Slovenia and “Gorenje”

“NO” to the Government

In black and white, evidence was published that Bajuk's cabinet is offering aid to “Gorenje” badly damaged in the recent fire, but only on condition that this factory sell the rightist government its package of shares in Ljubljana Delo.

AIM Ljubljana, September 28, 2000

“May God help them, they do not know what they are doing”. With these words, president of the management board of “Gorenje” Joze Stanic commented in writing on the proposal of Slovenian government, cutting short the rumours on blackmail concerning the aid to the factory recently damaged in a fire. “Gorenje”, the biggest Slovenian and once the biggest Yugoslav manufacturer of household appliances, was faced with a terrible challenge on September 3 – the factory caught fire after which electro-plating installations (Galvana) practically do not exist any more. Almost three hundred workers were left without their jobs, and the damage was estimated to several ten million German marks. Experts have calculated that construction of the new electro-plating plant would cost about one hundred million German marks. And since insurance will cover only one third of the inflicted damage, numerous Slovenian enterprises have offered aid.

Slovenian government also appeared. If one knows that “Gorenje” is the pride of Slovenian economy, it is clear that the shock was big. That is why the aid offered at first by the government was unconditional. Minister of the economy Joze Zagozen visited the site of the fire and promised the management that the government would provide 610 million tolars (about 0.61 million German marks) of aid for reconstruction from the available funds for new jobs. And then it occurred to somebody that “Gorenje” was on its knees and that nothing should be given for free.

Soon after that an offer of the mentioned minister of the economy arrived in which the intention to help “Gorenje” was repeated, but only if in return the factory sold shares “it recently bought from the Capital Fund”. This refers to the shares Drnovsek's government had had in certain media and which Joze Lenic, loyal member of Drnovsek's Liberal Democracy of Slovenia (LDS) managed to sell just before the fall of LDS. All this had happened at the time when Drnovsek's government was at its last gasps and just before Lenic himself was relieved of duty. This deal at first distressed the rightists and then enraged them because right under their very nose the (media) power was snatched away from them, the force they counted on in the election campaign.

Although they could not prove anything, immediately after inauguration Jansa and his comrades claimed that the said transaction with “media shares” was conducted in order to prevent the successors in power (the rightists) to control, by means of these shares, newspapers, but primarily dailies Dnevnik and Delo from Ljubljana. Among other, one of the packages of shares of the biggest newspaper in the state which used to belong to LDS was bought by “Gorenje”.

The logic of Bajuk's team was clear, so the minister in charge was charged with the task to carry out the plan. The government did not even try to conceal that this was open blackmail; “Gorenje” needed the money, the administration would find it, but not as aid, but as a classical business deal. As if the fire in Gorenje was sent by Providence itself in order to give the opportunity to the cabinet of Andrej Bajuk on the eve of the elections to reduce at least one independent media to obedience. For a long time there were rumours in the lobbies about the intentions of the prime minister until the government formulated the offer and put it on paper. And sent it to the management of “Gorenje”.

The answer arrived faster than they expected. “Gorenje” said “No”; the management of the factory considers the offer of the government on “purchase” of the securities pure blackmail. “Finalisation of capitalisation” of the enterprise, as the legal department of Bajuk's government formulated it, would have had some sense in different circumstances; finalisation of capitalisation is sought by enterprises which cannot get loans or which are forced to ensure their operation with several agencies and similar.

“We are not an enterprise at its deathbed (because of bad operation), we are an enterprise which asks the state for help because of a misfortune” laments Joze Stanic. Behind this there are facts to corroborate it. “Gorenje” is the biggest Slovenian exporter and the most praised enterprise of Slovenian economy.

Rise and Fire

“Gorenje” has acquired its reputation as the greatest Yugoslav manufacturer of household appliances and it is among the few enterprises that even after dissolution of SFRY found its place in new circumstances. The concern nowadays has about 6700 employees who work in 36 firms (“Gorenje” group) with annual turnover of 112 million German marks with 25 million German marks of profit, 6.8 per cent of rate of return and production of about 2.5 million pieces of big household appliances. These figures confirm that “Gorenje” remains among the great ones, along with the reputation that it is still the biggest Slovenian exporter, since it sells about 93 per cent of what it produces in the world market.

As an illustration of success in the world leading persons in “Gorenje” stated the fact that the factory in just a little over a day produces household appliances for the Slovenian market! It is clear that “Gorenje” would not have survived if it had not made the breakthrough on sixty markets in the world, mostly in Germany, France, Croatia, Austria, Denmark, USA, Czech Republic, Poland. Although competition is enormous, washing machines from “Gorenje” are advertised in Germany under the slogan “sturdy and reliable”. “Gorenje” does not need a bigger compliment.

“Gorenje” exists for half a century already; it all began in the village called Gorenje near Velenje when in 1950 the factory was constructed. The first cooking stove from Gorenje was produced eight years later, in 1961 export to German market began, and in the course of the decades that followed the production was expanded with refrigerators and washing machines. The first crisis was anticipated in the beginning of the nineties. The big state disappeared and with it the big market. But “Gorenje” did not perish. It chose privatisation, freed itself of dictated planned economy and escaped the control of the state.

Open Blackmail

It is logical that the fire in Galvana, one of the central plants of “Gorenje” disturbed the public. About thirty thousand workers and their families live off “Gorenje” and its cooperants. The fire took away jobs of exactly 264 workers at least for a year, and the consequences will also be felt by other parts of the production which will drop by 15 per cent.

There were many theories and guesses about the cause of the fire. At first the police suspected that the fire was caused by a damaged transformer in the vicinity of the factory. Then it was assumed that the fire was caused by negligence of the workers who were welding tubes in Galvana just a couple of minutes before the alarm went off. There is no doubt that a lot more will be said about causes of the fire at least before the investigation is over. In the meantime “Gorenje” is looking for sponsors.

Had the political conditions been normal, it would have quickly received aid from the state. It is certain that it will be easier and quicker for “Gorenje” to recover from the consequences of the fire than for Slovenian government to clear its name because it blackmailed the company from Velenje. Before the elections Bajuk's government decided to exert pressure not only on “Gorenje” but also on other Slovenian enterprises (director of Electric Company has just been removed and a "loyal man” although without adequate qualifications was appointed in his place) and in this way gambled away the trust of the public. One scandal after the other, one purge after the other, and the business weekly Finance from Ljubljana warns that Bajuk is unpopular because of frequent “personnel changes”. According to an investigation of a public opinion agency, voters estimate that the “worst move” of Bajuk's administration is personnel changes and pressure on the economy (19.2 per cent of the pollees).

Everything else – that the government has had a short time in office, that it is too engrossed in the past and itself, that it does not rule at all but that it is too concerned about return of nationalised property – reaches just one fifth of the answer. The same poll shows that directors of Slovenian enterprises would (at this moment) vote mostly for LDS (33.6%), and just a few for Jansa's SDS (8.8%), Zagozni's SLS (7.6%) or Bajuk's New Slovenia (1.6%). Even for somebody who has dropped by into politics from banking business – it is not exactly flattering.

Igor Mekina

(AIM Ljubljana)