Challenges and Opportunities Before Manufacturing Sector in Bulgaria

On February 17th, 2022, AmCham Bulgaria organized its first roundtable on Manufacturing, as part of its “Industries Round Tables Series”. A group of 20 representatives of 16 members took part at an open, frank, and fruitful discussion on the challenges and opportunities before this sector. The meeting was hosted by Visteon Electronics at Capital Fort, Sofia.

Manufacturing sector at AmCham is represented by 42 companies that make their production in Bulgarian factories and deliver it in multiple markets in Europe, Middle East, Africa, North America. They are among the largest employers within AmCham and in Bulgaria.

The event was opened by Petar T. Ivanov, CEO, AmCham Bulgaria who presented chamber’s priorities, main activities and projects, and the current development of the organization. He emphasized on some quality-based content, prepared by the committees’ experts with the support of prominent global consultants. As examples he mentioned the 2021 AmCham Healthcare as Investment Report, and the upcoming 2022 AmCham Energy Industry Decarbonization Study, which will be presented to institutions, stakeholders, media in February. Among the priorities he pointed out Rule of Law, Healthcare, Energy, Digitalization, and Human Capital Development. Mr. Ivanov moderated the discussion and gave additional insight while tackling with various topics in it.

Addressing some of the strategic challenges for the sector, Ivan Mihaylov, AmCham Board Member and Director Technical Centers – Bulgaria & Romania, Visteon, outlined the expected results of the meeting. He pointed out the need of more unite and structured approach within AmCham with regard the institutional dialog. “AmCham Bulgaria could be the platform for presenting the main challenges to any government. This is a prominent business association that unites reputable companies with various products, markets, and supply chains. However, I believe that we have got a lot in common – labor shortage, lack of favorable investment environment, slow bureaucracy, legislative hurdles, administrative burden, and many more” – he said during his remarks.

Ivan Mihaylov presented some of the results of the recent survey on Manufacturing. In December 2021, AmCham asked its targeted members with few questions about their view on issues, needs, plans for 2022, as well as probed their opinion if a future Manufacturing Committee is needed to be established in the chamber. A group of 16 companies representatives shared their insight.

Challenges and Institutional Dialog

Answering to the question on Business Environment Factors that have the biggest negative impact on their companies, top 3 answers were Energy prices and lack of energy diversification, CoViD-19 and post-covid consequences, and Skilled labor shortage.

“These answers show that Bulgaria is losing competitive advantage that was in the foundation of the of the successful business models that many or all companies of this sector followed so far. Adding to this, we are witnessing some weak investment climate for years” – said Ivan Mihaylov.

Second most interesting question – “Investment Plans or Reductions This Year” – showed that manufacturing companies plan to raise salaries of their employees, also they will invest in improvement of their technological base, as well as to make new investments and/or to expand their operations. The third top answer is that they will invest in their employees training this year. “It shows the responsible approach that those businesses and their leaders have with regard the sustainability and continuity of their operations despite covid pandemic, energy and other crises” – commented Mr. Mihaylov.

The open discussion followed with shared observations and suggestion of the majority of the senior leadership attendees. They expressed their concerns on various issues such as labor shortage, lack of labor mobility, the low productivity levels, the legislative gaps that hurdle or obstacle business either to meet their operation needs or to grow. It was mentioned the need of improving the business culture of the generations that are part of the current workforce and those that will come – both government and business should speak about the work as virtue and an opportunity for self-development and the creation of added value through work.

Following the 2,5 hours of discussion, Ivan Mihaylov wrapped-up the session with the potential next steps, such as: the need to establish a direct communication line and start of a dialog with the relevant institutions; start of some membership exchange (virtual communication, on-site visit/s through the year/s). The overarching topics for this community are labor force realization, digitalization, and quality of data. In order those activities to be realized and the needed processes to be structured, a future Manufacturing Committee should be established.

Manufacturing Community

The meeting was attended by Ivan Kehayoff, Honeywell EOOD, Tommy ver Elst, Sensata Technologies Bulgaria EOOD, Darina Stoyanova, Prestige 96 AD, Anton Petrov, PPS Manufacturing, Emil Iliev, Woodward Bulgaria EOOD, Yordan Lambrev, Zobele Bulgaria EOOD, and representatives of Industrial Holding Bulgaria, Techceramic-M, Titan Zlatna Panega Cement, Jacobs Douwe Egberts BG EOOD, Walltopia AD, Nasekomo AD, Schneider Electric Bulgaria EOOD, VSK Kentavar – IZ Dinamika EOOD.