semiconductor sector every year. Given the limited domestic labor market, in terms of number of positions and range of specializations though, a large portion of talent tends to emigrate. To stop this, Greece needs to continue to heavily invest in the further development of the local semiconductor sector and ecosystem, experts summarize.

south-east european INDUSTRIAL MARKET 11 PAID ARTICLE Anton Tomchev, Manager of VIVALUX, for South-East European Industrial Market Magazine What is your impression of this year's edition of the leading international exhibition Light + Building? What trends and topics were discussed by visitors at the VIVALUX stand? LIGHT+BUILDING has once again been a wonderful forum for everyone in the Lighting industry. New trends in technical, architectural, and solar lighting were presented. Leading companies have once again showed how significant their presence is with the products that they showcased. We saw the return of some important companies that for various reasons have missed previous editions. Their participation always raises the level of the forum. We are extremely happy that our team was once again among the leading names in the Lighting category. We see this as an important indicator that we are developing progressively and sustainably. Now that we are well recognizable outside of Bulgaria, it gives us a dose of self-confidence. At the same time, it makes us even more responsible and more demanding of ourselves as a company and a team. What were the highlights at the VIVALUX stand? Which products attracted most interest? At the VIVALUX stand we presented new series of interior and exterior lighting fixtures that have already been included in our portfolio for 2024, but also products that we plan to develop in the near future. We presented our new magnetic track system, which stands out for its functionality and minimalist design, as well as our new decorative lighting collection. A special highlight, both at our booth and generally at Light + Building 2024, was solar lighting, which is gaining more and more popularity due to its sustainable and eco-friendly use. How do you evaluate your participation? Did you achieve the goals you had initially set and what were they? The advantages of participating in an international exposition typically become evident in the following months. Regardless of that, we can safely say that we are satisfied with the exhibition because we have made interesting contacts and had visits from potential partners from different countries that are interesting for us. This is the purpose of participating in such forums. We will try to turn as many of the contacts from the exhibition as possible into successful partnerships. We are pleased to be constantly improving and getting better with each Light+Building participation. Furthermore, we become more and more recognisable on the international scene. Many Bulgarian companies visited the exhibition and our stand, which proves that the Bulgarian lighting industry is always seeking to improve and to be up-to-date with the latest trends. Do you plan to participate in the next edition of Light+Building? The next edition of Light+Building will take place in March 2026. Since 2016, VIVALUX has made four consecutive Light+Building appearances and we hope to welcome our guests and potential partners again at our stand in Frankfurt in two years. We also hope that the economic situation will allow us to develop our full potential and reap the results of the current L+B participation. Participating in exhibitions such as Light+Building is a serious commitment both in terms of preparation and oraganisation, but also financially wise. We see our participation as a worthwhile investment in our future development. How do you envision the next steps in the development of VIVALUX? We have always wanted to develop sustainably and dynamically, but also in moderation and by following market trends. We evaluate the economic and market environment. Data from Europe’s leading markets show a decline in sales. In this sense, we try to “hurry slowly”. Our policy is to offer our trading partners and end users reliability and quality, to be in close contact with them, to understand their preferences, and to be punctual in delivery and service. We know that all these aspects are essential to meet their needs and we act responsibly. In this sense, we believe that VIVALUX has already established itself as a responsible brand. We will continue to develop the VIVALUX product portfolio according to new lighting trends and customer preferences. VIVALUX’s participation in LIGHT+BUILDING is an investment in our future development

south-east european INDUSTRIAL MARKET 12 As an upper-middle-income industrial country in Central and Eastern Europe (CEE), the Romanian economy still reflects the legacy of its communist era. Industry (including construction) contributes 18,3% to national gross value added (GVA), 11% more than the EU average in 2021, Eurostat data shows. According to the World Bank however, the value added of industry to the Romanian economy has stagnated since 2000 and is now below average among middle-income countries as a percentage of GDP. The value added and competitiveness of specific manufacturing sectors have also changed. The manufacturing of steel, cement, and glass, which are products of medium technology intensity, has decreased in value added, as a proportion of national GVA, Industrial Analytics Platform (IAP) states. At the same time, some manufacturing sectors of higher technology intensity (such as automotive and machinery manufacturing), but also medium (rubber and plastics) and lower technological intensities (furniture) have increased, and today are the most important manufacturing contributors to the Romanian economy, aside from food and drink manufacturing. The most drastic decrease in value added The path to decarbonisation of Romania’s industry over the last decade is in basic metals manufacturing (70% decrease in value added, significantly higher than the EU average of 23,4% decrease), as well as in coke and refined petroleum products and fabricated metals manufacturing. The decrease in value added of these sectors was generally accompanied by decreases in production, although production increased for some products such as alloyed steel produced in electric arc furnaces and hot-rolled bars and heavy sections, Eurostat data shows. Production of fertilizers also decreased; even before the recent energy price crisis, which has forced closures in Romanian fertilizer plants, production of ammonia and urea had declined by 20 – 30%. In terms of industry competitiveness, Romanian exports have also seen a shift which broadly reflects the trends in GVA. In general, the share of Romania’s low- and middle technology intensity products in total manufactured exports has been decreasing year-on-year since 1995, being replaced by the high-tech manufacturing that made up 62% of manufacturing exports in 2020. Romania’s trade balance for manufactured goods is currently in deficit, whereas in 1995 the country was a net exporter of middle technology intensity products according to IAP data. Romania’s industry employed nearly 1,2 million people in 2021, around a fifth of the total active workforce. The automotive, food and drink, textiles, rubber and plastics and fabricated metal products sectors are the most important industrial employers in Romania. Of the energy-intensive manufacturers of intermediate products, the largest employers are in the sectors of cement, lime, and glass (48 237 employees), metallurgy (29 131), and chemicals (24 414). The largest companies in terms of personnel in these sectors are Liberty Galati (4987 employees, nearly one-sixth of Romania’s metallurgical industry, in 2021), aluminium producer Alro (2479 employees in 2021), and Chimcomplex (1919 employees in 2021). “While the total number of employees in Romania has increased slightly since 2008, the number of those employed in manufacturing industries declined by 12%. The steepest declines were in the mining sector, particularly in fossil fuel extraction, but some manufacturing industries also saw significant declines, mostly in line with GVA trends: coke and refined petroleum products manufacturing (73% decrease), metallurgy (41%) and chemicals manufacturing (34% decrease). On the other hand, the manufacturing of rubber, plastics, and paper products, and sectors of higher technology intensity, increased their workforce by 23% – 50% over the same period”, states Romania’s National Institute of Statistics. Emission levels Greenhouse gas (GHG) emissions from Romania’s industrial sector declined between 1990 and 2019, primarily due to the gradual closing or downscaling of extremely energy- and resourceintensive industrial facilities. According to IAP data, the CO2 intensity of manufacturing has also decreased since 2000 but remains above the EU average (0,28 kg CO2/constant 2015 US dollar, compared to 0,16). In 2020, emissions generated by Romania’s manufacturing and construction industries amounted to 25,4 Mt of CO2 emis-

south-east european INDUSTRIAL MARKET 13 sions, or 34,2% of total CO2 emissions (excluding land-use, land-use change and forestry, LULUCF). The share of national emissions contributed by emissions from fuel combustion in manufacturing and construction has decreased by a third since 1990. This is broadly in line with the decrease in Romania’s economy-wide emissions, and indicative of a general trend to switch away from carbon-intensive fuels. However, the share of industrial process and product use (IPPU) emissions, which are emitted during the manufacturing processes themselves, has stagnated. Despite this decline in emissions, Romania’s industry still contributes a higher overall share of total national emissions compared to the EU average. CO2 emissions from fuel combustion for manufacturing industries and construction made up nearly 20% of national emissions, compared to 15,2% at EU level, mainly driven by cement, lime and glass (4,9% of all CO2 emissions in 2020) and chemicals (4,9% of all CO2 emissions). IPPU emissions in Romania also contribute more to national CO2 emissions than the EU average (14,4% in 2020, compared to 8,3%), driven by cement, iron and steel, and ammonia production. IPPU emissions from ammonia production make up 99% of IPPU emissions in Romania’s chemicals industry, compared to 45% at EU level. Romania’s industrial landscape has changed fundamentally in the last 30 years, primarily on a trend of progressive deindustrialisation, but maintaining a higher-than-EU-average contribution of industrial manufacturing to the economy and to national emissions. This is broadly similar to other countries in the CEE region; for example, the production of non-metallic mineral products (which includes cement, lime, and glass) makes up a higher-than-average share of emissions in most CEE countries, Eurostat data shows. There are some differences in the carbon footprint of industry within the region: Hungary and the Czech Republic both have lower CO2 emissions per unit value added from their industries than Romania, while Bulgaria’s are significantly higher. However, the situation of industry in Romania and CEE is dynamic, and the trend of deindustrialisation may be partially reversed with the reopening of facilities and investments in new technologies. On the way to a decarbonised future The landscape of steel, cement and chemicals manufacturing in Romania has changed

south-east european INDUSTRIAL MARKET 14 substantially over the last three decades. Although on a progressive trend of deindustrialisation, the Romanian manufacturing industry is still a major contributor to the national economy, employment and emissions. The steel, cement and chemicals manufacturing sectors each exhibit their own characteristics and challenges, but the common challenges of heavy dependence on energy and key natural resources place technological transformation, demand management, and new processes at the head of Romania’s industrial future, states a 2023 Energy Policy Group (EPG) report. “Romania’s industry needs to undergo a deep transformation for the national economy to reach net zero emissions by 2050 and meet EU targets. In a balanced scenario, the penetration of technologies such as hydrogen-based direct reduction of iron (DRI) in steelmaking, the use of alternative fuels (including electrification and zero-carbon hydrogen and biomass use), material efficiency and substitution (particularly in the cement and construction industries, respectively) and the use of carbon capture must all play a significant role in Romania’s industry”, conclude EPG experts. This would lead to a drastic decrease in emissions from the cement, ceramics and steel industries, coupled with an increased demand for wood as a material substitute, and hence higher emissions from wood production. Implementation of these measures would bring the total energy demand of Romania’s industry to half of 2015 values by 2050 and reduce its GHG emissions to 2,67 Mt CO2-eq per year, equivalent to just over half of the current emissions of Liberty Steel Galati. “This transformation of Romania’s industry is beginning to emerge in the investment plans of major industrial producers. Some have submitted applications for funding renewable energy projects, committed to investing in carbon capture and storage or utilization, and elaborated plans for transitioning to low-carbon processes. These plans align on three major directions for deep industrial decarbonisation: electrification and the use of renewable electricity, the use of hydrogen, and carbon capture. Demand management will also play a role in reducing resource consumption and encouraging low-carbon production”, EPG’s report says. However, while investments in these directions could shift the resource consumption landscape and generate new value chains, their planning is fragmented as Romania currently has no roadmap for industrial decarbonisation. This is particularly challenging given the declining number of new investment cycles before 2050 and the scale of the transformation that must be achieved. Reaching net zero emissions by 2050 in the balanced scenario requires a massive reduction in natural gas consumption by industry, driven by the electrification of lowtemperature industrial heat production, and the use of clean hydrogen and biomethane. At the same time, under this scenario industry must capture and store 1,16 Mt of its CO2 emissions yearly by 2030, reaching 3 Mt CO2 per year by 2050. Today, however, most hydrogen produced in Romania is through the emissions-intensive steam methane reforming process, and there are no large-scale carbon capture and storage projects. The scale of Romania’s industrial decarbonisation challenge is therefore significant, but certain characteristics of the Romanian industrial sector may create or enhance existing opportunities for meeting this challenge. Firstly, as shown in EPG’s report, industrial manufacturing sectors are important contributors to the Romanian economy, and as such benefit from public and institutional buy-in to modernising industrial production, particularly if the alternative is the closure of facilities. Secondly, six counties in Romania will benefit from funding under the Just Transition Mechanism, including those which are home to Liberty Steel Galati, Azomures, and the OMV Petrom Petrobrazi refinery. While this funding is likely to be mostly directed towards social safeguards for employees of carbon-intensive industries, they are an important driver for rethinking local economies and developing new businesses, including in industrial hubs. Thirdly, the significant potential of Romania for renewable energy (including offshore wind

south-east european INDUSTRIAL MARKET 15 in the Black Sea, hydrogen production and natural gas production can propel large-scale fuel switching to support industry decarbonisation. Large-scale wind and solar energy projects can reduce the carbon intensity of Romania’s grid, propagate the benefits of reduced scope 2 emissions to industrial facilities looking to electrify, and enable the production of green hydrogen. Hydrogen production can help not only decarbonise Romanian industry, but also generate new business opportunities for existing and future industrial facilities, EPG claims. Finally, Romania has potentially significant geological CO2 storage capacities: 514 Mt in onshore hydrocarbon deposits only, and likely more in deep saline aquifers. Both types of storage sites are often times situated close to heavy industry facilities. A market could also be developed for utilizing captured CO2 – however, a thorough life-cycle assessment must be performed on the envisaged utilisation pathways. To make the most of these opportunities and drive industrial decarbonisation at scale and at pace, several actions must be taken at national level. Firstly, Romania must implement a national strategy for industrial decarbonisation. Deep emissions reductions in industry are currently not discussed in an integrated manner and are not the concrete responsibility of any public institution. In some cases, the approach to funding industrial decarbonisation technologies is unclear – for example, financing from the EU Modernization Fund has been directed towards energy efficiency in industry, including enabling carbon capture (despite carbon capture incurring an energy penalty, and not contributing to energy efficiency). The revision of the National Energy and Climate Plan (NECP) and publication of its LongTerm Strategy for climate neutrality (both expected in 2023) can act as a launchpad for establishing a national industrial decarbonisation strategy for Romania. A national strategy for industrial decarbonisation must be accompanied by a comprehensive framework for financing, including more proactivity on supporting applications for largescale EU funding, such as the Innovation Fund, 50 and an analysis of the potential for using EU ETS revenues to fund industrial decarbonisation. “Financing frameworks should also seek to stimulate private finance, tapping into the potential of products such as loan guarantees or models such as public-private partnerships for driving large-scale industrial decarbonisation. Following an economy-wide approach to industrial decarbonisation, sector-specific decarbonisation strategies can help address the inherent differences in decarbonisation pathways between major industrial sectors. These should incentivize the deployment of solutions on a “ladder” basis, providing support based on emissions reduction potential, states EPG’s report. Strategies for the deployment of specific technologies, such as hydrogen or CCS, can further support R&D, funding, and infrastructure for deploying these capital-intensive solutions. Clarifying institutional responsibility for implementing industrial decarbonisation strategies will also be key, with the Ministry of Economy likely playing a central role, and coordinating with the Ministries of Energy and Environment. Other enablers of industrial decarbonisation are R&D, stakeholder cooperation and enabling infrastructure. Fostering R&D by financing pilot and demonstration projects can help to propel industrial decarbonisation, benefitting from Romania’s numerous research institutions and universities with specialization in science and engineering. However, funding for R&D must be significantly boosted to enable this. Stakeholder cooperation, particularly in the case of pursuing lowcarbon industrial hubs, is key to exchange knowledge, build resilient partnerships, and aggregate demand for relevant resources and infrastructure. Finally, investments in reinforcement of the power grid and in major infrastructure for hydrogen and CO2 transport and storage are key to accelerate the implementation of decarbonisation technologies, but also to ensure that industrial emitters who are more “isolated” from industrial hubs are able to access solutions such as hydrogen and CCS in a cost-effective way.

south-east european INDUSTRIAL MARKET 16 Bulgaria has a long history and established traditions in the automation segment. The roots of the sector go all the way back to the 1960s, when the intensive development of the electronic industry began, as part of the country’s economic development strategy and as a reflection of the massive national strive to implement the achievements of the scientific and technical revolution. Today, as an integral part of the European Union, the country has an extensive and thriving automation components market. Development trends The automation and robotics sector in Bulgaria managed to survive the global crisis in production, trade and supply chains related to the COVID boom and today is on the rise again, marking a new era for the high-tech ecosystem in the country. The automation components market is strongly influenced by global trends, such as the fight against climate change and the strive towards energy efficiency and sustainability, the ubiquitous digitalization and the transition to Industry 4.0 and beyond. More than half of the firms in Bulgaria (56%) used at least one advanced digital technology in 2023 and make more use of the Internet of Things (42%) and robotics (28%) than other types of solutions, EIB reports. Over the next three years, Bulgarian firms will prioritise investment in capacity expansion (32%), very similar to capacity replacement (31%). This is expected to positively impact the automation components marAutomation components market in Bulgaria ket as automation and robotics are considered to be essential means of both increasing efficiency and productivity as well as improving the sustainability of enterprises. A current report of the International Trade Administration (ITA), states that cloud technologies, Big Data and Internet of Things are growing technology segments in the Bulgarian ICT and automation sector, and emerging sub-sectors include cybersecurity, automotive electronics, intelligent transportation, smart city technologies, etc. In addition, many government tender opportunities exist for EU-mandated IT and ICT solutions: automation, computers, peripherals, data centers, security operation centers, 5G technologies/IoT, software, servers and other hardware technologies. Еcosystem specifics According to InvestBulgaria Agency (IBA), the robotics and mechatronics sector is among the leading branches of the local industry. There are over 100 operating companies in this industry with more than 6700 employees. The total annual turnover of the sector is around EUR 555 million and the productivity grows by 6% year-onyear, IBA informs. Most of the production of the sector is intended for export. The current automation components market in Bulgaria covers products for both industrial, (including process automation) and building/ home automation. Segmentation by technology encompasses electrical, electromechanical, pneumatic, hydraulic components, etc. By product type the automation components market consists of multiple different kinds of hardware: programmable logic controllers (PLCs), motors, drives, actuators, sensors, IoT and IIoT devices, safety components, human-machine interfaces (HMIs), discrete and analog I/O modules, machine vision cameras and systems, network and communication components, power distribution

south-east european INDUSTRIAL MARKET 17 SEE NEWS OMV Petrom commissions largest crude oil storage tank in Romania OMV Petrom commissioned a new crude oil tank, the largest in Romania, on the Petrobrazi refinery platform. The tank has been designed and built according to the latest standards in the field, for increased safety in use. It features double walls and a double base, an aluminium dome cover, and an inner floating lid to retain vapour emissions. The construction of the project took approximately two years, with investments exceeding EUR 23 million. The tank, taller than a 10-story building, has a total capacity of 60 000 cubic meters and can store raw material for the equivalent of 1,2 million fuel fills. The aluminum dome, the largest structure of this type in Romania, is an impressive construction, weighing 53 t, with a height of 15 m and a diameter of 72 m. The lifting of the dome into position was done using, for the first time in Romania, a pneumatic system consisting of 28 lifting devices, centrally operated. EBRD lends EUR 15 million to Serbia’s Feka Automotive The European Bank for Reconstruction and Development (EBRD) is extending a EUR 15 million loan to Feka Automotive, a Serbia-based producer of automotive lighting. Feka, which has supply contracts with leading international car manufacturers such as Toyota, Volkswagen and Stellantis, will use the funds to improve its overall efficiency and increase the availability of reliable lighting devices to customers around the world. The EBRD loan will help Feka, a subsidiary of Turkish Feka Otomotiv A.S, to construct a new energy-efficient production facility adjacent to its principal production facility near Cuprija in central Serbia. The funds will also be used for the acquisition of rooftop solar panels and the installation of new state-of-the-art, energy-efficient production lines and equipment. Photo: OMV Petrom components and power supplies, switches, relays, linear motion components, motion control components, encoders, robots, grippers, robot peripherals, etc. All those types of products find broad application in virtually every branch of modern industry, namely in the automotive sector, mechanical engineering and machine building, food and beverage production, chemical and pharmaceuticals, packaging, 3D printing, metalworking, electronics and semiconductor manufacturing, plastics production, and many others. The automation sector in Bulgaria encompasses a growing number of local and international companies, including manufacturers, traders, distributors, integrators, customers and users of a wide range of products in the automation, mechatronics and robotics segment. Multiple national and regional enterprises and a large number of European, Asian and global producers are represented on the Bulgarian market through own and subsidiary companies, local branches and offices, commercial partners, etc. Among them are: ABB, Beckhoff, Bosch Rexroth, Camozzi, Cognex, Emerson, Endress+Hauser, Fanuc, Festo, GE, Hiwin, Honeywell, ifm electronic, igus, KUKA, Lenze, Mitsubishi Electric, Murrelektronik, Omron, Parker, Pepperl+Fuchs, Pilz, Phoenix Contact, Rittal, Rockwell Automation, Schneider Electric, Schunk, Sick, Siemens, SMC, TME, Wago, Weidmueller, Wika, Yaskawa, Yokogawa, and many others. By profile, organizations in the Bulgarian automation ecosystem include startups, scaleups and established local and international/multinational companies, R&D centers, universities, etc. The majority of the companies are headquartered in the capital Sofia. Nevertheless, across the whole country and in most of the main industrial zones are located multiple production plants, research facilities and sales offices of national and foreign brands. Companies in the sector (A-L) In this section we will list some of the most prominent companies in the sector. ABB operates in Bulgaria with a central office in Sofia and four branches of the company in the country, developing four core businesses – Power & Electrical, Process Automation, Drives and Robotics & Discrete Automation. Akhnaton offers products and complete engineering solutions in the field of factory automation, process control and machine automation. The company offers a comprehensive portfolio of safety systems, industrial robotics cells, machine vision, building automation systems, etc. Among its key partners are Mitsubishi Electric, Congnex, Sick, Murrelektronik, Weintek, and so on. Aqua Jet 2011 offers on the Bulgarian market the products of the Austrian manufacturer of electric actuators Schiebel Antriebstechnik. Atics is an official distributor of numerous international companies in the field of industrial automation, including Leuze electronics, Wachendorff Automation, Laumas elettronica, etc. ATRI Robotics is an official representative and offers equipment in the field of automation of leading global companies such as Yaskawa and Axelent. Belimo Bulgaria’s range includes automation devices for heating, ventilation and air-conditioning systems, sensors for building automation, universal controllers, etc. Belopitov represents Balluff on the local market, offering its broad catalogue of sensors, switches, identification and machine vision systems and so on. Betelgeus is specialized in providing complete solutions in the area of primary and secondary coding, marking, labeling, packaging, product identification, etc. BG Robots specializes in robotics, automation, engineering and manufacturing. The company is an official system partner of KUKA and SprutCAM reseller in the country. Bibus Bulgaria is engaged in trading components, systems and comprehensive solutions in the field

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