Transport mechanical engineering - automotive parts manufacturing

Great Wall Motor Company, one of China's biggest automotive manufacturers, near the town on Lovech

Mechanical engineering is an industrial sector with great economic importance. It is a basic industrial sector in Bulgaria, actively contributing to the development of the national economy and revolutionizing the spheres of material production. That is why it is reasonably believed that the mechanical engineering is the "core of industry”.

Our country’s history of the industrial sector is relatively short. By the end of World War II mechanical engineering in Bulgaria had been one of the lagging industries, due to the lack of own metallurgical base, minimum availability of machinery and equipment, the small size of the country and impossibility to compete against the developed countries in international markets. There were only a few small engineering enterprises and workshops (a total of 86 companies with a personnel of 1000 people). They mostly met the needs of the railway transport, mining and military industry. They predominantly performed repairs and manufactured metal items. The largest mechanical engineering factories were the Muelhaupt and Co. JSC’s factory for farming and milling machines in Ruse, the military workshops in the towns of Lovech, Karlovo, Kazanlak, the railway factories in Sofia, Ruse and Drianovo, the mining workshop in Pernik, the factory for blowers in Debeletz and the shipyards in Varna, Rousse and Bourgas.

In the years following World War II the capacity of mechanical engineering increased, new enterprises were built and the existing ones were expanded.

The branch structure of mechanical engineering was formed during the period 1960-1980, when the influence of the “international division of labour” factor was manifested. Mechanical engineering branches such as device manufacturing, radio frequency engineering, electrical engineering, organizational machinery and automotive engineering became more popular.

By 1990 mechanical engineering in Bulgaria had ranked first among the industry. The sector experienced particular problems after the changes had occurred and the country's transition from a planned to a market economy.

Today Bulgaria is one of the most attractive destinations in Europe regarding investments in the production of automotive components and parts.

The automotive engineering in Bulgaria is one of the priority sectors and has great potential for growth. For the past five years export of automotive components was estimated at approximately BGN 3 billion which is about 14% of the country’s total industrial output. In Bulgaria there are currently about 100 companies in this sector.

Different kinds of automotive parts and components for brands such as BMW, "Mercedes", "Audi", "Ford”,”Volvo", "Peugeot", "Renault", "Dacia" and others are made in their plants. The manufactured parts and components include upholstery, seats, cables, parts for air conditioners and motors, microchips, rubber seals, glass, springs, electronics, filters, aluminum profiles, belts, etc.

Until 1989 Bulgaria’s main trade partners were the CMEA countries. After the dissolution of this Union, the country felt an acute need for new larger markets. Since the accession to the European Union in 2007 the country’s export has mainly been directed to member states. Over 75% of the total volume of manufactured goods, which was estimated at BGN 25 billion in 2013, is exported to this part of the world. Bulgaria’s main trading partners in the EU are Germany, Italy, Romania, Greece, France and Belgium. Other major trading

partners of the country are the United States, China, Russia and Turkey.

Trends in the mechanical engineering in the EU and Bulgaria show that by 2020 the deficit of personnel will deepen both in a quantitative and qualitative matter. When the mechanical engineering in Bulgaria overcomes the crisis the deficit of skilled and qualified employees will continue to grow. Exacerbating the problem within the EU, expanding and liberalizing the labor market in the EU, enlarging and easing migration process in the EU will all create additional conditions for the movement of skilled labour force to other countries that offer better living and working conditions.

The predicted increase in the number of employees in 2020 compared to 2013 is 15%. It is expected that in 2020 the number of employees in the sector will reach 36,000 people.

In accordance with the accepted initial conditions a 35-percent increase in the turnover can be expected in 2020 compared to 2013. The expected growth in the added value for the same period is 34.4%. The ratio between skilled and unskilled personnel willl change from 5:1 to 6:1, i.e. about 83% of the employed will belong to the category of qualified staff.

Development of the mechanical engineering in Bulgaria is a prerequisite to believe that in the future it will continue to be a major economical force of the country. Bulgaria’s perspectives are related to the introduction of new technologies in the production process and attracting new investments in the sector. These factors would make the country a regional leader in the manufacture of automotive components. Changing the export direction towards the Middle East is also an opportunity for the Bulgarian mechanical engineering.

Threats to the development of the industrial sector are mostly related to the lack of skilled and qualified personnel. This is a serious obstacle and needs quick response from both the state and private sector, but to achieve the desired results there has to be an interaction between them.

1924 - The bodywork workshop in Botevgrad produced the first bus

1925 - 2 aircraft plants were created in Bozhurishte and Kazanlak

1936 - The production of the first Bulgarian trams started in Sofia

1951 - The first electrocar was manufactured

1966 - Assembling of the cars Moskvich, FIAT 850 and FIAT 124 began in “Balkan” plant

1969 - Assembling of the cars Renault 8 and Renault 10 began in Plovdiv

1974 - Mass production of the “Chavdar“ buses began in Botevgrad.

In the period 1970 -1989 electrical engineering, electronics and mechanical engineering were rapidly developing in Bulgaria. There were 730 factories, 430 000 employees (35 000 engineers) and 5000 scientists working in 30 research institutes.The leading role of machine engineering contributed for 30% of the total country manufacture in the late 1980’s.

In 1987 the production of industrial forklift trucks reached about 89 000 units, which represented more than 20% of the world production.

Nowadays, the industry is concentrated on manufacture of cars, vehicles and auto-components; manufacture of home appliances and machines for the food industry; hydraulics; metal casting; weapons; etc.

Compared to 2007 there was a 134-persent growth of the sector’s FDI in 2010. The FDI average annual amount for the last 5 years was approximately EUR 65 mln.

11% of the university students are enrolled in related programs. Currently there are more than 50 000 employees in the industry working in more than 1500 companies. Bulgaria is in the center of the emerging automotive cluster of CEE. The Transport and logistics cluster in Bulgaria combines all modes of transport: Land (Road and Railway), Air and Water (Sea and River).

MAJOR INVESTORS IN THE SECTOR

Integrated Micro-Electronics Inc.

Established in 1993 as EPIQ, since May 2011 it has been part of the international group Integrated Micro-Electronics (IMI). It employs 2800 people. The company is specialized in the design and production of electronics and electro-mechanical modules and systems for the automotive industry. IMI subcontracts for well-known names in the automotive sector, including Valeo, Denso, Brose and EF.

Montupet

The French-based company established its plant in Ruse in 2006. It employs 260 people. The plant is for the production of aluminum head gaskets, wheel rims, engine and chassis parts for Audi, Renault, Peugeot, Citroen and Ford. The plant is exporting parts to car factories in Germany, Turkey, Romania, the Czech Republic and Slovakia.

Great Wall

Great Wall Motor Company, one of China's biggest automotive

manufacturers, started car production in 2011. The plant in Lovech has an annual production capacity of 50,000 units, it employs more than 200 people and assembles four different models – a sports utility vehicle (SUV), a pickup and two passenger car models, which are expected to be sold in EU countries.

Johnson Controls

Their technology center was established in 2001 and employs about 500 people. It provides project support and delivery of automotive software development and validation, hardware solutions design and prototyping, mechanical engineering services and global IT support.

Ixetic

The German company built its plant in Plovdiv in 2009 and employs 620 people. The main product of the plant in Plovdiv is the steering system equipment for companies like Audi, BMW, Daimler, Porsche, Renault, Toyota, Volkswagen and Volvo.

SE Bordnetze

The German company, started operations in Bulgaria in 2002. It produces equipment and parts for the electrical system for a variety of automobile platforms and employs 1800 people.

Yazaki

It started operations in Bulgaria in 2008. The Japanese company produces equipment and parts for the electrical system for various companies in the automotive industry. The company has currently 2 plants in Bulgaria and plans to build a new one. With its 3,400 employees, the Yazaki’s plant in Yambol is one of the biggest factories of the company in Europe.