ELECTRICAL ENGINEERING & ELECTRONICS in BULGARIA

1. ELECTRICAL ENGINEERING &ELECTRONICSinBULGARIA SofiaApril 22, 2008 nceeb

2. The roots1 • 1878/79 – first electrical lighting system; facilities for telegraph network delivered by SIEMENS • 1888/99 – first electrified factories, collieries • 1900/02 – first hydroelectric PS with 7 kV transmission line; first thermal PS; tramway in Sofia starts to roll • 1909/11 – regular import of bulbs & utility material from Austria. SIEMENS wins tender for first 3000 posts distribution telephone exchange • 1917/19 – permanent representation agencies of SIEMENS-SCHUCKERT for HV technique and SIEMENS-RHEINIGER for medical equipment nceeb

3. The roots2 • 1923 – “Bulgarian Ltd Company for electricity-SIEMENS” inaugurated • 1925/26 – regular import of radio receivers; first X-ray device imported • 1926/35 – production start of small electric motors, dynamos, transformers, lighting fixtures, cables, bulbs, switchgear; first 320 kVA transformer • 1934/43 – construction of automatic telephone exchanges; high-frequency installations • 1934/45 – repair workshops for radio sets, telephone and telegraph appliances, el. motors, transformers, heating devices nceeb

4. NACE Classification • Manufacture of office machinery and computers • Manufacture of electrical machinery and apparatus • Manufacture of radio, television and communication equipment and apparatus • Manufacture of medical, precision and optical instruments, watches and clocks nceeb

5. The Electrical Engineering Now • 100% private industry • The former state enterprises of the electrical engineering industry are utilizing only 30-35% of their previous capacity • A great number of newly established (after 1990) small and medium enterprises • The sector comprises about 590 enterprises, 350 of them – actively operating; 20 are large, the rest – small and medium • Labor force in the sector - 18 000 employees • For the period of 1998-2005 - $137 million FDI nceeb

6. Annual average production growth: 14,3%; in 2005 - 35% • Added value in sector’s production - 24%, with an average for the manufacturing industry in Bulgaria of 19,9% ; for theEU25 – 33,3%. • In 2005 – export of batteries for €35 M, export of electric motors for €20 M nceeb

7. Local factories of important foreign investors • ABB: 2 factories, MV&LV switchgear; now 3th LV (gf) • HYUNDAI HEAVY INDUSTRIES: power transformers, tap-changers • SCHNEIDER: LV breakers (gf) • EPIQ & MELEXIS: PCB assembling • FESTO: sensors for automation (green field) • LIEBHERR & VIDEOTON : household appliances (gf) • SIEMENS: HV measurement transformers • CET: PCBs • DZU VIDEOTON: household appliances • ARKOMAT: wire harnesses nceeb

8. Important factories in sub sectors1 • Cables, enameled wires - ELKABEL, GAMAKABEL, EMKA, ARKOMAT • Start and traction batteries - ELHIM-ISKRA, MONBAT, ENERGIA, START • Electric motors, generators, alternators – ELMA, HARMANLI, ELPROM ZEM, DINAMO, MMOTORS, ZAE • Transformers – HYUNDAI HEAVY INDUSTRIES, ELPROM TRAFO, SIEMENS, ISOMATIC, AQ, SOKOLOVO, ELPROM EMZ • HV/MV/LV switchgear – ABB AVANGARD, SCHNEIDER, FILKAB, NIKDIM, EME, KET, EAZ, ISKRA SILATRONIK • Electric distribution and control boards – ELIA, FILKAB, ELECTROGETZ, METIX, PAVEL & SONS, AHNATON, ELKOM, ELPROM ET, MEGAEL, ELEKTROIZGRAZDANE, PENON • Optical devices- OPTIX nceeb

9. Important factories in sub sectors2 • Electronic control and measurement devices – KARAT ELECTRONICS, ENTEL, ELECTROINVENT, MPS, COMICON, EMSYST • Electronic modules, electronic assembling –EPIQ, FESTO, TELETEK, HIC, MELEXIS, EME • Fiscal memory devices – DATECS, KARAT ELECTRONICS • Energy meters – MPS, KARAT ELECTRONICS, ENTEL • Household appliances – LIEBHERR, ELDOMINVEST, FICOSOTA, DZU VIDEOTON • Lighting fixtures and building installation products – TEHNOSVET, DENIMA, KUBRAT • Lifts –TEHNOS, TOP LIFT, IZAMET • Plastic, metal parts, ceramics – BUNAY,GOTMAR, METAL IN, MM MECHANICS nceeb

10. Major enterprises by number of employees • > 700:EPIQ, ELMA, DZU, LIEBHERR, ARKOMAT • > 500:ENERGIA, ELPROM-ZEM, HYUNDAI HEAVY INDUSTRY. • > 400:ELHIM-ISKRA, MONBAT, SET, FIKOSOTA, ARCOTRONICS, ELKABEL • > 300:ELDOMINVEST, EMKA, NAIDEN KIROV, AROS QUALITY nceeb

11. Production and export nceeb

12. Production of electric motors, batteries, switchgear nceeb

13. Export of assembled PCBs, € mln nceeb

14. Production of electrical household appliances, pcs nceeb

15. Import of electrical household appliances, pcs nceeb

16. nceeb

17. Monthly emoluments in electricalengineering sector, large cities, EUR, 2006 nceeb

18. Number of graduates in electrical engineering subjects, 2005There are 5 technical universities and 65 vocational schools with el. eng. & electronic subjects nceeb

19. State strategy • According to “STRATEGIC TRENDS OF BULGARIAN ECONOMY”, published July 2007 by the Ministry of Economy and Energy: • DELOITTE’S SURVEY -most perspective sectors and competitive advantages in Bulgaria are:IT, outsourcing, electrical engineering and electronics; • UNCTAD’S SURVEY 2007/2008 - electrical engineering and electronics is most perspective industrial sector for investments in Bulgaria nceeb

20. Sector strategy A “National Strategy for the Development of the Electrical Engineering Industry in Bulgaria up to 2013” was jointly elaborated with the Ministry of Economy and Energy and the support ofGTZ (Gesellschaft fur Technische Zusammenarbeit). Main tasks are: • To support enterprises in their drive towards integration with the European industry and the global market. • To promote and support the establishment of cluster structures. • To promote R&D activities in the sector, to organize and support research parties and testing laboratories. • To promote regional collaboration aiming establishment of regional market and transnational clusters. nceeb

21. EU technical legislation • Transposed directives: LVD, EMC, R&TTE, ATEX, Machinery, lifts, gas appliances, simple pressure vessels, pressure equipment, toys, NAWI, refrigeration appliances, hot water boilers, noise emission, etc. • WEEE (effective from 01.07.06); • RoHS (effective from 01.01.07); • Batteries (from 2005) • Transitional period - Directives on medical devices • Most enterprises ISO9000 certified by TUV, SGS, LR, BVQi nceeb

22. Important state institutions for this sector • State Agency for Metrology and Technical Surveillance • Executive Agency for the Promotion of Small and Medium Sized Enterprises • InvestBulgaria • Bulgarian Institute for Standardization • Executive Agency “Bulgarian Accreditation Service” • Executive Agency “Certification and Testing” • Executive Agency“Waste Control” nceeb

23. Business climate Invest in Bulgaria. Why? nceeb

24. 1. FINANCIAL STABILITY1 Currency board since 1997 The Central Bank does not act as a lender to government and commercial banks The exchange rate to foreign reserve currency (EURO) is strictly fixed, 1 € = 1,95583 lv The Central Bank will only issue one unit of local currency for each unit of foreign reserve currency it has in its vault The country has not the ability to set monetary policy according to domestic considerations nceeb 4

25. 1. FINANCIAL STABILITY2 GDP (% real growth) nceeb

26. 2. FINANCIAL STABILITY3 Unemployment Rate (%) nceeb

27. INFLATION RATE (average annual change %) nceeb

28. 1. FINANCIAL STABILITY4 Cash Balance (% of GDP) nceeb 7

29. 2. POLITICAL STABILITY NATO member country since April, 2004 EU member country sinceJanuary, 2007 All political parties support NATO and EU membership No ethnical problems nceeb 11

30. 3. WELL EDUCATED AND HIGHLY SKILLED LABOUR FORCE 43 Universities 45 000 graduates (BA or MA) annually 350 vocational technical colleges 65 000 graduates annually 30 000 Bulgarian students in foreign countries nceeb 13

31. 4. THE LOWEST PRICE LEVEL IN EU EUROSTAT Price Level Indices 2005 (%) nceeb 15

32. 5. FAVOURABLE INVESTMENT CLIMATE Corporate Tax (flat): 10% Manufacturing companiesin high unemployment municipalities: 0% nceeb 17

33. 6. BULGARIA – A LINKAGE BETWEEN EUROPE AND ASIA 9 4 7 10 8 nceeb

34. FOREIGN DIRECT INVESTMENT INFLOWS IN BULGARIA BY YEARS IN USD m nceeb 24

35. National Chamber of Electrical Engineering in Bulgaria (NCEEB) • www.bcee-bg.org • National representative of the sector.Mentor of sector’s employers in the dialogue with the state administration, the trade unions and the international institutions • Full member ofORGALIME (Brussels) since 2005. • Collaborates with ZVEI, ZVEH, ANIE, VDE, associations in Romania, Turkey, the Czech Republic, Slovakia, Serbia, Macedonia, Korea. • NCEEB is the information center of the sector: seminars, work shops, training courses. • The “M&E” (Machine Building and Electrical Engineering) Journal – printed matter of NCEEB • Association’s experts are active in the work of ORGALIME andEESC (Brussels) nceeb

36. Bulgarian companies, organized by NCEEB are participating regularly at fairs & exhibitions • Hannover Messe • Z-Leipzig • Light & Building, Frankfurt • AUTOMECHANIKA, Frankfurt • ELECTRONICA/PRODUCTRONICA, Muenchen • LIVINGLUCE, Milan • Regional (WIN-Istambul, Belgrade, Skopie, Bursa, Athens, etc.) • National (Plovdiv Fair) nceeb

37. Sub-suppliers In accordance with the STRATEGY, NCEEB is applying potential for expansion of its activities to serve also other sectors as: • Automotive parts producers • Suppliers of plastic, metal, ceramic and rubber parts, non-ferrous castings nceeb

38. Automotive parts suppliers nceeb

39. Important companies in subsectors1 • START BATTERIESMonbat, Elhim-Iskra, Start • ALTERNATORS, STARTERS, COMPONENTSDynamo Sliven, Elprom-Elhovo, Iskra Silatronik • WIRE HARNESSESArkomat, Nursan Automotive, Yazaki (in construction) • CAR ELECTRONICS, MODULESEPIQ, Festo, Melexis, Johnson Controls, HIC, Teletec Electronics • SPRINGS, SCREW, PINSKrepejni Izdelia, Rubolt, Sanel, ZKD, William Hughes, Arkus, Zavod za prujini, Varianti nceeb

40. Important companies in subsectors2 • CASTINGS, Alucom, Ossam, Metakom, VIP, Bronze-TM, Madara Gruppe, Droujba, Tchugunoleene • FORGED & PRESSED PARTSPreskov, Beta Industries, Madara Gruppe, Autonom Metall, Milara, Spartak, Sovis • PLASTICS Arexim, Bunay, Gotmar, ITD • RUBBER PRODUCTSKula Ring, Kaumet, Kautchuk, Zebra • HYDROLIC ELEMENTSCaproni, Garant, Kirkovo, M+C Hydravlika, Samel90 nceeb

41. Important companies in subsectors3 • SHAFTS, AXLES, PISTONS, COGS, DRIVES, ETC.Droujba, Beta Industries, MadaraGruppe, Metaloobrabotvane&Zuboproizvodstvo, TEREM Turgovishte, Avtoremontnizavodi, Remel • CAR FRAMES, TRAILERS, CONTAINERSKenta, Preslav-AN, Poluremarketa&Konteineri, BulgarskoMashinostroene • CAR FITTINGGrammer nceeb

42. Social Dialogue • The Social dialogue is functioning under the title “Sector councils for social collaboration “Electrical and electronic industries and informatics” with the Ministry of Economy and Energy • The National Assembly approves in December 1997 a Law on health preserving and safe conditions of work including a separate system for social dialogue at the following levels: • National – The National Council on labor conditions has been established in March 1998 • Sector – The sector council on labor conditions in the EE industrial branch has been established in February 1999, but after its positive start, it is working only formally at present • Regional – district and municipal councils on labor conditions are being established • Company – Committees on labor conditions are beingestablished in the companies. nceeb

43. Trade union partners of the Chamber: • National Federation “Technical industry, science, informatics” with the Confederation of Labor “Podkrepa” • Trade Union Federation of organizations in the electronic, metal engineering industries and informatics with CNTUB nceeb

44. Sector Collective labor agreement • August 2002 – A collective labor agreement is signed for the EE-industry between the sector organizations of employers (NCEEB, BCEIT) and the trade unions (NFTISI – CL “Podkrepa” and TUFEMI – CNTUB). In the agreement part, covering the scope are mentioned explicitly 5 economic activities (30, 31, 32, 33 and 76). • July 2004 – A new two-years sector collective agreement was signed for the EEI-branch between the same partners and with the same scope as well as with the same problem, related to its action frame existing still existing • July 2006 – Again, a new two-years sector collective agreement was signed for the EEI-branch between the same partners and with the same scope as well as with the same problem, related to its action frame existing still existing nceeb

45. Existing Problem • Main problem, related to the agreement was the circumstance, in spite of the written demands by the parties, that the Minister of Labor, already two consecutive years has not expanded its power on the whole sector, the latter being enforced only on the companies, members of the employers chambers • The term of the acting agreement is expiring this year and NCEEB considers refusal to take part in negotiations, if there are not guarantees, that the agreement will be valid for the whole sector and not only for companies, members of NCEEB nceeb

46. Training(Jointly with the Trade Unions) • 3-days seminar (workshop) “Challenges before the employers and the trade unions with Bulgaria’s Euro-integration • 3-days seminar (workshop) “Practical aspects of ensuring health preserving and safe labor conditions” • 3-days seminar (workshop) on problems related to the LSLC • Seminar in Zagreb on the European labor legislation and labor agreements nceeb

47. Agreeing on minimum insurance levels in the EEI-sector according to personnel categories • The Ministry of labor and social policy has introduced in 2004 a new type of agreement on sector level – between the employers branch organizations and the trade unions, related to the requirement every year in August the minimum insurance levels for 9 categories of employees in the branch to be agreed upon. In the presence of agreement between the employers and the trade unions the Ministry is endorsing it, while with absence of agreement, introduces administrative new levels for the branch. • In 2007, the branch organizations of employers and the trade unions in the sector have agreed upon new insurance levels, which have been further introduced with a public act of the CM nceeb

48. Thank you for your kind attention nceeb