The Bulgarian manufacturers of instrumentation and controls in the EU

BusinessSouth-East European INDUSTRIAL Мarket - issue 1/2007

The expectations of the branch for our membership in the European Union are rather positive, shows a study organized by the editors.

“We also have a contribution to the industrial automation”, we have good reasons to claim this today in the dawn of our EU membership. Because we meet the European Union with well developed local production of instrumentation and well standing companies that have already won position on the Bulgarian industrial market as well as on a series of foreign markets. Therefore, we have good reasons to ask questions in the beginning of our EU membership – Will Bulgarian manufacturers of instrumentation and controls (I&C) find their own place on the common European market? Will they preserve their own independence or will they be taken over by their far more powerful European fellow-companies? Are the products they manufacture compatible? These are only few of the answers the industrial automation branch is seeking. Because the present moment is of utmost importance to I&C production…

Having just overcome the stagnation of the nineties the Bulgarian manufacturers face another even bigger challenge. On one hand, they have to operate on large scale markets alongside powerful manufacturers having long time experience, solid funds, proven sales and marketing strategies, wide product range with European certificates. On the other hand, EU membership multiplies the number of potential customers, increases the probability of revealing and occupying market niches that are not interested to major players and, besides, provokes the interest of western companies to various forms of cooperation in the name of the mutual economic prosperity.

Will our native manufacturers have engineering, production and human resources as well as the required knowledge and flexibility to benefit from the united European market? We will learn this answer in the future. However, there is still hope

we can preserve our home production

of instrumentation. Because we are talking of high technology products requiring serious engineering potential and technical know-how, which means high technology level of the branch as a whole. And after all, the added value remains with us. Besides, we should bear in mind that these manufacturers continue the good traditions of microprocessor technologies from the years of socialism. Without making fuss around themselves and drawing the attention of the state and the public to their problems they succeed in preserving, developing and strengthening their position as serious market players occupying the right market niche.

We tried to find answers to all questions concerning

the future of Bulgarian production of instrumentation and controls (I&C)

in the European Union jointly with the local manufacturers from the branch. The editors acknowledge the contribution of their colleagues, who responded to the initiative to share their views on I&S current state and future in connection with our EU membership despite the pressure of work they experience. The following companies took part in the inquiry organized by the Engineering Review magazine: Vector 1, Delta Instrument, Interpriborservis, Intiel, Izomatic Komplect, Komikon, Komeko, Markon, MIG - GG, Microsyst, Ring Engineering, SGK Skala, Sonix, STS Electronics and Unisyst Engineering. We also acknowledge the contribution of our colleagues from Termo Electronic, whose answers were not calculated in the study results since they were received after the editorial completion of the magazine copy.

Below is presented a summary of the information and we do hope that the results speak for themselves expressing the moods, spirits and expectations of the branch as a whole.

Figure 1 

Figure 1

A positive fact is that more than half of the inquired (58.8%) have positive expectations for the EU membership of Bulgaria. Next come the optimists with 35.3% followed by 5.9% rather pessimistic expectations. However, none of the inquired marked the answer “I am a pessimist” or “The situation will never change”. 

Figure 2 

Figure 2

The question; “Are you acquainted with the business rules in the EU member-states” was answered “not very well” by 53% of the inquired. An equal percentage of inquired answered they were “well-acquainted” or ‘little acquainted” with EU business rules - 17.6%. Only 5.9% of them answered they had excellent knowledge of the rules. The same percentage of 5.9% answered they had no knowledge of EU business rules whatever. 

Figure 3 

Figure 3

A significant portion of the branch (23.4%) is not familiar with the European standards and regulatory requirements in their field of production. Still, 53% of the inquired think they are familiar with the regulations and the standards. Only 11.8% of the inquired have excellent knowledge. The same percentage of 11.8% of the specialists answer they have little knowledge. None of the inquired answer they had no knowledge of the regulatory and standardization requirements. 

Figure 4 

Figure 4

Almost half of the inquired (47.2%) know well the market offering of products similar to the ones they manufacture. 17.6% of the inquired have excellent knowledge of the market offering and 23.4% of them do not know it very well. The answer “I have little knowledge” and “I have no knowledge” was given by 5.9% of the inquired.

Somewhat above half of the inquired (58.8%) know well the price levels of products similar to the ones they manufacture in other member-states of the Community. The percentage of those, who have excellent knowledge, is 17.6%; the same is the percentage of those, who do not know very well the prices of similar products. Only 6% have little knowledge of the prices of compatible products manufactured in other EU countries. 

Figure 5 

Figure 5

An impressive share of the inquired Bulgarian manufacturers (88.2%) thinks that the prices of Bulgarian I&C products will rise fluently after EU accession. Only 11.8% of the inquired express opinion that the prices of products manufactured in Bulgaria will preserve their current values. None of the inquired foresees peak rise of price levels or any possibility for the products to become cheaper. 

Figure 6 

Figure 6

Those, who are familiar with the home market of I&C products find logical the opinion of 76.5% of the inquired Bulgarian manufacturers that after EU accession foreign manufacturers not presented so far will come to the country but they will be small companies since the leading ones are already here. Comparatively smaller part of the inquired (11.8%) expect big foreign manufacturers to enter the Bulgarian market and 17.6% expect that foreign companies that are not presented so far in Bulgaria will not seek commercial realization of their products here. The sum of percentages is bigger than 100 because some of the inquired give more than one answer.

In addition to the opinion of the manufacturers regarding the entry of new foreign companies we asked if the Bulgarian I&C manufacturers will have better chances after EU accession. A serious share of the inquired (64.7%) expresses opinion that the chances for market realization of the products they manufacture will increase insignificantly. Optimistic are only 29.4%, who expect far better business opportunities. A small share of the inquired (5.9%) does not expect any change whatever. Neither of the Bulgarian manufacturers answers that the situation will become worse. 

Figure 7 

Figure 7

Comparatively evenly are distributed the answers of Bulgarian manufacturers to the question “Do you plan to make a market breakthrough in other EU member-states?” Almost 1/3 of the inquired (29.5%), already export products to countries from the European Community. The same percentage of 29.5% plan to market their products on the European markets in the near future. More modest is the share of manufacturers planning to export production to the Union in the more remote future – 17.6%. Neither of the inquired stated that he has no plans to export production but 23.4% do not have any specific plans so far.

In parallel with the expected by Bulgarian manufacturers better opportunities for realization of their products on the European markets the prevailing part of them answer positively the question if EU membership will improve the business climate for export to countries outside the EU. More than half of the inquired (58.8%) assess favorably the EU annexation with regard to product realization outside the EU member-states. Far less of the inquired participants (35.3%) think that these opportunities will increase insignificantly and 11.8% do not expect any change. Neither of the inquired participants answered that the label “Made in EU” will increase considerably the chances for market realization in countries that are not members of the Union. 

Figure 8 

Figure 8

Answering the question “Will you seek partnership with foreign European companies to sell products in the EU?” 68.75% of the inquired state that they will sell within the community without partners. 25% of the manufacturers will act independently. Half of the inquired participants plan to manufacture for other companies. The sum of percentages is higher than 100 because some manufacturers gave more than one answer. Neither of the inquired participants answers “No, I will not sell in other European countries”. 

Figure 9 

Figure 9

The prevailing part of the inquired will seek opportunities for project funding by the European development programs, 18.75% have already won project funding, 18.75% of them are in the phase of preparing application documents, 43.75% are in the process of getting familiar with the opportunities. The share of skeptics, who see no sense in applying for funding by European programs, is 12.5%. The answer is “No” by 6.25%. 

Figure 10 

Figure 10

Outside EU the neighboring countries have the highest potential for marketing I&C products manufactured in Bulgaria. This is stated by a serious percentage– 82.4%. Next to our neighbors comes Russia with 35.3%. Opportunities for market realization exist in the countries from the Near East as well, say 23.5% of the inquired. Equal shares of 17.6% point out USA and the CIS countries. The least percentage of the inquired (5.9%) sees opportunities for successful business in Asia. The sum of percentages is more than 100 since some of the inquired gave more than one answer. 

Figure 11 

Figure 11

Almost half of the inquired (43.75%) think that I&C products manufactured in Bulgaria lag in quality behind their western analogs. Similar is the share (37.5%) of those, who claim that Bulgarian products lag in quality insignificantly behind those manufactured in the older community members. Only 6.25% define the quality difference as essential, while 12.5% think there is much to be done in this respect.

The answers to the question “Do Bulgarian I&C products comply with the European requirements?” can be divided into two groups. The first group of 42.8% states that the Bulgarian products fully comply with the European standards. The second group of a bit higher percentage (57.2%) thinks that there are differences but they are not essential. The manager of Microsyst, eng. Dimitar Markov, comments as follows: “There is a big difference in the quality of products from different manufacturers. A small part of the products comply fully”. 

Read Also: Manufacturers about their business opportunities in the EU




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