The automotive industry is among the most prospective sectors in Bulgaria

Automation & RoboticsInterviewSouth-East European INDUSTRIAL Мarket - issue 4/2015

Dr. Till Truckenmueller, President of Automotive Cluster Bulgaria, for the South-East European Industrial Market magazine

Dear Mr. Truckenmueller, which are the highlights in the activities of Automotive Cluster Bulgaria? Please, tell us more about the structure and the main goals of the organization.
Automotive Cluster Bulgaria is an organization founded in 2012 by eight companies to support the automotive industry in Bulgaria in two key areas: attracting investors from the industry and assisting companies in the country operating in the sector on issues of prime importance.

We actively work towards improving the qualification of staff by offering practical training to improve the managerial skills of the staff of the middle management, training in methodologies such as Lean, Six Sigma, SPC, FMEA, VDA and other specific sectors. Together with our member companies FESTO and SMC we also offer technical courses as pneumatics, hydraulics, energy saving.

Part of our goals in this direction is to set up classes in the dual education for the automotive industry. We also work towards branding the sector. We wish to provoke among the public, especially among young people interest in the sector, in the companies that operate in it and create long-term and attractive jobs.

Recently we started issuing a newsletter that informs about innovations and opportunities in the industry. Currently, Automotive Cluster Bulgaria has 32 members. Companies outside the automotive industry are also interested in our activities.

What is your assessment of the current state of the automotive industry in Bulgaria? How would you estimate the level in the country compared to other European countries?
The automotive industry is one of the most promising and fastest growing industries in Bulgaria. This is a sector that creates high added value, creates jobs for low qualified staff as well as for highly educated people with good prospects for career growth and accumulation of valuable experience.

The fact is that over the past few years, the companies in the industry grow rapidly, build new factories and plan future ones which is a sign that the economic conditions in which they operate are favorable and competitive. The more difficult point is to persuade new companies to invest in Bulgaria because of the relatively bad image of the country abroad.

What are the rates of development of the automotive manufacturing in Bulgaria in the recent years and which are its leading divisions? What are the most significant achievements in terms of technology and innovation?
Along with the IT and BPO sectors, the OEM sector is among the most dynamically developing ones. The boom, on its part, leads to an increase in demand for qualified personnel. Therefore in February 2015 Automotive Cluster Bulgaria, together with the companies FESTO and SMC, initiated the setup of a training center to increase personnel qualification. Moreover, the cluster plans to participate in the creation of classes for dual education in professions such as mechatronics, electronics, etc.

Is the qualified staff in the sector enough currently? What are the opportunities for training and enhancing the competencies in this field?
The automotive industry requires specific knowledge and skills. Currently, due to the rapid growth in this sector there is a shortage of specialists that we as an organization and each company in the sector try to compensate with trainings. Therefore we launched an initiative with the support of the Austrian chamber to form classes in the dual training for the automotive industry. The aim is that business in partnership with vocational schools produces and provides the qualified professionals needed.

Which local conditions attract foreign investors in the country and what is the significance of these investments for the sector and the economy as a whole?
Very often in conversations with investors the main focus is the low level of salaries as a major advantage. However it attracts fewer companies. Other advantages are necessary. What Bulgaria can offer and that is very important for companies lately it is the political and economic stability of the country.

Bulgaria is among the countries with the lowest debt in the EU. For the potential investors it is also very important that the lev is pegged to the euro because they cannot afford large currency deviations. The EU membership is a priority for Bulgaria. Lower taxes are of prime importance, especially for the average business. Agreements to avoid double taxation which Bulgaria has concluded with most countries of Western Europe and the world are also taken into account.

An indisputable factor is the strategic location of Bulgaria. The pan-European Transport Corridor No.4 passes through the country (passes through Vidin). It is important for our members, especially after the construction of the bridge Vidin-Calafat.

What is essential for manufacturers and suppliers of automobiles and automobile parts is that they be able to reach all the important production bases that Bulgaria offers within 24 hours. That is why many suppliers withdrew from North Africa and China. In China parts are produced only for the market in the country or in Asia but not for Europe. In the future components for the market in Europe will be produced mostly in Eastern Europe from which Bulgaria also could benefit.

Specialists are of great importance. Bulgaria is the country with the most German-speaking graduates in Eastern Europe. Bulgarian students are one of the biggest groups in Germany.
Thanks to its well-qualified specialists Bulgaria gains popularity as a software center.

What are the specifics of the market in the country and the region? What opportunities on local and global scale are available to the companies in the branch and what are the most significant challenges facing them?
Typical of the automotive industry in Bulgaria is that there are but very few Bulgarian companies involved in the supply chain. These most often are companies of Tier 3 and Tier 4 or a lower level of supply. In order for a company to become a Tier 1 or Tier 2 provider the main challenge is to meet numerous criteria and requirements.

What is your forecast for the future development of the automotive industry in Bulgaria? Do you expect a new boom of interest in the local labor market by international companies?
Currently most of the possible big Tier 1 investors evaluate Bulgaria as one of the possible investment locations. Additionally we notice that some of the big companies move their production from China to Eastern Europe because of the better total cost relation.

The most important factors to win new investors is the improvement of the labour market, especially to push the dual education system, to shorten the administrative processes, to avoid all kind of corruption around the settlement of an investor and to improve the environment for the people to prevent that only few locations in Bulgaria will be selected as possible investment locations.

In total we are optimistic that the boom in the automotive sector will continue and of course a highlight will be the settlement of an automobile manufacturer. We try hard to win one of the worldwide OEM`s.

Could you tell us more about some of the most interesting and significant projects of the Cluster to improve the conditions in the sector? What similar initiatives are you planning from here on?
Automotive Cluster Bulgaria continually strives based on feedback from the business to improve conditions in the sector. Our main activities are associated with trainings of the personnel in the sector by organizing specific industry trainings and creating a closer relationship between students and teachers with businesses.

That’s why we arrange plant visits, presentations of key professions and opportunities for development for students and students from vocational schools. We plan on creating dual education classes for the sector from next year. A video clip for the automotive industry in Bulgaria is also in the process of creation.

Next year there will be special career days with representatives of the automotive industry. We are preparing several projects with the financial support from the European Union for technology transfer to develop new supply chains among the automotive, logistics and mobile technologies sectors.

We also participate as a partner in several consortia and work closely with organizations and companies from Italy, Spain, Finland, Hungary, Austria, etc. We plan the development of a project for setting up laboratories for the automotive industry. We have started many initiatives and hope to bring them to a successful end in next year.