Банкеръ Weekly

Briefs

CLUSTERS IS THE NAME OF THE NEW CO-OPERATIVE UNIONS

The Ministry of Economy introduced a new business notion - cluster, and defined it as a group of related companies and facilities with the same strategic objective. According to the decisions made on a meeting of the Council for Economic Growth, in the period April - end-July 2004 the Economic Chamber of Bulgaria, the Bulgarian Chamber of Commerce and Industry, and the Bulgarian International Business Association (BIBA) should present projects for construction of cluster structures in four economic sectors - information technologies in Sofia, chemistry in Devnya, energy in Maritsa-Iztok, and tailoring in Rousse.For example, the project for the Devnya-based cluster is being developed by BIBA and the Union of Employers. The Bulgarian Chamber of Commerce and Industry has the leading role in the cluster in Rousse, while the local textile branch organisation works directly with the tailoring companies. BIBA and its Chairwoman Sasha Bezuhanova have the leading role in the technological cluster, too.Regardless of some people's fears that the Bulgarian language is on its way to lose its purity, cluster ideas are getting numerous and are officially supported by the economic ministry. The ministry officials said with regret that they had been searching for a suitable Bulgarian word and had been violently discussing the new term but had failed to find out a better alternative. It is almost certain now that cluster, as well as benchmark, for example, will become part of the Bulgarian language. Countries with developed economies have long ago started to build attendant companies that maintain and develop the main production in a region. Profits from this production are reinvested in improvement of the labour conditions as well as in educational programs for the personnel. In turn, the availability of qualified staff in regions with stable production attracts the attention of new investors who find excellent opportunities to develop attendant productions. That is how a cluster of companies is formed - the main activity becomes the body and the additional activities such as production, training, social, cultural, infrastructural, economic activities gather as concentric circles around it. The term that describes this type of economic policy emerged in Japan about ten years ago. It explains the need of the business to reproduce itself. In practice, a big company creates preconditions for the producers of details and components to form a group around it, most frequently on a geographical principle.The companies in the cluster exchange experience, potential, production decisions, and work for a result with the same quality. The geographical differentiation guarantees a lower end price of the product, too.Experts in the Ministry of Economy claim that the establishment of clusters is among methods for increasing the competitive power of small and medium-sized companies, for attracting foreign capitals, and for developing products comparable to those offered on the European markets. The faience-macing plants Vidima and Ideal Standart have successfully terminated that process in Bulgaria, the ministry states.Engineer Vassil Kounev, Director of the Sevlievo-based Vidima plant, admits that cluster is an unknown term in Bulgaria and sounds ridiculous rather than provoking initiative. But since the strategy is already recognized all over the world we simply have to get used to another disharmonious foreign word in our language. In America there are already cluster zones where attendant outputs support the main business and thus establish a production conglomerate, the engineer explains. This approach guarantees that business opportunities will not be over some day and thanks to the attendant outputs it will maintain itself and rejuvenate.Investment policy experts in the Ministry of Economy claim that Vidima plant has not planned to grow as a cluster, but has become one later. In practice, for the past three years Vidima and six other companies in the region that related to its business have opened 650 new jobs. The German Hamberger built its own lavatory pan plant and recently turned the first sod of another one. The Italian Minerali Industriali acquired 35 more dka to expand its production base which provides raw materials to Vidima. The Austrian Hermes company is engaged with the production of polish bands. Spain's Mateo offers flexible bonds, Germany's Polish Materials supplies polish pastes, and the Italian Technoconsult delivers galvanic installations.For the past five years Ideal Standart has built two more plants in villages close to its biggest plant. The company is also investing in a long-term training program which involves employees and students from the region.When experts proposed one of the managers of the plants in Devnya to make a cluster, he agreed on the condition that they would explain him that term. Today the Devnya cluster includes Solvay-Sodi, Devnya Cement, Agropolychim, Polimeri, etc.

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