[Business Scene] Vampovac: Tvin is undergoing rebranding and entering the niches of designer and hotel furniture

Since the Virovitica family Vampovac – which owns, among others, the companies Pro Wood, Contorte, and Select – took over the furniture factory Tvin in May last year, the city at the foot of Bilogora has suddenly stopped talking about the former industrial giant, the largest manufacturer of office furniture in the former state and a decades-long supplier to Swedish Ikea.

The accumulated problems in one of the symbols of Virovitica had until then been the subject of rumors, media reports, public debates, political discussions, and court rulings. Now – absolute silence. Neither good nor bad. If people no longer complain to their families, neighbors, friends, and the media, they must be satisfied, we conclude at the beginning of the conversation with the owner and CEO of the Contorte group, Hrvoje Vampovac, and the director of Tvin Mario Mikolaš.

– We have received such information too – they respond with a slight dose of pride as they lead us into a spacious office on the second floor of the administrative building, which they want to restore to its original purpose after three decades and turn it into a showroom, a modern representative space with well-furnished meeting rooms, conference halls, exhibition space, and a mini-museum about the history of the factory founded in 1913.

The Vampovac family acquired the majority stake in Tvin after the greatest crisis in the company’s modern history, which began in 2017 with an attempted hostile takeover and resulted in the dismissal of the longest-serving director, Ivan Slamić, in 2019 and the appointment of a new management that continued to achieve poor financial results.

The historical link between Contorte and Tvin is Mirjana Vampovac, the former head of exports and commercial director of Tvin. For various reasons, more business than private, she left Tvin and started her own business, which her son Hrvoje joined in 2008 after finishing college.

The company Contorte was founded in 2005, focusing exclusively on representing and distributing furniture manufacturers from Croatia, Serbia, and Bosnia and Herzegovina to foreign markets, and quickly branded itself as the largest exporter of case goods and solid wood furniture. They experienced the greatest growth during the global economic crisis from 2008 to 2010. During that period, they represented the largest number of furniture manufacturers, some of whom went bankrupt, leaving them with debts, so they began to take them over one by one. Today, the group operates nine companies with a total of 1,250 employees.

– First, we took over a small production facility in Suhopolje and realized that production is a living thing, completely different from trade, a completely different world. We bought the former DIK Đurđenovac in bankruptcy in 2015 in very poor condition. Infrastructurally and mechanically, it was chaotic. Little by little, we brought it into order, renewed the infrastructure, acquired more modern machines, renamed it Pro Wood, and now it looks nice. We are proud of the team that formed in Đurđenovac. There we produce quality solid wood furniture that can compete with any European production, mostly for German and Austrian partners – says Vampovac.

At the end of 2015, Contorte leased the facilities of the former textile factory Virovitičanka and launched its own production, in which they invested significant amounts from EU structural funds, loans, and their own resources in the development of production activities in the Virovitica-Podravina and Osijek-Baranja counties. They quickly became serious competitors to the still large and powerful Tvin, surpassing it in total annual revenue by 116 million kuna, which propelled them to the top position as a manufacturer of solid wood furniture in the country.

By connecting their companies through central procurement and sales, they achieved a considerable volume of business. They represent less and produce more, which is logical – since Croatia joined the European Union, everyone has easier access to foreign markets. We ask what the ratio of revenue from representation and production is today. Representation is now negligible, emphasizes our interlocutor, almost 95 percent is their own production.

– To be clear, sales are still the best business – claims Vampovac.

– So what made you go into production?

– We had no one left to buy from – he replies.

With its ownership portfolio, the Contorte group is one of the strongest companies in the Virovitica-Podravina County with a tendency for constant growth. The group achieves an annual turnover of 250 million kuna, and the goal is to double it in the next five years, with the same number of employees and a new machine park.

– Last year was extremely tense for us. We planned to consolidate the company and markets and reduce the number of employees, and then Tvin happened. We did not intend to enter ownership, but it was either the factory’s collapse or the announced bankruptcy. Let’s not kid ourselves, a lot was happening both inside and outside. There was a lot of stress; I could write a book – hints Vampovac.

– At least tell us the titles of each chapter?

– Ah, no! That’s behind us; in the end, everything turned out well – he is categorical, asserting that Tvin recorded a production increase of 60 percent last year in the second half, after three extremely bad years, and thus an increase in revenue.

This good is reflected in the following: one million kuna was invested just in the renovation of the boiler room, water filtration, and the renovation of part of the roofs; had this not been done, the factory would not be operating today; about ten completely new machines were purchased, and we continue to repair the neglected and poorly maintained machine park; a total of 100 million kuna will be invested in Tvin over three years, which is a huge amount in this industry. But the greatest success, our interlocutors believe, is the relationship with the workers and the return of trust in management. At least 30 former workers who left for some reason have returned. Only a few good craftsmen and foremen have left in the past ten months, and those to Western European countries. Salaries have been adjusted, and the policy of increasing salaries and additional benefits for employees of the Contorte group continues. Some people were sent to retirement, some were laid off with severance pay, and about fifty new young workers have been hired, says Vampovac.

– Until we fully settle the debts, we cannot raise everyone’s salaries by 20 percent at this moment. A salary review will happen very soon; it is inevitable. We will stimulate the best and de-stimulate the poor performers. One is a family environment and a fair relationship, and another is when we draw the line at the end of the year and see if we did well and if we have coverage for good salaries. We are in constant contact with the local government, the Employment Service, secondary schools in Virovitica and the surrounding area, and the faculties of economics, computer science, and forestry in Zagreb and Osijek. We organize an internal job fair and invite them all to come here for internships; we will keep the best – explains Vampovac his staffing strategy.

Director Mario Mikolaš adds that Tvin’s problem was almost equal in the ratio of production and non-production staff, which is probably a legacy from socialism.

– It was a tremendous overhead burden: what you need you don’t have, and what you don’t need you have in abundance. Today we have 550 workers; the average age in production was quite high, above fifty, now it is somewhat lower. It is difficult to retain a good worker because they can leave for better conditions, and it is hard to fire a poor one. We talk individually with people, psychologically boosting their morale. Our doors are always open; we are constantly in production, in communication with the managers – says Mikolaš.

Long-term plans are to return Tvin’s name to the number one position in the office furniture category. They expect a big comeback with the offer of smart offices with implemented virtual reality, modern design, and innovative solutions for practical use. For example, smart office desks that will have leather applications for computer mice and the ability to wirelessly charge the entire surface for mobile phones. This project is being developed in collaboration with Hungarian partners through the B-light competition conducted by Hamag Bicro.

– The ultimate goal is to produce a quality and functional product that will be a hit in the market and achieve a higher price – plans Vampovac, revealing that they are currently working on equipping Podravka’s offices, which Tvin fully equipped more than 40 years ago.

We shift the story from Tvin to the group. In Contorte, they want to take over the domain of hotel furnishing. Although new to this market, they have already secured five large projects, two of which are the largest this year in Croatia.

– Currently, three are underway for which they competed against much stronger players with significantly longer experience in this market. These were not dumping prices; we are the ones who can guarantee that we will complete the job on time. Everyone wants to open hotels this season; we have people who can handle it. On that basis, we are building our reputation. If we are successful now, we will be a very desirable partner for future projects in the fall – our interlocutor is optimistic.

In addition to office furniture and hotel furnishing, as well as the core business – the production of solid furniture that is entirely exported – they want to try their hand in the segment of innovation and design – high class solid furniture and designer furniture with a combination of materials. One of their trump cards, they reveal, is disinfection cabinets and digital furniture, in which they want to be pioneers in the global market.

– How to transition from high-volume production to designed furniture – we ask?

– Currently, it is extremely difficult; we are limited by machines for high series. We are now replacing them with the latest generation machines. We are entering a serious story in which we want to be the largest furniture manufacturer in Eastern Europe. Our greatest advantage is the complex market and constant and secure foreign and domestic customers, large wholesalers from Austrian holdings to smaller retail chains in Slovenia, Austria, Germany, France, and England, but the long-term success of the entire group will now depend most on Tvin and the upcoming investment cycle in the Virovitica-Podravina and Osijek-Baranja counties – emphasizes Vampovac, adding that management is grateful to workers from both counties for their patience during the takeover of Tvin, as other companies were somewhat sidelined during that period.

We leave the Virovitica factory and photograph a large billboard made of seven dark-colored boards dominated by the orange recognizable logo of the company that will soon be history. In its place, a large screen will stand from June, on which the new logo, photographs of new products, data on the number of employees, total production, exports, new investments, the amount of energy saved based on solar panels, and other interesting information will rotate, which the new owners want to use to spark interest among the youth in the tradition of the woodworking industry and to restore a sense of belonging to the citizens, to see that Tvin is theirs and to cheer for it.

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