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    Copyright: The following text is for personal information only. Any professional use or publication in written or electronic form is subject to an agreement with AIM, 17 rue Rebeval, F-75019 Paris, France

    MON, 30 SEP 1996 22:47:17 GMT

    Difficulties and Ruin of Large Enterprises


    Tu quoque, fili! (You too, my son!) This was exclaimed by many when construction enterprise Pionir from Novo Mesto went bankrupt. It was just another of former Slovenian giant enterprises which collapsed under burden of large economic problems. It is just another in a series of enterprises such as Elan, Meblo, Primex, TAM, Vidmo from Krsko, Iskra from Kranj and other firms which served as examples for illustration of successful Slovenian economy and pride of its politicians, while nowadays, only courts and receivership deal with them, and employment offices are the only ones concerned about their sacked workers and labour surpluses.

    It is interesting that during the reign of the planned-market system, Slovenia managed to resolve problems of large enterprises. If we just recall financial rehabilitation of giant enterprise Gorenje which was exceptionally successfuilly carried out by Herman Rigelnik, later chairman of Slovenian parliament and the current director of the equally successful Autokomerc. Times are changing, and therefore nowadays, instead of celebrating half a century of its survival by constructing roads from Iraq, Lybia, Algeria, all the way to Poland and former Soviet Union, as well as former Yugoslavia and open champagne bottles, Pionir is awaiting bankrupcy procedure in court in Novo Mesto. Results of their efforts will be enjoyed by generations in Sarajevo, along the Adriatic and the Black Sea, and in Moscow. Rumour goes that the main reason of its collapse are financial difficulties due to the property in Croatia which cannot be sold. That is the reason why it took loans from Slovenian banks for which they had to pay back an interest amounting to 2.5 billion tolars in the past three years. Pionir which used to employ up to four thousand workers, is now continuing its activities in the firm called Pionir Standard which employs only about ten workers of the former total number. These are results of wrong economic policy in the past. Had there been more understanding for the advice of the former and later removed from office president of the Slovenian executive council Stane Kavcic that Slovenia's future was in development of tourism, banking and trade, many industrial giants which create difficulties to Slovenian economy would have not been founded - from various steelworks to clay and aluminium factory in Kidricevo and finally to the overcapacitated construction firms which have collapsed ingloriously after the loss of the former Yugoslav market.

    During this summer, TAM from Maribor was in the focus of interest of resolving problems of Slovenian economic giants. Several directors have left it, so the Development Fund of the Republic of Slovenia nominated a new team who also left and finally the Government was forced to reach a decision to call for tenders for TAM. That is how a whole series of small enterprises were created out of ruins of the collapsed TAM. In the best years Maribor car factory (TAM) employed between eight and nine thousand workers, while it called for tender with three thousand workers. According to words of Valter Nemac, director of the Development Fund of the Republic of Slovenia, in the next three years about three thousand people could find employment in it again. To Maribor which is badly stricken by unemployment, this could mean a lot. The first trace of hope appeared with a deal offered by Saudi Arabia which ordered construction of 500 buses.

    One of the typical former giants is Litostroj from Ljubljana, better known by its former name "Tito's Litostroj Complex". The factory is known mostly for manufacturing enormous turbine engines for hydro-electric power plants and similar products. In the past years, Litostroj was faced with diminishing number of orders and a sudden drop of liquidity. As such a problematic firm, it is very difficult for it to get a credit both from domestic but especially from foreign banks, Litostroj got into a very difficult position. Workers did not receive several salaries and they went of a strike. This brought about resignation of director Duhovnik, who had proved insufficiently capable to draw the enterprise out of trouble. He had expected too much help from the state which is not ready to finance all the abortive projects of the past.

    Large majority of Slovenian economic giants were designed according to the twenty-million market of former Yugoslavia. When that market, after Slovenia gained independence, narrowed down to hardly two million inhabitants of little Slovenia, the whole world crumbled down into thousand pieces for some of them. Putting these pieces back together has not been completed yet. Who will survive after all, will be clearer only after Slovenia finishes restructuring its economy and when it brings its process of property transformation to its end, and when it approaches standards of the European Union. All things considered, Slovenian giant enterprises are on their way to perish like dinosaurs and leave room to more flexible and more adaptable enterprises.

    Milan Povirk, AIM