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Business and Politics

Gordan Kolak: I am not a proponent of subsidies as history has shown that such projects fail

Author: Edis Felić

September 18, 2024

The discussion on how companies are preparing for the next year took place at a round table following the conference Day of Big Plans, where the leaders of Franck, Končar – Electrical Industry, Croatian Post, and Alarm Automation shared their thoughts.

Ivan Artuković (Franck) stated that they have had headwinds so far as their key costs have risen, which they could not compensate for with either positive economic policies or the market. After the pandemic, their logistics routes stabilized, prices fell, but now the Suez is practically closed, it takes longer to supply coffee raw materials, and transportation has become expensive again.

– However, we have secured the raw material. In recent years, we have articulated demands through HUP for the abolition of the special tax on coffee, which constitutes a third of the price; I hope the Government will consider this next year – said Artuković, adding that in response to the labor shortage, they have invested significantly in automation and production monitoring.

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Boris Popović (Alarm Automation) stated that they had to raise salaries in their company after they were increased in the public sector. The entire company is growing over 20 percent annually, but it is difficult to keep up with that growth with the number of skilled employees. The plan is to hire 30 people annually, ten in Croatia and 20 abroad. They currently have a total of 250 employees. Regarding investments, Alarm Automation has purchased a logistics center from Intereuropa in the Primorje-Gorski Kotar County.

– The industry will grow organically by over ten percent in the next 20 years. We need three million euros for the new 30 employees each year because each job is worth 100 thousand euros. As long as we can do that, there will be no problems. Regarding challenges, we are ready for quick adaptation – said Popović.

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Ivan Čulo (Croatian Post) stated that the company is growing by 20 percent annually in terms of revenue, but salaries are also increasing. They should follow the growth of productivity. Croatian Post (HP) has reduced the number of employees by 2500 in the last seven years, while productivity has increased.

– We need to change processes to adapt to the labor market. If we had not worked on increasing productivity, we would not have such a good company as HP. However, we will have to turn even more strongly to foreign labor, so you will see more postal workers from other countries – said Čulo.

HP’s fleet consists of 1300 vehicles, of which 400 are electric (a combination of bicycles, mopeds, and other vehicles). So far, 300 parcel machines have been installed, and new ones will soon be installed.

– We spend up to eight million euros annually on fuel, and by investing in electric vehicles, we could save significant funds – said Čulo.

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We must start behaving market-oriented

Gordan Kolak (Končar – Electrical Industry) reminded that Končar’s value has grown in the last five years and will continue to grow. As a result, pension funds, which have been part of the ownership structure of the company for eight years, are under pressure to sell shares as the value of the companies increases, creating pressure to sell shares. Kolak sees the reason for this growth in the green policy adopted by the European Commission in 2019, as investments in electrical infrastructure began thereafter.

– This is a process that will take a long time, and we have also implemented structural adjustments within the company. We have changed our approach to the market and sales using our own resources, and we have digitalized. In the first six months, the value of our contracted products is at the level of 1.8 billion euros. Contracting is going faster than realization, so the order book should grow. We are entering the next year with clear goals and will need to strengthen our capacities and staff – said Kolak.

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Speaking about the rise in energy prices, he said that the price of electricity that HEP paid on the European market was extremely high, so this state company subsidized consumption in Croatia. However, he believes that in Croatia we are not aware of the real price of energy. The EU has adopted a green plan, which costs money, and we must be aware that we have more expensive gas and oil from Russia, as well as electricity from Europe.

– We need to raise awareness of the situation and start behaving market-oriented. I am not a proponent of subsidizing anything, as history has shown that such projects fail. Additionally, we will need to invest in the development of electrical infrastructure – said Kolak, adding that Končar – Electrical Industry is expanding its capacities in all its productions.