[Business Travelogue] Cemix Concludes Another ‘Best Year Yet’ Despite Drastic Cost Increases

The pandemic did not stop their business; they achieved record results, and while everyone is wondering where to find workers, people are asking them for employment. This is not a provocation, but a summary of the conversation that Željko Pecak, a member of the Management Board and director of Cemix Croatia, had with the Lider team.

A few minutes’ drive from the center of Đurđevac, alongside a long factory facility, laboratory, and high storage spaces, is the administrative building of Cemix, which is already indicated from afar by branded trucks. For more than twenty years, tons of construction materials have been produced and developed here, which are sold throughout Croatia and exported to Slovenia, Hungary, and Bosnia and Herzegovina.

The German-Austrian company Lasselsberger-Knauf, which operates in eight Central European countries, came to Croatia in 1997, and three years later, it expanded its sales activities with production. Along with the factory in Đurđevac, Lasselsberger-Knauf, which has been called Cemix since December 2020, further expanded its production capacities in Croatia by investing 23 million kuna in the Zapužane-Benkovac factory of construction powder materials. This facility, for which the company received a special recognition ECO Lider invest, was opened in 2018 and employs twenty people. Cemix Croatia has a total of sixty employees.

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Records and Production Reality

This manufacturer of construction materials achieved a gross revenue of 79 million kuna last year. And behind them, as Pecak says, is once again the best year yet. However, although they continued a steady growth that can be traced back to 2015 and earned five million kuna more than in 2020, post-pandemic difficulties have reflected on profits, which will need several good years to return to the levels they were at.

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Željko Pecak, Cemix

photo Ratko Mavar

—- Costs have drastically increased. It literally happened that in the evening we received information that we would receive raw materials the next morning, when deliveries start, under new conditions and new prices. Generally speaking, additives have increased by up to 80 percent, packaging and pallets by about 40 percent, transportation costs have risen, gas has been 46 percent more expensive since October, and on top of that, we have also raised salaries. Of course, all these costs have not been passed on to the market. We will try to adjust prices, but it still will not be to the extent that we follow the increase in raw material prices – emphasizes Pecak, who has been at the helm of Cemix for 14 years, and prior to that, he got to know the company ‘inside out’ as he was employed at Knauf Zagreb in 1994, before the merger of that company with Lasselsberger construction materials. In his 28-year career at the company he now manages, he has worked in various positions – as a commercial-technical advisor, sales manager, procurator, and then for three years as deputy director.

In 2020, the company achieved a record profit of over seven million kuna, and shortly before the outbreak of the coronavirus pandemic and the strict epidemiological measures that followed, Cemix celebrated its 20th anniversary. It was on 20.02.2020 at 8 PM, and although they invited more guests, exactly 220 responded, the company director recounted with a big smile. Although a challenging period followed, work in construction did not stop. Therefore, orders continued to arrive regularly.

Investment Standstill in Tourism

– It is evident that last year we had sales growth throughout Croatia, except in the area from the Šibenik Bridge to Dubrovnik. There, uncertainty was most felt; people did not invest because they did not know whether there would be anything from tourism or not. I hope that this spring, considering last year’s events and a successful tourist season, investments will increase in that part of Croatia. We expect that this year our sales will be five to eight percent higher compared to last year – says Pecak, who notes that the increase in demand for reconstruction after the earthquake is still not felt, but he is convinced that this impact will also be felt over time.

He adds that immediately after the earthquake, Cemix donated truckloads of materials to Markuševac and Banovina, and as one of the founders of the Croatian Association of Manufacturers of Thermal-Facade Systems (HUPFAS), they also participated in writing recommendations on how and with which materials to renovate damaged buildings. Within HUPFAS, which is the initiator of energy renovation of multi-family buildings, Cemix conducts training for architects, investors, and contractors to handle new materials as effectively as possible. Although the pace of energy renovation has slightly slowed down due to the earthquake, the pandemic, and the lack of workforce on the ground, it is expected that these activities, which generate demand for construction materials, will soon fully recover.

Plans

Since they sell their products exclusively to stores, Cemix plans to expand its sales network to the western part of Slovenia this year and strengthen its presence in Bosnia and Herzegovina, where they have long-term plans. Namely, they have had an employee in Bosnia and Herzegovina for four years who mediates in sales and opens the market; in the border area along the Sava, they are already delivering significant quantities of goods. However, there are plans to build a plaster factory there as well. They have already found a location, but approvals from the company owners are still awaited for this project.

For now, there are no plans to expand production capacities or open new jobs in Croatia, but efforts are being made to make working conditions for employees even more stimulating.

The Workforce is Power

– Our biggest challenge is to continue operating stably. It is very important that employees have work to do and maintain their current above-average income level for both county and Croatian conditions. The average salary here is just below nine thousand kuna. Since January 1, we have increased salaries, we regularly pay Christmas bonuses, special gifts for children, we give employees hams for Easter, and when we achieve annual plans, we also provide a 13th salary. We have a lot of inquiries from our area, as well as from neighboring Bjelovar-Bilogora and Virovitica-Podravina, as well as Zadar and Šibenik counties; people would like to come work with us. That says a lot, just like the fact that in the 28 years I have been here, there has been almost no employee turnover – Pecak proudly stated that he does not share the fate of many employers who are searching for employees with a candle.

Such employee loyalty also allows for the creation of management staff within the company, which the director is extremely proud of, as well as several AAA credit excellence certificates and five Golden Kuna awards for the best small or medium-sized enterprise that the Croatian Chamber of Commerce has awarded them over the years. In Cemix’s laboratory, some new products for greener construction are also being developed, but these are processes that take time before a product goes into application.

We step out into the yard where we meet the heads of several departments who have grown within the company. The director certainly wants us to meet them because, as he says, teamwork is responsible for every success. We do not enter the production facilities because special care is taken to ensure that these employees are not exposed to the risk of infection, and we decline to climb the silo to enjoy the view of the Đurđevac valley this time because our fingers are freezing from the winter. A few more photos to finish, and we leave.

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Željko Pecak, Berislav Horvat, Ladislav Gračan, and Davor Bistrović, Cemix

photo Ratko Mavar

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Cemix remains behind us with its large parking lot and several trucks that will set off on the road and take part of someone’s future building, house, garage. It is all a more expensive journey and material, but a new future is being built regardless of everything.

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