By: Vida Kocjan
Last week, two multinational-owned companies announced closures or relocations of part of their production – Velenje-based Gorenje and the Šempeter company Mahle, owned by the German multinational of the same name, which is moving part of its production to Bosnia and Herzegovina (BiH) and Hungary.
Due to the relocation of production to Bosnia and Herzegovina (BiH), Slovenia will lose 340 jobs, and the transfer of part of the production to Hungary will result in a loss of 270 jobs. This is not a new development, as the government coalition tried to present; Robert Golob sparked a particular circus over it.
Slovenia as a stepmother state
At the Šempeter company Mahle, part of the namesake German group and employing approximately 1,800 people, they announced back in March that layoffs would occur this year. They stated that the number of employees would be reduced by about a third, equating to around 600 jobs. At that time, they also explained that they were relocating the starter production programme to a new factory in Aleksandrovac in BiH, and the move to the new factory has already begun.
The N1 Sarajevo portal reported at the end of January 2024 that Mahle had completed the construction of a €20 million factory in the municipality of Laktaši, located near Banja Luka, the second-largest city in the country. They reported that this is one of the largest factories in BiH, expected to employ up to 700 workers in the future. Iskra has also built a new factory in Laktaši.
Gorenje closes facility in Rogatec
Home appliance manufacturer Gorenje is closing its component production facility in Rogatec, where 120 people are employed. By the end of the year, they will significantly reduce production, and by the end of August 2025, the facility, which employs 120 workers, will be shut down.
Layoffs at Alpina
Alpina will also relocate part of its production to BiH and has already announced layoffs of 60 workers in Slovenia as of August. In Slovenia, where Alpina employs 331 of the 948 workers in the entire group, the number of employees will therefore decrease by 60 by the end of the year. Of the total workforce in Slovenia, just over a hundred work in retail stores.
Unior closes facility in Stari trg ob Kolpi
In recent days, the Slovenian public has been informed that Unior will cease production in Stari trg ob Kolpi by the end of the year, where various tools are manufactured, and will relocate it to its headquarters in Zreče. Of the 29 employees, some will retire, while the others will receive notice for business reasons. The facility celebrated 40 years of operation in April 2023 and was a significant asset for these relatively remote areas of Bela Krajina. At that time, the hard work, perseverance, innovation, and commitment of the employees were praised. Danilo Lorger, the director of the Hand Tool programme, stated that thanks to the employees, who find nothing difficult, they can develop new special tools in this facility. In addition to plumbing tools, they are also increasing the share of special tools from the cycling and motorcycle programmes. Just a year later, everything is different. They are relocating production to Zreče.
Also Iskra in Laktaši
Iskra, a Slovenian manufacturing group led by Dušan Šešok, is also expanding its operations in Bosnia and Herzegovina (BiH). In Laktaši, where Mahle is also moving its production, Iskra has built a new factory expected to create up to 500 new jobs. This investment, valued at approximately 15 million euros, includes a new 15,000-square-meter production hall.
The expansion is aimed at optimising operational costs, as BiH offers lower electricity and labour costs compared to Slovenia. The new factory is part of Iskra’s broader strategy to strengthen its position in the region, Iskra representatives told the media.
Golob’s government blamed for the issues
Announcements of companies moving abroad or establishing foreign branches due to new legislative changes (and higher taxes) are not new. Between January 8th and February 13th of this year, the Slovenian Chamber of Commerce (GZS) conducted a survey among Slovenian companies. This survey revealed that as many as 62 percent of companies are considering relocating abroad or establishing foreign branches due to new legislative changes. The most frequently cited destinations for relocation were Croatia, Austria, and Germany, with Croatia being the most popular choice. We are also witnessing relocations to BiH.
Appeal to the government for judiciousness and responsiveness
“Mahle is not the only company, but it is currently the most significant indicator of the challenges facing Slovenia’s business environment, something we employers have continuously pointed out,” noted Vesna Nahtigal, GZS’s Director General, in response to recent announcements of over 600 job losses at the company. She added that “similarly worrying news is coming from numerous other companies.”
The GZS has also pointed out that reports are already circulating about Alpina shutting down fashion footwear development, Gorenje closing its Rogatec facility, Unior Zreče closing its Stari trg ob Kolpi facility, and layoffs at Eurele and Boxmark Leather. “I hope and wish that the Slovenian government has the judgment and responsiveness to recognise that it must take immediate action – rather than waiting for numerous other companies to follow suit,” added GZS’s Director General.
GZS’s CEO Mitja Gorenšček warned earlier in the summer about the struggles of the German automotive giant Volkswagen, expressing concern that “VW might be just the first sign; that they are the first to understand the market situation, and other companies in the automotive sector will likely follow Volkswagen’s lead”. Vesna Nahtigal added that companies within international supply chains are exposed to intense global competition. “In these battles, only the best and most innovative succeed, and the competitiveness of the country’s business environment also plays a crucial role.”
Wrong policy moves by the Slovenian government
The Director General of the Slovenian Chamber of Commerce (GZS), Vesna Nahtigal, is critical of numerous poor policies moves by the Slovenian government, ranging from new and higher taxes and contributions to a new system of network fee calculation, which will significantly raise operating costs for industry. She also mentioned issues with high electricity prices, raw material market conditions, etc. This is why she fears that “the key to saving Mahle will not be found within the company itself, but in quick and correct steps taken by Slovenian policy to create a more business-friendly environment”.
The first measure the government must take, therefore, is to pass a law establishing a permanent reduced working hours scheme, which the Ministry of Labor, Family, Social Affairs, and Equal Opportunities has announced is set to be passed by the government (only) in the first quarter of 2025. Moving forward, it must seek ways to alleviate the burden on the entire economy.
Does Minister Han live in a parallel world?
Following the prominent announcement by Mahle, Minister of Economy Matjaž Han had to rush to Šempeter near Nova Gorica. However, he made headlines by stating that the planned layoffs at Mahle were not due to Slovenia’s economic environment but rather to the situation in the European automotive industry. They agreed on regular updates on the situation, with Han especially focused on the timeline of the layoffs.
Speaking to the media at the company’s headquarters in Šempeter, Han stated that he asked management to clarify what specific aspects of Slovenia’s economic environment were to blame for the announced layoffs. The business sector has been warning that poor economic policy from the government will also contribute to anticipated layoffs by companies. “There was no answer,” he said, adding that the issues stem from strained conditions in the European automotive market, which faces declining orders and slow adaptation to electrification.
Han finds it promising that the company’s management announced that the Šempeter plant would remain open, continuing its development activities, and that the company’s owners see it as having potential. “However, the entire group is preparing for further development,” he said. According to him, this also includes layoffs.
Preparations for further layoffs
The ministry will maintain daily contact with Mahle’s unions and management, he announced. “It is crucial that no final decisions are made until an agreement is reached,” said Han.
He will now inform the government about the situation, and he intends, along with his team, to determine within 20 days what actions the state can take.
Mahle expected proposals but was left empty-handed
According to Mojca Plešnar, chair of the works council at Mahle Electronic Drives in Šempeter, they expected concrete proposals from the minister’s visit. None were provided, though there was a commitment to negotiate, and they were encouraged to present proposals from the workers’ side as well. Minister Han reportedly promised to involve other relevant ministries in the search for solutions.
The works council hopes for solutions that will satisfy both workers and the company’s management. The common goal must be for the company to remain and have a future, said Plešnar. One of the proposed measures, she noted, is a transition to a 36-hour work week.
There is not much foreign labour in the company, Plešnar explained, nor are there many agency workers or fixed-term employees, as they lost their jobs following the announcement in the spring of a reduction of 170 employees this year.
Although this is now the second wave of layoffs this year, Plešnar remains optimistic that the Šempeter plant will survive, at least the development section and certain production segments. She describes relations with management as constructive.
Promises of 200 million euros in state aid
The next step was a meeting with representatives of the Slovenian automotive industry. The discussion aimed to “analyse the current situation and address challenges impacting the future of Slovenia’s automotive sector”.
The meeting was held at the initiative of Robert Golob.
Attending the meeting were Finance Minister Klemen Boštjančič, Minister of Economy, Tourism, and Sports Matjaž Han, and Minister of Labour, Family, Social Affairs, and Equal Opportunities Luka Mesec.
The discussions focused on the situation in European markets, which brings numerous uncertainties, and on finding solutions to strengthen the long-term competitiveness and resilience of Slovenia’s automotive industry in an increasingly unstable environment.
After the meeting, Matjaž Han and GREMO mission coordinator Iztok Seljak presented key conclusions. Han began by stating that conditions in the automotive industry have changed significantly over the past two decades. The Slovenian industry, he said, has decided, due to challenging conditions, to connect with the Slovenian automotive cluster project, the GREMO mission. “The state has recognised that investment in this automotive cluster is necessary, and so we will invest approximately 200 million euros over the next few years,” he said, adding that the Ministry of Economy, Tourism, and Sports is working to overcome all administrative obstacles and streamline processes.
Han emphasised that the green transition has also significantly impacted the European automotive industry, making it essential for the industry to focus on new technologies and invest in these processes. He added that Slovenia’s automotive industry is still relatively robust and that “we will weather the current economic situation and be ready for new challenges”. Another meeting between the Prime Minister and ministers with representatives of the Slovenian automotive industry is expected in three months – assuming the government still holds by then.
