Ministry of Industry and Trade

Transcription

1 Ministry of Industry and Trade

2 Ministry of Industry and Trade

3 In behalf of MIT prepared: Branch development section, Administrative section, Policy section, Energy sector section External collaboration: Ministry of Agriculture Translation: Ladislav Louda, PhD Design and pree-press: Radix Co. Ltd., Printing: Uniprint Co. Ltd., Rychnov nad Kněžnou 2

4 Dear distinguished readers, otvíráte You are opening the eighth edition of the yearbook Panorama of the Czech Industry, which has been for you prepared by the Ministry of Industry and Trade in collaboration with the Ministry of Agriculture. This publication is prepared with the objective to provide information on development and results achieved in the last period in the individual branches of the manufacturing industry and in the manufacturing industry as a whole. It is just the manufacturing industry, which plays an indispensable role in the advanced economy, because in the developed economies it belongs to the decisive resources for creation of the gross domestic product. In this year the publication contains a narrowed analysis of the manufacturing industry in the period from 2000 to 2004, which seems to be economically very favourable. The Czech industry has been already continuously growing for fifth year. Also in the last year it significantly grew in all basic indicators, namely in the labour productivity as well as in the average nominal wages. As a very favourable factor it is necessary to stress namely the considerable growth of the production with higher value added, in which the industrial potential and manpower of the indigenous economy are evaluated. Positively might be namely evaluated the fact the manpower potential is not driven solely by the consumption, but mainly by the investments and export. As to the outer conditions, namely the accession to EU had a favourable effect, which manifested by a rapid growth of the foreign trade turnover. The publication was in this year subjected to the more substantial changes. It is focussed on evaluation of the industrial branches in the structure within two digits of the Branch Classification of Economic Activities. The more detailed data for the individual manufacturing branches, inclusively the group division, are given on CD, which forms a part of the publication. Experience of the last years and your response as readers present the credible evidence that the publication Panorama of the Czech Industry takes a considerable concern. It is namely giving to the wide expert community in our country as well as in abroad a possibility to accustom the reached level of the manufacturing industry. At the same time it awards the chance to present results of the Czech firms internationally. I believe that Panorama of the Czech Industry furthermore remains to be an indispensable resource of information and acquisition for all of you, be connected with the manufacturing industry occupationally or it presents just a sphere of your interest. Ing. Milan Urban Minister of Industry and Trade 3

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6 CONTENT List of used abbreviations / 9 Table of NACE / Manufacturing industry D / Characteristics of the manufacturing industry / Main production indicators of the manufacturing industry / Employment within manufacturing industry / Foreign trade / Investment / Manufacturing industry perspectives / 21 MANUFACTURE OF FOOD PRODUCTS, BEVERAGES AND TOBACCO PRODUCTS DA / Manufacture of food products and beverages NACE 15 / Main production indicators of the NACE 15 branch / Employment in NACE 15 branch / Foreign trade / Investment / Branch NACE 15 perspectives / 26 MANUFACTURE OF TEXTILES AND TEXTILE AND CLOTHING PRODUCTS DB / Manufacture of textiles and textile product NACE 17 / Main production indicators of the NACE 17 branch / Employment in NACE 17 branch / Foreign trade / Investment / Branch NACE 17 perspectives / Manufacture of wearing apparel; dressing and dyeing of fur NACE 18 / Main production indicators of the NACE 18 branch / Employment in NACE 18 branch / Foreign trade / Investment / Branch NACE 18 perspectives / 34 MANUFACTURE OF LEATHER AND LEATHER PRODUCTS DC / Tanning and dressing of leather, manufacture of handbags, saddlery and the like goods and footwear NACE 19 / Main production indicators of the NACE 19 branch / Employment in NACE 19 branch / Foreign trade / Investment / Branch NACE 19 perspectives / 38 5

7 MANUFACTURE OF WOOD AND WOOD PRODUCTS DD / Processing of wood, manufacture of products of wood, cork, wicker and straw except furniture NACE 20 / Main production indicators of the NACE 20 branch / Employment in NACE 20 branch / Foreign trade / Investment / Branch NACE 20 perspectives / 41 MANUFACTURE OF PULP, PAPER AND PAPER PRODUCTS; PUBLISHING AND PRINTING DE / Manufacture of pulp, paper and paper products NACE 21 / Main production indicators of the NACE 21 branch / Employment in NACE 21 branch / Foreign trade / Investment / Branch NACE 21 perspectives / Publishing, printing and reproduction of recorded media NACE 22 / Main production indicators of the NACE 22 branch / Employment in NACE 22 branch / Foreign trade / Investment / Branch NACE 22 perspectives / 49 MANUFACTURE OF COKE, NUCLEAR FUELS, REFINING OF PETROLEUM DF / Manufacture of coke, nuclear fuels, refining of petroleum NACE 23 / Main production indicators of the NACE 23 branch / Employment in NACE 23 branch / Foreign trade / Investment / Branch NACE 23 perspectives / 52 MANUFACTURE OF CHEMICALS, PREPARATIONS, PHARMACEUTICALS AND MAN-MADE FIBRES DG / Manufacture of chemicals and chemical products NACE 24 / Main production indicators of the NACE 24 branch / Employment in NACE 24 branch / Foreign trade / Investment / Branch NACE 24 perspectives / 58 MANUFACTURE OF RUBBER AND PLASTIC PRODUCTS DH / Manufacture of rubber and plastic products NACE 25 / Main production indicators of the NACE 25 branch / Employment in NACE 25 branch / Foreign trade / Investment / Branch NACE 25 perspectives / 61 6

8 Content MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS DI / Manufacture of other non-metallic mineral products NACE 26 / Main production indicators of the NACE 26 branch / Employment in NACE 26 branch / Foreign trade / Investment / Branch NACE 26 perspectives / 66 MANUFACTURE OF BASIC METALS AND FABRICATED METAL PRODUCTS DJ / Manufacture and processing of basic metals NACE 27 / Main production indicators of the NACE 27 branch / Employment in NACE 27 branch / Foreign trade / Investment / Branch NACE 27 perspectives / Manufacture of structural and fabricated metal products NACE 28 / Main production indicators of the NACE 28 branch / Employment in NACE 28 branch / Foreign trade / Investment / Branch NACE 28 perspectives / 74 MANUFACTURE AND REPAIRS OF MACHINERY AND EQUIPMENT DK / Manufacture and repairs of machinery and equipment NACE 29 / Main production indicators of the NACE 29 branch / Employment in NACE 29 branch / Foreign trade / Investment / Branch NACE 29 perspectives / 79 MANUFACTURE OF ELECTRICAL AND OPTICAL EQUIPMENT DL / Manufacture of office machinery and computers NACE 30 / Main production indicators of the NACE 30 branch / Employment in NACE 30 branch / Foreign trade / Investment / Branch NACE 30 perspectives / Manufacture of electric machinery and equipment NACE 31 / Main production indicators of the NACE 31 branch / Employment in NACE 31 branch / Foreign trade / Investment / Branch NACE 31 perspectives / Manufacture of radio, television, and communication equipment and apparatus NACE 32 / Main production indicators of the NACE 32 branch / Employment in NACE 32 branch / Foreign trade / Investment / Branch NACE 32 perspectives / 91 7

9 1. Manufacture of medical, precision, optical, and time measuring instruments NACE 33 / Main production indicators of the NACE 33 branch / Employment in NACE 33 branch / Foreign trade / Investment / Branch NACE 33 perspectives / 96 MANUFACTURE OF TRANSPORT MEANS AND EQUIPMENT DM / Manufacture of motor vehicles, manufacture of trailers and semi-trailers NACE 34 / Main production indicators of the NACE 34 branch / Employment in NACE 34 branch / Foreign trade / Investment / Branch NACE 34 perspectives / Manufacture of other transport equipment NACE 35 / Main production indicators of the NACE 35 branch / Employment in NACE 35 branch / Foreign trade / Investment / Branch NACE 35 perspectives / 104 MANUFACTURING DN / Manufacture of furniture; manufacturing not elsewhere classified NACE 36 / Main production indicators of the NACE 36 branch / Employment in NACE 36 branch / Foreign trade / Investment / Branch NACE 36 perspectives / 107 8

10 LIST OF USED ABBREVIATIONS Joint stock Co. joint-stock company IPT Inward Processing Trade cur. p. current prices CEFTA Central European Free Trade Agreement (Poland, Czech Republic, Slovakia, Hungary, Slovenia, Romania, Bulgaria) CMGDB Czech-Moravian Guarantee and Development Bank CNB Czech National Bank CR Czech Republic CSO Czech Statistical Office EIA Environmental Impact Assessment on the level of the individual plans EC European Community EFTA European Free Trade Association EU European Union (Austria, Belgium, Czech Republic, Cyprus, Denmark, Estonia, France, Finland, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden) EUR European currency unit GATT General Agreement on Tariffs and Trade HCCP Hazards and Critical Check Points Analysis GDP Gross Domestic Product TIP Tangible Investment Property HIGH-TECH Technically very demanding products n.e.c. not elsewhere classified MIT Ministry of Industry and Trade NACE Statistical Classification of Economic Activities in the European Community OECD Organisation of Economic Co-ordination and Development OKEČ Czech Branch Classification of Economic Activities OPIB Operational Programme Industry and Business VA value added const. p. constant prices SEA Strategic Environmental Assessment process SEVESO accidents prevention CPA Standard classification of products, which is practically equal to the international Classification of Products by Activities SOP Sector Operational Programme s.r.o. Limited company (Ltd.) USD US dollar V a S own products and services (P & S) WTO World Trade Organization M Manufacturing industry Ltd. Co. Limited Liability Company USD USA dollar Own P&S own products and services WTO World Trade Organization MI Manufacturing Industry 9

11 10 NACE TITLE VALID BEFORE TITLE VALID SINCE CONDENSED TITLE DA FOOD AND TOBACCO INDUSTRY MANUFACTURE OF FOOD PRODUCTS AND BEVERAGES, FOOD AND TOBACCO INDUSTRY MANUFACTURE OF TOBACCO PRODUCTS 15 Manufacture of food and beverages Manufacture of food products and beverages Manufacture of food and beverages 15.1 Production of meat and meat products Production, processing and preserving of meat and meat products Production of meat and meat products 15.2 Processing of fish and fish products (incl. preserving) Processing and preserving of fish and fish products Processing of fish and fish products 15.3 Processing of fruit, vegetables and potatoes Processing and preserving of fruit, vegetables and potatoes Processing of fruit, vegetables and potatoes 15.4 Manufacture of vegetable and animal oils and fats Manufacture of vegetable and animal oils and fats Manufacture of oils and fats 15.5 Treatment and processing of milk Processing of milk, manufacture of dairy products and ice-cream Processing of milk and manufacture of ice-cream 15.6 Manufacture of grain mill and starch products Manufacture of grain mill and starch products Manufacture of grain mill products 15.7 Manufacture of prepared animal feeds Manufacture of feeds Manufacture of feeds 15.8 Manufacture of other food industry products Manufacture of other food industry products Manufacture of other food products 15.9 Manufacture of beverages Manufacture of beverages Manufacture of beverages 16 Processing of tobacco Manufacture of tobacco products Processing of tobacco 16.0 Processing of tobacco Manufacture of tobacco products Processing of tobacco DB TEXTILE AND CLOTHING INDUSTRY MANUFACTURE OF TEXTILES AND TEXTILE TEXTILE AND CLOTHING INDUSTRY AND CLOTHING PRODUCTS 17 Textile industry Manufacture of textiles and textile products Textile industry 17.1 Preparation and spinning of textile fibres Preparation and spinning of textile fibres Preparation and spinning of fibres 17.2 Textile weaving Textile weaving Textile weaving 17.3 Finishing of textiles Finishing of textiles Finishing of textiles 17.4 Manufacture of made-up textile articles (except apparel) Manufacture of made-up textile articles, except apparel Manufacture of made-up textile articles 17.5 Other manufacturing of textiles Manufacture of other textile products except wearing apparel Other textile manufacturing 17.6 Manufacture of knitted and crocheted fabrics Manufacture of knitted and crocheted fabrics Manufacture of knitted fabrics 17.7 Manufacture of knitted and crocheted articles Manufacture of knitted and crocheted articles Manufacture of knitted articles 18 Clothing industry, dressing and dyeing of fur Manufacture of wearing apparel; dressing and dyeing of fur Clothing industry 18.1 Manufacture of leather clothes Manufacture of leather clothes Manufacture of leather clothes 18.2 Manufacture of other wearing apparel and accessories Manufacture of other wearing apparel and accessories Manufacture of other wearing apparel and underwear 18.3 Dressing and dyeing of fur; manufacture of articles of fur Dressing and dyeing of fur; manufacture of articles of fur Dressing of fur

12 11 NACE TITLE VALID BEFORE TITLE VALID SINCE CONDENSED TITLE DC LEATHER INDUSTRY MANUFACTURE OF LEATHER AND LEATHER PRODUCTS LEATHER INDUSTRY 19 Tanning and dressing of leather, Tanning and dressing of leather, manufacture of handbags, Manufacture of leather, manufacture of handbags and the like, saddlery and footwear saddlery and the like goods and footwear dry goods and footwear 19.1 Tanning and dressing of leather Tanning and dressing of leather Tanning and dressing of leather 19.2 Manufacture of handbags and the like, Manufacture of luggage, handbags, saddlery and the like goods Manufacture of handbags and saddlery goods saddlery and other products of leather and plastics 19.3 Manufacture of footwear Manufacture of footwear Manufacture of footwear DD WOOD-PROCESSING INDUSTRY WOOD-PROCESSING INDUSTRY WOOD-PROCESSING INDUSTRY 20 Wood-processing industry Processing of wood, manufacture of products of wood, cork, Manufacture of wood products wicker and straw except furniture and others 20.1 Sawmilling and impregnation of wood Sawmilling and impregnation of wood Sawmilling and impregnation of wood 20.2 Manufacture of veneer sheets, Manufacture of veneer sheets, Manufacture of agglomerated products and others plywood products and agglomerated wooden products plywood and agglomerated wooden products 20.3 Manufacture of builders carpentry and joinery Manufacture of builders carpentry and joinery Manufacture of builders carpentry and joinery 20.4 Manufacture of wooden containers, pallets inclusively Manufacture of wooden containers Manufacture of wooden containers 20.5 Manufacture of other products of wood; manufacture of articles of cork; Manufacture of other products of wood, cork, Manufacture of other products of wood, cork, manufacture of plaiting materials products wicker and straw except furniture wicker and straw DE PAPER AND PRINTING INDUSTRY, PUBLISHING ACTIVITIES MANUFACTURE OF PULP, PAPER AND PAPER PRODUCTS; PAPER INDUSTRY AND PRINTING PUBLISHING AND PRINTING 21 Manufacture of pulp, paper and paperboard Manufacture of pulp, paper and paper products Pulp and paper industry 21.1 Manufacture of pulp, paper and paperboard Manufacture of pulp, paper and paperboard Manufacture of pulp, paper and paperboard 21.2 Manufacture of articles of paper and paperboard Manufacture of articles of paper and paperboard Manufacture of articles of paper and paperboard 22 Publishing, printing and reproduction of recorded media Publishing, printing and reproduction of recorded media Printing industry 22.1 Publishing Publishing Publishing 22.2 Printing and service activities related to printing Printing and service activities related to printing Printing and related activities 22.3 Reproduction of recorded media Reproduction of recorded media Reproduction of recorded media DF MANUFACTURE OF COKE, REFINING OF PETROLEUM, MANUFACTURE OF COKE, NUCLEAR FUELS, COKE AND REFINED PETROLEUM MANUFACTURE OF NUCLEAR FUEL, REFINING OF PETROLEUM MANUFACTURING RADIOACTIVE ELEMENTS AND COMPOUNDS 23 Manufacture of coke, refining of petroleum, Manufacture of coke, nuclear fuels, refining of petroleum Manufacture of coke and refined petroleum manufacture of nuclear fuel, radioactive elements and compounds 23.1 Manufacture of coke oven products Manufacture of coke oven products Manufacture of coke oven products 23.2 Refining of petroleum Manufacture of refined petroleum products Refining of petroleum 23.3 Manufacture of nuclear fuel, radioactive elements and compounds Processing of nuclear fuels, radioactive elements and compounds Manufacture of nuclear fuels and radioactive elements Table of NACE

13 12 NACE TITLE VALID BEFORE TITLE VALID SINCE CONDENSED TITLE DG CHEMICAL AND PHARMACEUTICAL INDUSTRY MANUFACTURE OF CHEMICALS, PREPARATIONS, CHEMICAL AND PHARMACEUTICAL INDUSTRY PHARMACEUTICALS AND CHEMICAL FIBRES 24 Manufacture of chemicals Manufacture of chemicals, preparations, Manufacture of chemical products pharmaceuticals and man-made fibres 24.1 Manufacture of basic chemicals Manufacture of basic chemicals Manufacture of basic chemicals 24.2 Manufacture of pesticides and other agro-chemical products Manufacture of pesticides and other agro-chemical products Manufacture of pesticides and agro-chemicals 24.3 Manufacture of paints, varnishes and similar coatings, Manufacture of paints, varnishes and similar coatings, Manufacture of paints, varnishes and mastics printing ink and mastics printing ink and mastics 24.4 Manufacture of pharmaceuticals, chemicals and botanical products Manufacture of pharmaceuticals, chemicals and botanical products Manufacture of pharmaceuticals and other products for medicinal purposes, cotton wool and bandage means 24.5 Manufacture of soap and detergents, cleaning and polishing preparations, Manufacture of soap and detergents, cleaning and polishing preparations Manufacture of cleaning and cosmetic preparations cosmetic products 24.6 Manufacture of other chemical products Manufacture of other chemicals and chemical preparations Manufacture of other chemical products 24.7 Manufacture of man-made fibres Manufacture of man-made fibres Manufacture of man-made fibres DH RUBBER AND PLASTIC INDUSTRY MANUFACTURE OF RUBBER AND PLASTIC PRODUCTS RUBBER AND PLASTIC INDUSTRY 25 Manufacture of rubber and plastic products Manufacture of rubber and plastic products Manufacture of rubber and plastic products 25.1 Manufacture of rubber products Manufacture of rubber products Manufacture of rubber products 25.2 Manufacture of plastic products Manufacture of plastic products Manufacture of plastic products DI GLASS CERAMICS, PORCELAIN AND BUILDING MATERIAL INDUSTRY MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS MANUFACTURE OF GLASS AND BUILDING MATERIALS 26 Manufacture of other non-metallic mineral products Manufacture of other non-metallic mineral products Manufacture of mineral products 26.1 Manufacture and processing of glass Manufacture of glass and glass products Manufacture of glass and glass products 26.2 Manufacture of non-refractory ceramic and porcelain goods other than Manufacture of non-refractory ceramic and porcelain goods other than Manufacture of non-refractory products; for construction purposes; manufacture of refractory ceramic goods for construction purposes; manufacture of refractory ceramic products manufacture of refractory products 26.3 Manufacture of bricks, tiles, in baked clay Manufacture of tiles and bricks, in baked clay Manufacture of tiles and flags 26.4 Manufacture of bricks, burnt tile roofing and stoneware, in baked clay Manufacture of burnt masonry materials, tiles, bricks and similar products Manufacture of brick-making goods 26.5 Manufacture of cement, lime and plaster Manufacture of cement, lime and plaster Manufacture of cement, lime and plaster 26.6 Manufacture of articles of concrete, plaster or cement Manufacture of articles of concrete, plaster, lime and cement Manufacture of articles of concrete 26.7 Processing of building stone Cutting, shaping and finishing of ornamental and building stone Processing of stone 26.8 Manufacture of other non-metallic mineral products Manufacture of other non-metallic mineral products Manufacture of other mineral products

14 13 NACE TITLE VALID BEFORE TITLE VALID SINCE CONDENSED TITLE DJ MANUFACTURE OF BASIC METALS MANUFACTURE OF BASIC METALS MANUFACTURE OF BASIC METALS AND FABRICATED METAL PRODUCTS AND FABRICATED METAL PRODUCTS AND METAL PRODUCTS 27 Manufacture and processing of basic metals Manufacture and processing of basic metals Metallurgy and basic metals processing 27.1 Manufacture of basic iron, steel, Manufacture of basic iron, steel, Manufacture and rolling of basic iron and steel ferro-alloys and flat products and hot forming ferro-alloys and flat products, hot forming of products 27.2 Manufacture of tubes of cast iron or steel, inclusively accessories Manufacture of tubes of cast iron or steel Manufacture cast iron and steel tubes 27.3 Other first processing of iron, steel and ferro-alloys Other first processing of iron and steel Other first processing of iron and steel 27.4 Manufacture and first processing of metals Manufacture and first processing of non-ferrous metals Manufacture and processing of basic non-ferrous metals 27.5 Casting of metals Casting of metals Casting of metals 28 Manufacture of structural and fabricated metal products Manufacture of structural and fabricated metal products Manufacture fabricated metal products except machinery and equipment (except machinery and equipment) 28.1 Manufacture of structural metal products and prefabricated elements Manufacture of metal structures and prefabricates Manufacture of structural metal products and prefabricates 28.2 Manufacture of tanks, reservoirs and containers of metal; Manufacture of tanks, reservoirs and containers of metal; Manufacture of metal tanks and boilers manufacture of central heating radiators and boilers manufacture of central heating radiators and boilers 28.3 Manufacture of steam generators, except central heating hot water boilers; Manufacture of steam generators, except central heating hot water boilers Manufacture of steam generators manufacture of nuclear reactors 28.4 Forging, pressing, stamping and roll forming of metal; powder metallurgy Forging, pressing, stamping and roll forming of metal; powder metallurgy Forging and pressing of metal; powder metallurgy 28.5 Surface treatment and coating of metals; Surface treatment and coating of metals; general mechanical engineering Surface treatment and coating of metals general mechanical finishing of metals 28.6 Manufacture of cutlery, tools and general hardware Manufacture of cutlery, tools and general hardware Manufacture of general hardware 28.7 Manufacture of other fabricated metal products Manufacture of other fabricated metal products Manufacture of other fabricated metal products DK MANUFACTURE OF MACHINERY AND EQUIPMENT MANUFACTURE AND REPAIRING OF MACHINERY MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C. AND EQUIPMENT 29 Manufacture of machinery and equipments Manufacture and repairing of machinery and equipments n.e.c. Manufacture and repairing of machinery and equipments n.e.c Manufacture of machinery for the production and use of mechanical power, Manufacture and repairing of machinery for the production and use Manufacture of machinery except aircraft, vehicle and cycle engines of mechanical power, except aircraft, vehicle and cycle engines for the product. of mech. power 29.2 Manufacture of other general-purpose machinery Manufacture and repairing of other machinery and general-purpose machinery Manufacture of other general-purpose machinery 29.3 Manufacture of agricultural and forestry machinery Manufacture and repairing of agricultural and forestry machinery Manufacture of agricultural and forestry machinery 29.4 Manufacture of machine tools Manufacture and repairing of machine tools and forming machines Manufacture of machine and forming tools 29.5 Manufacture of other special purpose machinery Manufacture and repairing of other special purpose machinery Manufacture of other special purpose machinery 29.6 Manufacture of weapons and ammunition Manufacture and repairing of weapons and ammunition Manufacture of weapons and ammunition 29.7 Manufacture of household appliances n.e.c. Manufacture of household appliances and equipment n.e.c. Manufacture of household appliances Table of NACE

15 14 NACE TITLE VALID BEFORE TITLE VALID SINCE CONDENSED TITLE DL MANUFACTURE OF ELECTRICAL AND OPTICAL EQUIPMENT MANUFACTURE OF ELECTRICAL AND OPTICAL EQUIPMENT MANUFACTURE OF ELECTRICAL AND OPTICAL EQUIPMENT 30 Manufacture of office machinery and computers Manufacture of office machinery and computers Manufacture of office machinery and computers 30.0 Manufacture of office machinery and computers Manufacture of office machinery and computers Manufacture of office machinery and computers 31 Manufacture of electrical machinery and apparatus n.e.c. Manufacture of electrical machinery and apparatus n.e.c. Manufacture of electrical machinery and apparatus 31.1 Manufacture of electric motors, generators and transformers Manufacture of electric motors, generators and transformers Manufacture of electric machines 31.2 Manufacture of electricity distribution and control apparatus Manufacture of electricity distribution and control apparatus Manufacture of electricity distribution and control apparatus 31.3 Manufacture of insulated wire and cable Manufacture of insulated wire and cable Manufacture of insulated wire and cable 31.4 Manufacture of accumulators, primary cells and primary batteries Manufacture of accumulators, primary cells and primary batteries Manufacture of accumulators and galvanic cells 31.5 Manufacture of lighting equipment and electric lamps Manufacture of lighting equipment and electric lamps Manufacture of lighting equipment and electric lamps 31.6 Manufacture of electrical equipment Manufacture of electrical equipment n.e.c. Manufacture of other electrical equipment 32 Manufacture of radio, television and communication equipment and apparatus Manufacture of radio, television and communication equipment and apparatus Manufacture of radio, TV and communic. engineering 32.1 Manufacture of electronic valves and tubes and other electronic components Manufacture of electronic valves and tubes and other electronic components Manufacture of electronic components 32.2 Manufacture of television and radio transmitters, Manufacture of radio and television transmitters and apparatus Manufacture of telecommunication engineering incl. apparatus for line telephony and line telegraphy for line telephony and line telegraphy 32.3 Manufacture of television and radio receivers, Manufacture of radio and television transmitters and receivers, Manufacture of consumer electronics incl. sound and video recording or reproducing apparatus sound or video recording and reproducing apparatus 33 Manufacture of medical, precision, optical and time measuring instruments Manufacture of medical, precision, optical and time measuring instruments Manufacture of instruments for measuring, control and automation 33.1 Manufacture of medical and surgical apparatus and equipment, Manufacture of medical and surgical equipment and apparatus, Manufacture of healthcare equipment incl. orthopaedic appliances manufacture of surgical and orthopaedic appliances 33.2 Manufacture of instruments and appliances for measuring, checking, Manufacture of instruments and appliances for measuring, checking, testing, Manufacture of control equipment navigating and other purposes, except industrial process control equipment navigating and other purposes, except industrial process control equipment 33.3 Manufacture of industrial process control equipment Manufacture of industrial process control equipment Manufacture of equipment for control of ind. Processes 33.4 Manufacture of optical instruments and photographic equipment Manufacture of optical and photographic instruments and equipment Manufacture of optical and photographic instruments 33.5 Manufacture of time meters Manufacture of time measuring instruments Manufacture of time measuring instruments

16 NACE TITLE VALID BEFORE TITLE VALID SINCE CONDENSED TITLE DM MANUFACTURE OF TRANSPORT EQUIPMENT MANUFACTURE OF TRANSPORT MEANS AND EQUIPMENT MANUFACTURE OF TRANSPORT EQUIPMENT 34 Manufacture of dual-track motor vehicles, trailers and semi-trailers Manufacture of motor vehicles (except motorcycles), Manufacture of dual-track motor vehicles manufacture of trailers and semi-trailers 34.1 Manufacture of dual-track motor vehicles and their engines Manufacture of motor vehicles (except motorcycles) and their engines Manufacture of dual-track motor vehicles and engines 34.2 Manufacture of bodies (coachwork) for motor vehicles; Manufacture of bodies (coachwork) for motor vehicles; Manufacture of bodies for motor vehicles, manufacture of trailers and semi-trailers manufacture of trailers and semi-trailers manuf. of trailers and semi-trailers 34.3 Manufacture of parts and accessories for motor vehicles Manufacture of parts and accessories for motor vehicles Manufacture of accessories for motor vehicles (except motorcycles) and their engines (except motorcycles) and their engines 35 Manufacture of other transport equipment Manufacture of other transport means and equipment Manufacture of other transport equipment 35.1 Building and repairing of ships and boats Building and repairing of ships and boats Building and repairing of ships and boats 35.2 Manufacture of railway and tramway locomotives and rolling stock Manufacture and repairing of railway and tramway locomotives Manufacture of railway and tramway locomotives and rolling stock 35.3 Manufacture of aircraft and spacecraft Manufacture and repairing of aircraft and spacecraft Manufacture of aircraft and spacecraft 35.4 Manufacture of motorcycles and bicycles Manufacture and repairing of motorcycles, bicycles and invalid carriages Manufacture of motorcycles and bicycles 35.5 Manufacture of other transport equipment Manufacture and repairing of other transport means and equipment n.e.c. Manufacture of other transport equipment DN MANUFACTURING N.E.C. MANUFACTURING N.E.C. MANUFACTURING N.E.C. 36 Manufacture of furniture; other manufacturing industry Manufacture of furniture; manufacturing n.e.c. Manufacture of furniture and other manufacturing 36.1 Manufacture of furniture Manufacture of furniture Manufacture of furniture 36.2 Manufacture of coins and medals; Manufacture of jewellery and related articles Manufacture of jewellery and related articles manufacture of goldsmith and jewellery articles 36.3 Manufacture of musical instruments Manufacture of musical instruments Manufacture of musical instruments 36.4 Manufacture of sports goods Manufacture of sports goods Manufacture of sports goods 36.5 Manufacture of games and toys Manufacture of games and toys Manufacture of games and toys 36.6 Other miscellaneous manufacturing Other miscellaneous manufacturing n.e.c. Other manufacturing 37 Recycling Recycling Recycling 37.1 Recycling of metal waste and scrap Recycling of metal waste and scrap Recycling of metal waste and scrap 37.2 Recycling of non-metal waste and scrap Recycling of non-metal waste and scrap Recycling of non-metal waste Table of NACE 15

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18 Manufacturing industry 1. Manufacturing industry D 1.1 Characteristics of the manufacturing industry The manufacturing industry in CR takes a significant share in creation of the gross domestic product. In 2004 it was thanks to the favourable economic development 27% (+ 3% as compared with 2003). In the total receipts of the industry it shared in the last year 90,2% (89,7% in 2003), 7,2% shared the production and distribution of electric energy, gas and water and the remaining 2,6% shared the production of mineral raw materials. The most rapid development showed the manufacturing branches, which are creating higher value added and on the contrary the branches, which are labour and raw materials intensive, were stagnating. Thanks to this trend our manufacturing industry is gradually getting a structure current in the developed industrial economies. 1.2 Main production indicators of the manufacturing industry The manufacturing industry is divided in 14 subsections (sectors), 23 divisions (branches) and 103 groups (lines). Shares of the branches in main production indicators of the manufacturing industry in 2004, in cur. p. % Number of employees Value added Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated As it follows from the graph of the main production indicators, the decisive share in the main indicators of the manufacturing industry have four subsections: DJ Manufacture of basic metals and fabricated metal products (17%) DL Electrical and optical equipment industry (15,8%) DM Transport equipment industry (15%) DA Food and tobacco industry (11%) By far the lowest share had in 2004 the subsection DC (Leather industry 0,3%), which is in a permanent recession. From the table of main production indicators it may be confirmed, that the largest pace of the growth of receipts in the manufacturing industry was recorded in the last year (in cur. p. + 14,9%, in const. p. 10,7%), namely thanks to the subsections DJ (+ 9,6% in const. p.), DL (+ 35,3% in const. p.) and DM (+ 11,2% in const. p.), which experienced an economic boom. Very favourable development showed the value added indicator, which interyearly increased by 8,4%, mainly thanks to the subsections showing the largely export character and the highest dynamics. 17

19 Main production indicators of the manufacturing industry, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S MI , , , , ,6 Year-on-year index x 110,8 105,4 105,6 110,7 Cumulative index 100,0 110,8 116,8 123,3 136,5 Value added MI , , , , ,6 Year-on-year index x 108,1 101,3 105,3 108,5 Cumulative index 100,0 108,1 109,5 115,3 125,1 Labour productivity from VA MI 353,1 369,6 385,7 412,4 449,5 Year-on-year index x 104,7 104,4 106,9 109,0 Cumulative index 100,0 104,7 109,2 116,8 127,3 Number of employees MI , , , , ,0 Year-on-year index x 103,3 97,0 98,5 99,5 Cumulative index 100,0 103,3 100,3 98,7 98,3 Source: Czech Statistical Office, MIT estimate, *preliminary data Number of employees has been declining since 2002, however, the development is differentiated in a great extent: while in the subsection DB (Textile and clothing industry) it dropped between 2000 and 2004 by 34,6 thousands employees, in the subsection DL it increased by 23,5 thousands employees and in the subsection DH (Rubber and plastic products industry) by 16,3 thousands employees. The indicator of the labour productivity from value added was developing favourably in the entire period under review, where the largest growth was recorded in the last year (+ 9%). Far the highest values showed the chemical branches, subsection DF (Manufacture of coke, refining of petroleum) CZK/employee thousand and subsection DG (CZK/employee 937,3 thousands). On the contrary the lowest value showed the labour intensive subsections of the light industry, i.e., DB, DC and DD (Wood-processing industry). At the same time it holds to be true that in the labour productivity the enterprises with Czech owners are significantly lagging back behind the firms under foreign control (just about 55 60% of their level). 1.3 Employment within manufacturing industry Employment structure, according to the size of enterprises, in the manufacturing industry, in and more 18% % % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 18

20 Manufacturing industry From the graph of the size structure of employment it may be estimated that most people are employed in the categories of firms with and employees, equally 25% both. 18% of workers are employed in the category of large enterprises occupying more than 1000 employees, in which altogether 32% of the total receipts of the manufacturing industry are realised. In the small and micro enterprises categories act 16% of the total number of employees in each. In 2003, however, their share in receipts was amounted just to 11,4% and 6,1%, respectively, i.e., 17,5% in total. As it follows from the more detailed analysis, after the temporary growth of the number of employees by 3,3% (at ) in 2001, this indicator was declining in the following years in 2004 it was inter-yearly by employees or 0,5%, respectively. Wages in the manufacturing industry are growing in March 2005 the average monthly wage reached CZK , i.e., by 3,5% more than in the same month of the foregoing year. The monthly receipts per employee in const. p. in the same month increased by 4,9%, so the labour productivity was growing by a more rapid pace than wages. By the Resolution of the CR Government No. 566/2004 Vol., the Programme of support to creation of jobs in regions mostly affected by unemployment was approved. Its objective is to stimulate creation of the new jobs by revival of economic development in regions with unemployment over 14%, namely in the form of plans (projects) aiming into the manufacturing industry or strategic services, respectively. At the beginning of May 2005 (Programme was enounced for the period ) MIT as administrator and assessor executed applications of 27 firms, which in the affected regions assume to invest more than CZK 1,1 billions and create approx. 3,5 thousand of new jobs. For the time being most projects were delivered from Moravia from South Moravian region (10) and Moravia-Silesian region (8). Generally, it may be assumed that the entrepreneurial environment in the manufacturing industry is gradually improving, some weaknesses, however, henceforth exist. It is valid for both, the economic output (slow growth of employment, low volume of the Czech investments in abroad) and functioning of the entrepreneurial subjects themselves (financial and marketing experts are missing, the supervisory boards are unsatisfactorily inspecting the top managements), it is, however, also valid for the infrastructure (high energy intensity per unit of the production, high CO 2 emissions etc., somewhere the low level of the information technologies is recorded). To the improvement of the stage of affairs, effective steps of the state administration can contribute, which will be limiting the excessive administrative and facilitate the business, the access to the financial means mainly. 1.4 Foreign trade Foreign trade development in CPA products, in (Mill. CZK) Export , , , , ,5 Import , , , , ,1 Balance , , , , ,4 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 113,9 98,9 109,1 125,1 Import x 112,4 96,8 108,8 121,3 Source: Czech Statistical Office, MIT estimate As the table on the foreign trade development documents, in the period the export increased by 53,7%, while the import just by 43,6%, thanks to the advanced growth of export before import, the favourable balance was for the first time recorded in 2002 and in 2004 it exceeded CZK 60 billions. Extraordinary successful was in this evaluation the year 2004, when the export increased as compared with the 19

21 foregoing year by 25,1%, while the import increased by 21,3% only. At the same time, according to the Lehmann Brothers Investment Bank study the growth of our export was the quickest among all European countries (+ 7,1%) and in its dynamics the CR was overtaken just by China and Korean Republic (+ 8,6% both). The positive balance was recorded with the three largest trade partners, namely with FRG (CZK + 75,3 billions), Slovakia (+ 51,5 billions) and Austria (CZK + 31,4 billions). On the contrary the highest unfavourable balance was with China (CZK 80,8 billions), Japan (CZK 49,2 billions) and Russia (CZK 46,7 billions). The export performance of the manufacturing industry is gradually growing (almost 52% in 2004, while in 2000 it was slightly under 44%). The largest level of this indicator showed in the last year the subsections DL (81%) and DM (78%). The import intensity notably increased in the last year at 36%. The actual development in this year (January April 2005) shows that at the favourable boom the positive balance of the manufacturing industry foreign trade could furthermore enhance at CZK 80 to 100 billions. In the last year minimal changes were registered as to the territorial structure. The clearly largest trade partner remains to be FRG (turnover CZK billions) before Slovakia (turnover CZK 163 billions). At the same time the CR foreign trade with all decisive partners significantly increased in the last year. 20

22 Manufacturing industry 1.5 Investment The gross tangible investments in the manufacturing industry increased by more than 16%, including growth by 19,2% in the machinery investments. The most investments were channelled into the subsections DM (CZK 36,5 billions), DJ (almost CZK 15 billions) and DA (CZK 17,2 billions). The system of investment incentives, as adapted by the Law No. 19/2004 Vol., is widely developed in CR. In compliance with this, law investment incentives to 155 firms were afforded by the end of the last year. The investments, which were terminated by these companies or which are being implemented by them should reach in total CZK 185 billions and altogether 41,8 thousands of the new jobs will be created and minimally the same number of so called indirect jobs. The decisive action, which was supported by the investment incentive in the last year, was the construction of the automobile factory TPCA in Kolín, furthermore it were the projects of the firms Daikin, continental, Shimano etc. The direct foreign investments (FDI) present for our economy one of the main stimuli of economic growth. Their volume exceeded CZK one billion in the period In the last year the total influx of FDI attained almost CZK 115 billions and increased by more than 57% as compared with It was significantly supported just by the investment incentives: MIT decide on investment incentives for 31 firms in the total volume of USD 1,7 billions, which will bring over 7,5 thousand of new jobs, will help to modernise the manufacturing branches and will enhance our competitiveness on the international market. 1.6 Manufacturing industry perspectives The World Bank else categorised in the last year our economy for the first time among the advanced countries, nevertheless as to the competitiveness in the global amount we have still a lot to catch up. According to the study of International Institute for Development of Management in Lausanne, namely we occupy 36. position among 60 assessed states (improvement by 7 positions as compared with the foregoing year). The grade is dominated by USA (index 100), while CR is assessed by index 60. When evaluating the competitiveness, it must be taken into account the fact that the companies with the foreign investor are attaining much better results, than that ones with the domestic owners (labour productivity higher by 80%, better-quality personnel, sophisticated access to the manpower management, export orientation etc.). In addition considerable reserves still exist in the support given to science and research, in organisation of work, in level of management, in raw material and energy intensity etc. The next development of the manufacturing industry in CR can be influenced by a number of factors, namely the development of the raw materials and energies prices (crude oil and further raw materials commodities), interest of foreign and domestic investors on business in CR, successes in using of all forms of assistances given to the economic development (namely structural funds, support of export, support of science, research, development and innovations), further stimuli in the sphere of the economic, industrial and trade polices, respectively. If we succeed in fulfilment of the objectives, which were in this year stressed by CR Government in its programme declaration, there is a real chance to accelerate the pace of the GDP growth and so come more quickly near to the European Union average. 21

23 MANUFACTURE OF FOOD PRODUCTS, BEVERAGES AND TOBACCO PRODUCTS DA 1. Manufacture of food products and beverages NACE 15 The manufacture of food products and beverages (NACE 15) is closely connected with the agriculture. An important measure, which should substantially affect the character, performance and competitiveness of the production, presented the adoption of the Conception of the Czech Republic foodstuff industry for the period after the accession to EU ( ) by the Czech Republic Government (October 2004). This conception is connected with the adoption of the EU foodstuff policy, in which the foodstuffs safety was laid out as the main priority. Besides the foodstuff safety, which strategy was also adopted by the Czech Government, the sufficiency of foodstuffs as to the assortment and amount and also the influence on consumers with respect to the correct nutrition principles, belong to other priorities. It also concerns the active marketing policy supporting the sale of the good-class foodstuffs. In the conception the protection of environment at the foodstuffs manufacturing is also planned. It is an intention that the branch NACE 15 will furthermore keep its economically important position within the manufacturing industry, similarly as in other developed countries. At the relatively high pace of the production in majority of the manufacturing industry branches, the share of this branch within manufacturing in sale of own products and services was 12,0% in 2004, in outputs inclusively the trade margin it was 12,2%, in labour costs 10,1% and in the number of employees 10,3%. From a part of the branches the foodstuff sector is buying its inputs and so influencing the amount of their productions. In contrast to the entire manufacturing sector, production indicators in the branch NACE 15 were in the period from 2000 to 2004 relatively fluctuating and showed entirely lower pace. Lower rate of the foodstuffs production growth is given by the high offer and size of the assortment on the domestic market, which in principle corresponds to the level in the developed countries. At the same time the demand of foodstuffs also corresponds to the purchasing power of consumers, which remains in comparison with the mentioned countries lower. In the export area is the growth limited by a high competition on markets, where foodstuffs and beverages from CR are exported. 1.1 Main production indicators of the NACE 15 branch Main production indicators in NACE 15, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

24 NACE 15 The number of employees in this branch, at continuing concentration of production accompanied by closing down of some non-perspective plants, decreased from thousand to thousand, i.e. by employees. The cumulative index of receipts from sales of own products and services in the branch achieved the level of 104,4 and the value added at certain fluctuation in 2001 to 2003 hold in 2004 about the level of 2000 only. The positive trend in the assessed branch was registered in the labour productivity from value added. The cumulative index of this indicator in NACE 15 branch reached the value of 107,9. In comparison with the growth dynamics of this indicator in the total manufacturing industry, the reached rate in NACE 15 is substantially lower so respecting the development stagnation in the value added. Main production indicators in NACE 15, in , in constant prices (mill. CZK, employees) * Receipts from sales of own P and S , , , , ,0 Year-on-year index x 101,7 104,2 99,2 99,3 Cumulative index 100,0 101,7 105,9 105,1 104,4 Value added , , , , ,7 Year-on-year index x 97,1 100,3 103,3 99,3 Cumulative index 100,0 97,1 97,4 100,6 100,0 Labour productivity from VA ,7 348,2 354,2 372,5 383,7 Year-on-year index x 97,9 101,7 105,2 103,0 Cumulative index 100,0 97,9 99,6 104,7 107,9 Number of employees , , , , ,0 Year-on-year index x 99,2 98,6 98,2 96,5 Cumulative index 100,0 99,2 97,8 96,1 92,7 Source: Czech Statistical Office, MIT estimate, *preliminary data 1.2 Employment in NACE 15 branch From the graph indicating the size structure of employment in NACE 15 it follows that the pillars of the assessed branch remain to be, from the point of employment as well, the middle-sized enterprises ( employees), in which almost one third of employees of the branch is occupied. At the employment decrease and Employment structure, according to the size of enterprises, in 2004 NACE and more 16% 0 9 7% % % Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated % 23

25 labour productivity growth the nominal growth of wages in the branch continued. Their level, however, does not reach the level of the manufacturing sector in total. Possibility of maintaining or creation of jobs, respectively, in the production of foodstuffs products and beverages is connected with the development of business environment. It depends on the volume of support given to small and medium-sized enterprises, i.e. enterprises, which are creating the pillar of this production. For the support of business it is desirable to use both, i.e., the national resources as well as the resources from the European funds. The improvement of the business environment should contribute to strengthening of the branch economic situation, namely to higher protection of foodstuffs producers as deliverers against their customers, i.e., against the distribution chains. The present economic situation of the branch demands support or protection, respectively, for the economic situation in the individual production groups and their business base being very divers as to the efficiency level. The assessed branch belongs also to that sectors, which were most affected by bankruptcies and liquidations in the precedent years. Economically strong and large enterprises, which are usually achieving a high value added per employee, are not many in the branch. To the largest enterprises in the category of to and more employees in the foodstuff area belong (ranked by the descending size): Prazdroj Plzeň, joint-stock co. Plzeň (beer production), PENAM, Ltd. Brno (production of pastry), MADETA, joint-stock co. České Budějovice (milk and dairy production), Unilever ČR, joint-stock co. Praha (production of fats), DELTA PEKÁRNY, joint-stock co. BRNO (production of pastry), Opavia-LU, joint-stock co. Praha (sweets production), Nestlé Česko, joint-stock co. Praha (sweets production), Kostelecké uzeniny, joint-stock co. (meat and meat products manufacture), VI- TANA, joint-stock co. Byšice (complete meals production), Coca-Cola Beverages, joint-stock co. s. r. o. Praha (production of alcohol-free beverages), Pivovary STAROPRAMEN, joint-stock co. Praha (beer production) and Setuza, joint-stock co. Ústí nad Labem (production of fats). From the survey of the given firms it is obvious that they are carrying their business in the decisive foodstuff branches and are acting in different regions. 1.3 Foreign trade The total balance of the foreign trade with foodstuffs products and beverages was else fluctuating in the period from 2000 to 2004, at growing turnover, however, it remained permanently unfavourable. Not even after the creation of the EU 25 common market (as on ), which meant improvement of trade conditions towards the EU 15 countries and enlargement of the domestic market protection towards the so called third countries, the situation in the foreign trade with products under discussion did not change in such a way that the volume of import would be in a greater extent balanced by export. In spite of the fact that the export of traditional commodities as, e.g., sweets, beer, malt or dairy products etc. is continuing, the import of products with higher value added is growing, which is unfavourably influencing the foreign trade balance on one side and has also an impact on CR producers on the other. Foreign trade development in CPA 15 products, in (Mill. CZK) Export , , , , ,7 Import , , , , ,9 Balance , , , , ,2 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 116,8 91,1 107,2 128,8 Import x 107,8 101,0 108,6 124,7 Source: Czech Statistical Office, MIT estimate 24

26 NACE Investment The need of further continuation of the investment process for the sake of competitiveness strengthening is following from the conceptual plans of the branch. In the field of the investment incentives belongs the foodstuffs industry among the less supported branches. Only 5 projects were supported and 770 new jobs created in this sector (which means the share of 1,4% of jobs created within the manufacturing industry). With regard to the structure of firms acting in the assessed branch, the grants given to the small and mediumsized enterprises are significant. For the mentioned category of enterprises the support in 2004 was amounted to 188,1 mill. CZK, i.e., it was less than in 2003, when the assistance reached CZK 226,0 mill. 25

27 Within the Plan for development of agriculture and countryside altogether 348,8 mill. CZK were drawndown in 2004 and for the measure Improvement of the structures for quality control, foodstuffs quality and consumer protection it was CZK 193,0 mill. In the framework of the so called brown-field regeneration the Lovosice project (liquidated sugar factory) was implemented in the last years. In projects approved within the measure INNOVATION of the Operational Programme Industry and Business altogether 6 projects were accepted in the branch under discussion, however, the demanded assistance 112,2 mill. CZK was not awarded. While the share of the foreign direct investment in NACE 15 branch is gradually rather decreasing within the national economy, their volume is growing. The volume of the indigenous investments in abroad is growing as well. Both mentioned trends will perhaps continue in the middle-term horizon in future. 1.5 Branch NACE 15 perspectives From the development of production indicators in as well as from the entire economic development it follows that the manufacture of foodstuffs products and beverages has a potential to enhance its competitiveness and to strengthen its position, namely within the national economy. All this can, however, happen only under the condition of further improvement of the business environment and manufacturers larger flexibility as well as of their effective strategy on the domestic and foreign market. As to the improvement of the business environment, it concerns greater possibility of engagement in programmes financed from both, i.e., EU as well as from national resources and greater stability of manufacturers. It also concerns stabilisation of the legal environment in wider sense as, e.g., bankruptcy law or protection of the environment (IPPC problematic, packaging etc. and determination of real duties following from these regulations) and also in specific fields connected with the manufacture under review, such as the foodstuffs or veterinary law. In case of improvement of the economic, marketing and legal conditions for business in the sphere of foodstuffs and beverages manufacture and at closer interconnection of firms mutually linked-up or otherwise collaborating, e.g., in the form of clusters and also at higher utilisation of scientific and research results than until now, the growth of competitiveness of this manufacture may be expected. The outlined development may be expected in carrier groups of the branch in the mid-term horizon with anticipation that in addition a part of the complete companies will leave the market. In the same time it also presents a precondition for more dynamic growth of economically strong companies as well of the entire branch in the challenging conditions of widening globalisation, which are manifested by growing influence of the foodstuffs distributors and not at last also of gastronomy. 26

28 NACE 17 MANUFACTURE OF TEXTILES AND TEXTILE AND CLOTHING PRODUCTS DB 1. Manufacture of textiles and textile product NACE 17 The textile industry is an export oriented branch with a short innovation cycle of the products alternation. According to the type of processed raw materials it is divided into the cotton, linen, wool and knitwear industries. Most textile industry manufacturers operate in more technological stages. Share of the manufacture of textiles and textile products in receipts of the manufacturing industry was in ,1%, in number of workers it was 3,8% and in value added 2,6%. The share of the given indicators in the manufacturing industry has been gradually and permanently decreasing in the time series since 2000 to The reason is the growing competition of the Asia countries mainly, the liberalisation of trade with textile products and the drop of economic activity in the EU countries and in Germany mainly. 1.1 Main production indicators of the NACE 17 branch In the period from 2000 to 2004 the development in main production indicators of the textile industry branch was manifested by stagnation of receipts from the sales of own products and services and of the value added in constant prices as well as by the decrease of the number of employees by almost 17,5 thousand. The strengthening competition accompanied by liberalisation of the world market gave rise to the need of manufacture restructuring associated with liquidation of non-effective plants and limitation of the manufacture of standard products. The growth of the labour productivity from value added as compared with 2000 was the largest in group 17.5 Manufacture of other textile products except wearing apparel namely by 83,5%. The technical textiles have a significant share in its growth, where the largest development of sophisticated manufactures has been observed. Stagnation or moderate drop of the productivity was recorded in groups of the knitting and crocheting industry (NACE 17.6 and 17.7) and in the group of textiles finishing (NACE 17.3). Main production indicators in NACE 17, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

29 Main production indicators in NACE 17, in constant prices, in (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,4 Year-on-year index x 107,4 89,9 98,9 100,5 Cumulative index 100,0 107,4 96,6 95,5 95,9 Value added , , , , ,2 Year-on-year index x 104,4 89,0 104,5 102,2 Cumulative index 100,0 104,4 92,9 97,1 99,2 Labour productivity from VA ,7 255,4 249,2 285,2 323,8 Year-on-year index x 104,8 97,6 114,4 113,5 Cumulative index 100,0 104,8 102,3 117,0 132,9 Number of employees , , , , ,0 Year-on-year index x 99,6 91,2 91,3 90,0 Cumulative index 100,0 99,6 90,9 83,0 74,7 Source: Czech Statistical Office, MIT estimate, *preliminary data 1.2 Employment in NACE 17 branch Employment structure, according to the size of enterprises, is given by character of the industry, which is technology-intensive and innovation-intensive one. The technology and innovation intensity is the reason, why only less than one fifth of employees are occupied in small enterprises. The average monthly wage in organisations with 20 and more employees was amounted to CZK , which is 73% of the average wage in the manufacturing industry. New jobs in the groups of the textile industry are mostly and in a limited way created by use of the consolidated text of the Law No. 72/2000 Vol., on investment incentives and by participation of the foreign capital. Under collaboration with the regional authorities projects to establishing of clusters are being prepared in regions with the largest shares of the textile industry, namely in North-East Bohemia. The business environment of the branch is currently mostly influenced by termination of the force of WTO Agreement on textiles and clothing (as on ), by trade liberalisation and by imports of the standard products of lower price parities from Asia countries. Employment structure, according to the size of enterprises, in 2004 NACE and more 19% 0 9 7% % Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated % % 28

30 NACE 17 The state administration is taking a significant share in preparation of measures related to the EU common market protection against the sinister practices in trade with the textile products. It adopted measures to an effective implementation of the commercial inspection by the supervision bodies of the Czech Commercial Inspection (ČOI) under participation of the police and custom service servants. 1.3 Foreign trade The growth of competition, liberalisation of trade and unsatisfactory rate of restructuring changes in the manufacture contributed to the drop of the foreign trade balance in the period from 2000 to By the CR accession to EU as on the direct export of the textile industry products into EU (25) interannually enhanced by 15,1% in 2004 and its share in the total direct export amounted to 84%. The price per kilogramme, however, dropped in the period under review by 3,2%. This fact was influenced by the exchange rate changes of CZK on European markets in the field of standard products. Approximately 16% of direct imports of the textile industry products are from CR channelled into EU nonmember countries. 19% of products are imported into CR from the EU non-member countries; it concerns namely materials for the production consumption, cotton yarns, bedding, table and wash-room and kitchen linen. As to the territories outside EU the textile products were mostly placed into Turkey, USA, Russia and Switzerland. Foreign trade development in CPA 17 products, in (Mill. CZK) Export , , , , ,3 Import , , , , ,4 Balance 4 054, , , , ,9 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 109,5 88,9 104,6 109,4 Import x 104,7 96,7 99,7 112,1 Source: Czech Statistical Office, MIT estimate 1.4 Investment Investments into the machinery and equipment are on a low level and do not correspond to the needs of restructuring of the manufacture and of implementation of new technologies. In spite of the fact that a few modernising actions were running in the textile industry under the support of investment incentives, which concerned both the organisations under foreign capital control and the domestic investors, the investment activity in the Czech textile industry is low as compared with that one in EU countries. As on altogether 10 projects of the textile industry companies were supported according to the Law No. 72/2000 Vol., in its consolidated version, the aim of the projects was to support implementation, enlargement or modernisation of the manufacture. Among the most important projects belong projects of the following companies: Nová Mosilana, joint-stock Co., Brno, VELVETA, joint-stock Co., Varnsdorf, JUTA, joint-stock Co., Dvůr Králové nad Labem, VEBA, joint-stock Co., Broumov and others. The foreign investors are interested in the textile industry branch. The reasons are the low production costs, proximity of advanced markets and competent workforce. For the support of business in the textile and clothing industry branch, namely in small and middle-sized enterprises, financial resources from both, i.e., the state budget and the EU resources are released through programmes published by the Ministry of Industry and Trade. 29

31 1.5 Branch NACE 17 perspectives After termination of force of the WTO Agreement on textile and clothing as on , by other words in the environment of an enlarged competition, the textile industry companies are succeeding in placing of products on demanding world markets and keep their position. The companies try to face the growing competition by implementation of new technologies, special sorts of products, products with new use quality (e.g., textiles with permanent anti-tick adjustment, artificial human leather produced by nanotechnology and determined for treatment of burns, for venous replacements etc.). For keeping and enhancement of competition ability on the world markets in the following period, the main priority of the branch is innovation of products and implementation of new products with higher share of value added, new orientation as well as of products having specific use features and high quality, accompanied by the respective service. Such products may arise in the foreseeable time by the mutual linkage of manufacturers with the scientific and research base, the network of deliverers and linked branches or the distributors. Growth of subdeliveries for the high-tech groups is also expected. 30

32 NACE Manufacture of wearing apparel; dressing and dyeing of fur NACE 18 The branch Manufacture of wearing apparel; dressing and dyeing of fur is an export oriented branch showing a high share of collaboration with external contractors, namely from the EU countries. The branch is a labour intensive one with dominating share of manual labour in products. The clothing industry belongs among sensitive branches, which are exposed to high competition pressures namely from countries with own resources of raw materials and low labour costs. In 2004 the manufacture of wearing apparel and dressing and dyeing of fur shared in the receipts of the manufacturing industry 0,7% (in current and constant prices), in the value added 1,3% (in const. p.) and in the number of employees 3,2%. Participation of the clothing industry in the manufacturing industry has been else decreasing since 2000, its importance for employment, namely in regions with the clothing industry tradition remains, however, furthermore considerable. 1.1 Main production indicators of the NACE 18 branch As it follows from development of the main production indicators, in spite of the fact that the inter-annual value of receipts from the sale of own products and services as well as of the value added (in constant prices) increased in 2004, the level of 2000 has not been achieved. This fact is influenced by the growth of imports of the clothing industry products from countries with lower production costs, namely from the Asia countries, as well as by the exchange rate changes and by remaining recession of the branch in the West European countries. Employment reached in ,4% of that one of Reduction of the number of employees is given by the need to hint enterprises and to enhance the labour productivity at the reduction of costs. The labour productivity expressed in the value added showed in 2004 a growth by 33% in const. pieces, which was achieved by both the decrease of the number of employees on one side and to some extent also by modernisation and restructuring of production focussed on products with higher value added and new use features, on the other. Main production indicators in NACE 18, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

33 Main production indicators in NACE 18, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,6 Year-on-year index x 95,5 112,8 84,1 101,3 Cumulative index 100,0 95,5 107,7 90,6 91,8 Value added , , , , ,4 Year-on-year index x 86,1 116,7 89,4 105,9 Cumulative index 100,0 86,1 100,4 89,8 95,1 Labour productivity from VA ,1 138,9 173,8 172,3 205,1 Year-on-year index x 90,1 125,1 99,1 119,0 Cumulative index 100,0 90,1 112,8 111,8 133,1 Number of employees , , , , ,0 Year-on-year index x 95,5 93,3 90,1 89,0 Cumulative index 100,0 95,5 89,0 80,3 71,4 Source: Czech Statistical Office, MIT estimate, * Preliminary data 1.2 Employment in NACE 18 branch The employment structure, according to the size of enterprises, follows from the entire character of the industry. Small and middle-sized enterprises share 75% of the employment in the branch. The average monthly wage in the clothing industry is the lowest average wage in the CR industry at all. In 2004 it was CZK , which presented 60% of the average wage in the manufacturing industry. New jobs in the branch are created minimally. The business environment is currently most endangered by the keener competition on the world markets with the textile and clothing products, due to termination of the Agreement on textile and wearing apparel, which force was ceased on As a consequence the less demanding manufactures are transferred to countries with low production costs and the non-effective productions are liquidated. In the next period it will be necessary to manufacture new sorts of products of higher generation accompanied by quick implementation of the research and development results into the manufacture as well as by implementation of higher innovation degrees. In the clothing industry it concerns namely the mode and functional clothing and technical and industrial clothing. Employment structure, according to the size of enterprises, in 2004 NACE and more 18% % % Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated % % 32

34 NACE Foreign trade The foreign trade balance showed a decreasing trend in the time series from 2000 to 2004 and in 2004 it even had the negative value. The development in 2004 was influenced by high imports of lower price parity products from Asia countries, namely from China. The largest share in the trade exchange occupies the trade with the EU countries, which exceeded 82% in After the CR accession into EU (i.e., from to in comparison with the same period of 2003) the direct export of products into the EU 25 countries enhanced by 23,4% and its share within the period under review was amounted to more than 88%. This development shows that the indigenous manufacturers succeeded in better penetration on the EU market with own assortments and models. The growing competition on the developed markets is obvious from the kilogramme prices decrease of the direct export and import. The import kilogramme price decreased (by 12% from EU countries) more notably than the export price in the period after the CR accession to EU, which drop in exports to EU countries was amounted to 2% and in exports to the rest of the world to 7%. The reduction of export prices is reflecting the growing competition on markets with the textile and clothing production as well as the fact that our manufacturers have not succeeded yet to manufacture the goods of higher price parity, i.e., the branded products, products of higher use quality and products for special use. The most important trade partner among the EU countries remained Germany even in 2004, followed by UK, Slovakia and Austria. Foreign trade development in CPA 18 products, in (Mill. CZK) Export , , , , ,6 Import , , , , ,6 Balance 7 918, , , ,1-478,0 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 98,8 86,3 95,2 127,1 Import x 110,6 101,6 97,9 149,7 Source: Czech Statistical Office, MIT estimate 1.4 Investment For the branch a high level of co-operations is typical. Within these relations the needed technical equipment is being loaned out and the needed documentation is being transferred. The high share of co-operations is even influencing participation of the foreign capital in the branch, which represents about one third of subjects with 100 and more employees. The manufacture of wearing apparel and dressing and dyeing of fur is not an investment intensive branch and this also presents one of the main reasons, why the manufacturing productivity is lagging behind that of EU countries. The Law No. 72/2000 Vol., on investment incentives, has not been utilised yet by any company of the clothing industry. To the support of business development in the textile and clothing industry, namely in the small and middlesized enterprises, financial resources from both the state budget on one side and the EU fund on the other are being released through programmes published by the Ministry of Industry and Trade. It concerns namely the Operational Programme Industry and Business (OPIB), programmes to the support of research and development, programmes on investment incentives and others. On development of small and medium-sized enterprises are focussed 11 support programmes. 33

35 1.5 Branch NACE 18 perspectives In 2004 the CR clothing industry has kept its position in the European region yet in spite of unfavourable influences, namely in spite of the growing competition from the Asia countries (namely from China), though in the labour productivity from value added and GDP parity it is strongly lagging behind the EU countries. The future development in the branch will be considerably influenced by liberalisation of the trade with the clothing products as a consequence of termination of force of the Agreement on Textile and Wearing Apparel as on For the Czech manufacturers of clothing it means an enhancement of competition on the world markets. In practice it will mean quicker liquidations of non-effective productions and a changeover to products with higher share of value added. For a new phenomenon in the branch development the so called intelligent textiles and the textiles produced by nanotechnologies may be taken. Its use in the clothing products ensures a topquality comfort and the products are so gaining a new use quality, which is, e.g., facilitating communication etc. In the middle-term horizon a role of a sub-deliverer for firms from the Community will be overwhelming in the branch, with respect to the low production costs in CR, favourable territorial position and reliability on the quality of the delivered production. In the same time, however, even in CR the trend will be amplifying to transfer the less demanding production further to the east into countries with even lower costs. For these reasons the clothing industry should also more focus on development of industrial services for provision of these manufactures. 34

36 NACE 19 MANUFACTURE OF LEATHER AND LEATHER PRODUCTS DC 1. Tanning and dressing of leather, manufacture of handbags, saddlery and the like goods and footwear NACE 19 The leather industry branch is divided on the basic manufacturing and final manufacturing. The importance of the basic manufacturing (Tanning and dressing of leather) is decreasing in relation to the volume of the production of footwear and handbags, saddlery and the like goods. The branch is an export intensive one, when approx. 80% of the receipts from sales of own products and services (own P&S) are created by the receipts from export (60% of which are from sales of footwear). In 2004 the share of the branch within the manufacturing industry was amounted in receipts from sales of own P&S to 0,2%, in value added to 0,3% and in number of employees 0,8%. The sizeable competition on the world market with the standard sorts of footwear and liberalisation of trade accompanied by cancelling of the system of licences for import of selected sorts of footwear from Asia countries, namely from China, as well as the small ability of companies to change the production structure, because of the shortage of financial capital, thus lead to a negative development in all main production indicators of the branch. 1.1 Main production indicators of the NACE 19 branch The largest drop of receipts from sales of own P&S (by more than 60%) was registered in the group 19.1 Tanning and dressing of leather and in the group 19.3 Manufacture of footwear (by 44,5%). In this period the number of employees in the branch decreased by almost 9,4 thousand, of which more than two thirds worked in the footwear manufacture. A positive development in the labour productivity during the last two years of the period under discussion has been achieved by liquidation of non-effective manufactures and by limitation of the standard products manufacture. Main production indicators in NACE 19, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

37 Main production indicators in NACE 19, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,6 Year-on-year index x 88,8 82,5 83,0 98,2 Cumulative index 100,0 88,8 73,3 60,9 59,8 Value added , , , , ,5 Year-on-year index x 84,9 77,9 86,9 100,8 Cumulative index 100,0 84,9 66,1 57,5 57,9 Labour productivity from VA ,2 140,7 130,6 146,2 167,4 Year-on-year index x 88,9 92,8 111,9 114,5 Cumulative index 100,0 88,9 82,6 92,4 105,8 Number of employees , , , , ,0 Year-on-year index x 95,4 83,9 77,6 88,1 Cumulative index 100,0 95,4 80,1 62,1 54,7 Source: Czech Statistical Office, MIT estimate, * preliminary data 1.2 Employment in NACE 19 branch In 2004 the largest share in employment within the branch (about 44%) showed organisations having from 50 to 249 employees. A permanent drop of employment in the branch is manifested namely in Zlín and Vysočina regions, where manufacturing capacities of the branch are mostly concentrated. The average monthly wage in the branch (in organisations having 20 and more employees) was amounted to almost CZK (by approx. 8,6% more than in 2003), which presented about 64% of the average wage in the manufacturing industry. Employment structure, according to the size of enterprises, in 2004 NACE % % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % The state administration in collaboration with regional institutions (in Zlín region mainly) is planning projects for the solution of unemployment and so is taking a considerable share in drafting of measures focused on the consumer protection (enhanced frequency of the Czech Commercial Inspection visits). 36

38 NACE Foreign trade Foreign trade development in CPA 19 products, in (Mill. CZK) Export 9 081, , , , ,6 Import , , , , ,4 Balance , , , , ,8 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 103,8 78,2 89,2 124,7 Import x 111,9 98,6 94,5 114,0 Source: Czech Statistical Office, MIT estimate Since 2000 the foreign trades with leather industry products have been showing an adverse balance, which is in a great extent caused by excessive imports from China. Limitation of this negative influence has not been achieved even by implementation of licences for imports of some kind of footwear from China introduced in the period from to , which was applied after the CR accession to EU. In 2004 the volume of footwear imports enhanced by approx. 3,1 mill. of pairs, which in the financial expression means an amount of CZK 271 mill. 37

39 The overwhelming part of the leather industry goods direct import was in 2004 channelled into EU countries (approx. 88,0%). As compared with the preceding period the assortment of the exported goods significantly improved, which was reflected in the growth of kilogramme prices. 1.4 Investment The investment activity is in the leather industry lagging behind the claims and requirements, which are being posed on the modern production machinery and also behind the need of the manufacture restructuring. The lack of financial resources for implementation of the investment plans is also in a great extent contributing to the situation. For the small and middle-sized entrepreneurs the state administration prepared within the Operational Programme Industry and Business altogether 11 supporting programmes, by which financial means from the EU Structural Funds might be drawn down (in a form of subsidies or credits). None of these programmes has been utilised as yet. 1.5 Branch NACE 19 perspectives It is supposed that the competition in trade with the leather industry products will be furthermore enhancing mainly from the side of manufacturers with low costs of labour force, mostly manufacturers from Asia countries. As an answer to this situation some developed countries of EU are and will be responding by transfer of the standard goods manufacture and sales into the countries with low costs. If the present European manufacturers of leather goods are due to meet this disadvantage, they must specialise on implementation of manufactures of certain kinds of goods (with higher share of value added, specific use features, qualitative parameters etc.), which are currently showing a shortage on the market. Such products may arise by interconnection of the manufacturers with the scientific and technology base, with the suppliers of resources and with the distributors of goods. Among important factors for preservation of the competition ability of the branch will in future belong: Creation of conditions for the foreign capital entry, Satisfactory amount of financial means for implementation of manufacture, trade and investment plans, Submission of good business plans (procurement of means from the EU Structural funds) and possibilities of their co-financing, Enlargement of collaboration with the EU countries (mainly in regions laying close to the border) on a qualitatively higher level, Enlargement of collaboration with the domestic as well as foreign scientific and technological base (research institutes, universities). 38

40 NACE 20 MANUFACTURE OF WOOD AND WOOD PRODUCTS DD 1. Processing of wood, manufacture of products of wood, cork, wicker and straw except furniture NACE 20 The wood industry has in the Czech Republic a long tradition. Its products find their application namely in the construction industry, furniture industry, agriculture, automobile industry, on railways, but also in the manufacture of music instruments, toys, sport goods etc. The indisputable advantage of the branch is the permanently renovating base of the raw material of domestic origin, i.e. the wood mass. A positive fact also presents the fact that the yearly augmentation in the woods is not fully harvested, in so far that the wood supply is permanently enhancing. Since 2000 the development of branch might be evaluated as stabilised. A similar statement applies to the basic group, i.e. to the sawmilling industry, which nowadays succeeds in overcoming of difficulties with the wood mass supply to small and medium-sized enterprises arousing in the last year. The situation was namely influenced by problems connected with changes of management and with conclusions of the delivery contracts in the state enterprise Lesy České republiky, Hradec Králové. 1.1 Main production indicators of the NACE 20 branch Products of the wood industry are indispensable for the entire society. In spite of this the CR economy is showing large weakness in acceptance of the wood products. It concerns namely the construction industry, which production is based on the typical silicate products (bricks, moulds etc.), application of which is connected with high demands on energy (electricity, gas), water consumption, with endangering of the environment and dustiness. In the same time the products of wood have the required mechanical and physical features and do not endanger the health or environment. The dynamics of the receipts does not have the needed level and its inter-annual index has been permanently decreasing since The wood industry, which is based on micro and middle-sized companies, has reached in the labour productivity from value added only 58% as compared with the average productivity in the manufacturing industry. The largest share in the total receipts from sales of own products and services showed in 2004 the groups 20.3 Manufacture of builders carpentry and joinery (42,1%) and Sawmilling and impregnation of wood (30,8%). It is pleasing that in 2004 the productivity enhanced in the carrier groups 20.1 and Main production indicators in NACE 20, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

41 Main production indicators in NACE 20, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,8 Year-on-year index x 111,3 107,6 104,8 100,2 Cumulative index 100,0 111,3 119,8 125,5 125,7 Value added , , , , ,4 Year-on-year index x 127,2 102,1 97,6 103,5 Cumulative index 100,0 127,2 130,0 126,9 131,4 Labour productivity from VA ,8 216,7 236, ,1 Year-on-year index x 117,3 109,3 92,5 107,4 Cumulative index 100,0 117,3 128,1 118,5 127,2 Number of employees , , , , ,0 Year-on-year index x 108,5 93,5 105,6 96,5 Cumulative index 100,0 108,5 101,4 107,1 103,3 Source: Czech Statistical Office, MIT estimate, * preliminary data 1.2 Employment in NACE 20 branch The wood industry recorded in 2004 an inter-annual decline of employment amounted to almost 3 thousand employees. In the decrease of the number of employees in a considerable way shared the group 20.1 Sawmilling industry due to difficulties in the supply of raw material. In 2004 the average wage in the branch was amounted to CZK (companies with 20 and more workers) and in comparison with preceding year it enhanced by 7,5%. The growth of wages was balanced by a quicker growth of the labour productivity of receipts from sales of own products and services. The business environment is with respect to a large number of subjects acting in the branch highly competitive one. A large number of small manufacturers cease to exist every year, a lot of new ones, however, roll up. For the branch and its proficiency, productivity and effectiveness the middle-sized and large enterprises play the decisive role. A considerable weight and favourable impact on the economic results of the branch have subject with foreign participation, e.g. Kronospan CR, joint stock Co. Jihlava (chipboards), Holzindustrie Schweighofer (the sawmilling plants in Planá at Mariánské Lázně and Ždírec), Danzer Furnierwerke joint stock Co. (a new plant for produc- Employment structure, according to the size of enterprises, in 2004 NACE % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % % 40

42 NACE 20 tion of veneers located near to Mělník) and Holzwerke Wimmer, joint stock Co. (a new capacity for production of the construction timber in Ždírec). 1.3 Foreign trade In 2004 the wood industry registered successful results and so took up on positive development in the preceding years. The export of the branch highly exceeded the imports, in so far that its positive balance amounted to almost CZK 13,5 billions present a considerable contribution to the foreign trade balance of the state. A long term challenge of the branch presents improvement of the export items assortment, for the export is carried out mainly in such items as logs, sawn wood, i.e., in products with low value added. Export in the group, where its enhancement is desirable, e.g., in agglomerated materials, grew in 2004 only slightly as compared with For the wood industry the EU countries markets play the decisive role, among them then mainly Germany and Austria. The assortment of export incorporates mainly such items as sawn wood, builders joinery products, and agglomerated products and in relation to FRG also the wooden constructions. The largest imports are realised from FRG and Austria. Their share was amounted to 40%. Furthermore follows Poland with 11% and Slovakia with 10%. Foreign trade development in CPA 20 products, in (Mill. CZK) Export , , , , ,1 Import 9 856, , , , ,1 Balance , , , , ,0 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 104,3 90,6 106,2 118,4 Import x 102,0 101,7 109,9 114,9 Source: Czech Statistical Office, MIT estimate 1.4 Investment The capital goods investment and capital constructions are not satisfactory dimensioned in the branch in a long term. The worst situation exists in the micro-enterprises and small enterprises, where due to the low manufacture performance and consequently also unsatisfactory creation of financial resources, the resources for the needed investment activity are not satisfactory. Better possibilities have the large enterprises and subjects, in which the foreign management and capital are participating. The investment incentives were allocated to the Austrian company Mayr-Melnhof Säge Paskov, joint-stock Co. (Paskov presents new capacity for the manufacture of sawn wood) and Cyprian company KRONOSPAN OSB, joint-stock Co. Jihlava (Jihlava presents new capacity for chipboards with directed OSB chips). In 2004 the wood-processing enterprises got grants in amount of CZK 3,2 mill. for altogether 15 actions. 1.5 Branch NACE 20 perspectives The wood industry branch must considerably enhance manufacture of higher value added products in the future. The EU leadership is planning development of the branch within the framework of the so called Forest Based Industry (FBI) complex (forestry and wood industry, pulp and paper, publishing and printing and furniture industries). An over-average development of the branch is supposed, for it concerns ecological branches, which are acting in harmony with principles of the sustainable development. Position of the wood industry subjects on the abroad markets is good even now and there is possibility of its improvement, which also will facilitate to manage problems of the world market globalisation. 41

43 MANUFACTURE OF PULP, PAPER AND PAPER PRODUCTS; PUBLISHING AND PRINTING DE 1. Manufacture of pulp, paper and paper products NACE 21 The pulp and paper industry belongs to the competitive and perspective branches of the CR manufacturing industry with a good environmental performance. It is based on raw materials of the predominantly domestic origin (wood and salvage paper) and is implementing the sustainable development strategy for a couple of years. The manufacture is running in closed cycles. The branch belongs to the investments intensive ones, even after the use of the investment incentives. The manufacture of pulp is an energy intensive one, which energy consumption is mostly covered from the renewable resources. The branch participated within the CR manufacturing industry by 2% in receipts from the sale of own products and services (own P & S) as indicator and by 3,1% in the created value added. An increase of the value added by 4,1% was documented in 2004 as compared with the foregoing year. In 2004 the branch shared within the manufacturing industry 1,4% in the number of employees. This indicator is showing a declining trend. 1.1 Main production indicators of the NACE 21 branch Main production indicators in NACE 21, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 From analysis of the main production indicators follows: The permanent growth of receipts from sale of own product and services, The permanent growth of the value added except 2002, which was depressed by the disaster floods connected with a decline in the production of pulp, paper and paperboard by 10,3%, The decline of employment due to implementation of automation and digitalisation of the production processes since 2003, The growth of the labour productivity from value added in the period from 2000 to 2004 with the largest interyearly increase in 2004 (by 11,7%). In this growth shared the group 21.1 Manufacture of pulp, paper and 42

44 NACE 21 Main production indicators in NACE 21, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,5 Year-on-year index x 106,2 103,8 102,0 106,4 Cumulative index 100,0 106,2 110,2 112,4 119,6 Value added , , , , ,4 Year-on-year index x 112,4 97,3 103,5 108,5 Cumulative index 100,0 112,4 109,4 113,1 122,7 Labour productivity from VA ,5 727,1 701,7 746,3 833,9 Year-on-year index x 107,6 96,5 106,4 111,7 Cumulative index 100,0 107,6 103,9 110,5 123,4 Number of employees , , , , ,0 Year-on-year index x 104,5 100,8 97,3 97,1 Cumulative index 100,0 104,5 105,3 102,4 99,4 Source: Czech Statistical Office, MIT estimate, * preliminary data paperboard 20,3%. For the growth of this indicator a top quality of the final product is important. The firms keeping the certificate of the quality control, according to the respective ISO standards, are preferred in booking of demands. 1.2 Employment in NACE 21 branch In the size structure of the branch, with respect to employment, in 2004 a dominant position was kept by the large companies with the share of 52% and the middle-sized enterprises with 31,4%. With the average monthly wage of CZK (in organisations with 20 and more employees) the branch laid slightly above the level of the average wage in the industry. Employment structure, according to the size of enterprises, in 2004 NACE % % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 1.3 Foreign trade In the period from 2000 to 2004 the export of the CPA 21 products was showing a permanently growing trend, which was brought by the enhanced demand after pulp and products of paper and paperboard. In spite of this the 43

45 Foreign trade development in CPA 21 products, in (Mill. CZK) Export , , , , ,2 Import , , , , ,2 Balance , , , , ,0 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 102,4 98,5 105,4 108,0 Import x 105,4 98,7 106,0 110,3 Source: Czech Statistical Office, MIT estimate increase of import showed in the last two years of the period under review a higher growth rate dynamic as compared with the export, for the demand on special sorts of paper products is growing. The decisive trade partner in the pulp and paper industry products is FRG, which shares 21% in export and 36% in import. 44

46 NACE Investment The volume of the gross tangible investments increased in 2004 as compared with the foregoing year by 14,3%, including the increase of investments into machinery by 22,7%. Among the more considerable actions finished in the preceding year might be mentioned, e.g., the new type line for waste paper processing, completion of the modern plant for production of the corrugated board in Rokycany, completion of the new plant for production of the packages of the backed paperboard etc. In the pulp and paper industry branch the foreign direct investments attained CZK 20,3 billions. The Czech pulp and paper industry companies invested in abroad CZK 320 millions on the contrary in the same year. 1.5 Branch NACE 21 perspectives The pulp and paper industry is systematically contributing to the control of the unfavourable effects on the environment. All decisive manufacturers operate the implemented environmental control systems. Since 1992 a considerable decline in pollutions as far as by 90% was recorded (specific emissions per ton of products declined in SO 2 by 84%, NO x by 50%). Considerably declined the consumptions of the specific energies for the manufacture of one ton of paper (water by 42%, electricity by 44%) and own production of energy from biomass increased by 37% at 58% of the total consumption of the electric energy in the pulp and paper industry. The consumption of the waste paper for the manufacture of the new paper doubled as compared with 1992, and reached almost tons 450 thousands in In spite of the dynamic growth of the paper and paperboard consumption CR has not reached the level of the developed countries in EU yet, however, another increase in this indicator until the amount of consumption around 200 kg per citizen, can be expected. It would correspond to the total consumption in the volume of approx. tons 2 millions per year. Achievement of this level just by an absolute increase of the import would not be economically effective and so it will be necessary to solve the situation by investments of a larger span. The optimistic perspectives of the branch are underlined by the fact that the branch based on the permanently renewable resources of the raw materials is concerned, which is utilising possibilities of the easy recycling of its production, i.e., the branch which is generally being kept for an environment friendly one. 45

47 1. Publishing, printing and reproduction of recorded media NACE 22 The publishing and printing industry section includes the publishing, printing and reproduction of recorded media. It differs by its character from the other branches of the manufacturing industry, for it is processing information to tangible products, which have the form of newspapers, books, journals, mercantile, recorded sound and video media. The branch shared in receipts from sales of own products and services (own P & S) 2,7% within the manufacturing industry and in the volume of created value added it ranked on 12 th place with its 3,1%. In 2004 in the same way as in the foregoing year the branch represented 3,2% in the number of employees of the CR manufacturing industry. The main production indicators showed a growing trend in the period from 2000 to Main production indicators of the NACE 22 branch Main production indicators in NACE 22, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 In 2004 the receipts from sale of own products and services in constant prices enhanced at CZK 61,5 billions, i.e., by 7,3% as compared with The most important increase of production (by 37,9%) at more than CZK 3,8 billions was registered in the group 22.3 Reproduction of recorded media, namely due to the enhanced interest on DVD media, which were sold in amount of thousand pieces. The given amount does not incorporate annexes to magazines and other periodic press. While the sell of the classical LPs in 2004 slightly increased as compared with the foregoing year and exceeded the border of 4,1 mill. pieces, the sell of the CD music media is permanently declining. Only 3,2 mill. pieces were manufactured in 2003 and receipts reached CZK 565 mill. only. The reason for the decline presents development of the digital technologies incorporating the DVD audio, SACD, the hybrid ones inclusively, the expected ingoing of the Blue Laser technology and also the constantly growing number of users equipped with devices, which are able to produce CD and DVD copies. The increase of receipts from sale of own P& S by 10,4% at CZK 29,9 billions was registered in the group 22.1 Publishing, namely due to the publication of a greater number of titles in smaller impressions. In 2004 the group 22.3 showed a considerable increase of the value added in constant prices (203,8%), the group, however, shared in the created value added of the branch less than 8% only. In 2004 the value added (in const. prices) in the branch increased inter-annually by 6,7%. 46

48 NACE 22 Main production indicators in NACE 22, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,6 Year-on-year index x 109,9 102,0 105,3 107,3 Cumulative index 100,0 109,9 112,1 118,1 126,7 Value added , , , , ,3 Year-on-year index x 98,1 107,4 109,2 106,7 Cumulative index 100,0 98,1 105,4 115,1 122,8 Labour productivity from VA ,2 344,6 348,7 371,9 392,9 Year-on-year index x 102,8 101,2 106,7 105,6 Cumulative index 100,0 102,8 104,0 110,9 117,2 Number of employees , , , , ,0 Year-on-year index x 95,4 106,2 102,4 101,0 Cumulative index 100,0 95,4 101,3 103,7 104,7 Source: Czech Statistical Office, MIT estimate, * preliminary data 47

49 A favourable development of employment in the branch was mainly influenced by putting in operations of the new manufacturing capacities, the printing ones for production of the new recorded media in the DVD format and the audio ones for production of the DVD audio format. In the group 22.1 Publishing a permanent decline of employment has been registered on the contrary. The labour productivity from value added (in const. prices) was permanently growing in the period from 2001 to Maximal increase was reached in 2003, namely by 6,7%, while the rate of growth was slower (5,6%) in In comparison with the EU countries the productivity in CR, however, remains considerably lower. For provision of the growth the top quality of the final product is important on the first place as well as the abidance of specific demands of customers. Firms, which keep certificate of quality control in compliance with the respective ISO standards, have the priority in contracting of orders. 1.2 Employment in NACE 22 branch Employment structure, according to the size of enterprises, in 2004 NACE % 1000 and more 4% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % With respect to the employment structure, according to the size of enterprises in 2004, the micro-enterprises kept the dominant position with 34,5% as well as the small companies with 24,4%. The share of micro-enterprises was enhancing in the period from 2000 to Foreign trade Foreign trade development in CPA 22 products, in (Mill. CZK) Export , , , , ,9 Import , , , , ,4 Balance 424,6 861, , ,4 990,5 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 124,0 108,4 129,9 105,6 Import x 120,8 106,2 116,3 122,1 Source: Czech Statistical Office, MIT estimate The foreign trade with products of the publishing ad printing industry was showing a permanent growth in the period from 2000 to The export was also permanently growing and its volume exceeded 20,5 billions in

50 NACE 22 For the publishing and printing industry a high import is also typical, which was in 2004 amounted to CZK 19,6 billions and which enhanced in 2003 by 22,1%, while the increase of export presented 5,6% only. The largest trade partner of CR remains to be FRG, which in 2004 shared 68% of the total export and 66% of the total import. 1.4 Investment In 2004 one investment incentive was approved in the branch of publishing and printing industry for enlargement of the final graphic operations at manufacture of catalogues. In 2003 the direct foreign investment in the branch were amounted to CZK 8,3 billions. Positively might be evaluated the fact that the Czech publishing and printing firms invested in abroad means in amount of CZK 985 mill. in 2002 and in amount of CZK 153 mill in Branch NACE 22 perspectives For the current period a close collaboration of Czech subjects with partners in EU is characteristic. It concerns the large publishing and printing industry enterprises on the first place, which major part has foreign owners. A classical structure of the branch has been created, similar to that existing in the most advanced countries. A few large firms are in an industrial way manufacturing a considerable part of the printed products such as books, publications, magazines, advertising printed matters etc. They are closely linked with foreign customers, for the national framework of market is for them too tight A specific group within the manufacturing industry form the newspaper printing plants. During the last years all important publishers of the newspaper titles have built up their own printing capacities, which are many times equipped with the most modern technologies. A dominant trend in the publishing and printing industry presents digitalisation of the manufacturing process. It is most manifested in the field of the press ready-making. The Computer to Plate (CtP) technology enables ready making of the printing forms by help of the direct laser exposure of the printing plates. The enterprises in the Czech printing and publishing industry have in this respect caught ingoing of the new technologies and the newspaper and other large printing plants are mostly equipped with the powerful CtP equipment. Similarly as in the other developed countries even in CR are the CtP systems quickly penetrating into the middle-sized and small printing plants. Another dominant trend in the modern publishing and printing production presents the interconnection of the three main phases of the relevant manufacturing process, namely of the pre-press operations, the proper press on the printing machine and the finalising post-press processing. Connection of all the three phases of the publishing and printing manufacture in one unit is based on the uniform data standards, by help of which all the printing machines, equipments and systems are controlled. 49

51 MANUFACTURE OF COKE, NUCLEAR FUELS, REFINING OF PETROLEUM DF 1. Manufacture of coke, nuclear fuels, refining of petroleum NACE 23 A characteristic feature of the branch presents refining of fuel, which in fact presents a matter of activity in all three groups, which belong in this branch, according the branch classification of economic activities (NACE), namely the manufacture of coke oven products, manufacture of refined petroleum products and processing of nuclear fuels. Out of the mentioned three groups the economic results of the entire branch are mostly influenced by the group NACE 23.2 Manufacture of refined petroleum products, for it presents 89% of receipts from sales of own products and services. It concerns the strategically important branch of the industry, to which a couple of the manufacturing industry groups are linked, e.g., the food and pharmaceutical industries as well as the sphere of agriculture. 1.1 Main production indicators of the NACE 23 branch The decisive effect on receipts of the branch has the group Manufacture of refined petroleum products, in which it is reflected the fluctuation of the world prices of the crude oil and refinery petroleum products and in CR also fluctuation of the current USD exchange rate towards CZK. In 2004 the group 23.2 was characterised by a sudden increase of receipts from sale of own products and services. Such trend may be expected in 2005, namely due to the increasing consumption of fuels in CR as well as due to the increase of their prices. The graphic presentation of situation in the branch (the graph on the main production indicators in the NACE 23 group in the period from 2000 to 2004), similarly as the given table survey, does not express the mentioned trend of increasing receipts in the branch The reason for this is the fact that the most important indigenous company processing the crude oil Česká rafinérská, joint stock Co.(ČeR, joint stock Co.), which economic results were in a great extent influencing the values reached in the branch NACE 23, is operating under the re-doing regime since Since the given date the company does not cash the receipts from sale of own products and services, but only the re-doing payments for the crude oil processing onto petroleum products from its processors (AGIP ČR, ConocoPhillips ČR, SHELL CR a Unipetrol Rafinérie), who are also realising the sale of petroleum products and the purchase of the crude oil. With respect to this situation the activity of the branch is not anymore Main production indicators in NACE 23, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

52 NACE 23 Main production indicators in NACE 23, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,7 Year-on-year index x 97,0 100,7 108,8 68,9 Cumulative index 100,0 97,0 97,7 106,2 73,2 Value added , , , ,9 152,8 Year-on-year index x 113,2 86,8 127,2 1,7 Cumulative index 100,0 113,2 98,2 124,9 2,2 Labour productivity from VA , , , ,3 49,8 Year-on-year index x 120,6 94,5 130,0 1,8 Cumulative index 100,0 120,6 113,9 148,1 2,6 Number of employees , , , , ,0 Year-on-year index x 93,8 91,9 97,9 98,7 Cumulative index 100,0 93,8 86,2 84,4 83,3 Source: Czech Statistical Office, MIT estimate, * preliminary data included in the branch 23, which is strongly reflected in the achieved values of the labour productivity and value added in the branch in The labour productivity in the branch has been showing a growing trend since 2000, which is a consequence of gradual improvement of the economic situation and of enhanced development primarily in the group of the manufacture of the refined petroleum products. 1.2 Employment in NACE 23 branch The period under review was in the branch 23 characterised by a moderate decline in the number of employed workers, which was namely influenced by modernisation of the manufacturing technologies and by implementation of the new control processes in the group 23.2 and by the linked declining of the number of employees in the refinery plants. The categories with 250 to 999 employees and with 1000 and more employees keep the largest share in employment of the branch, which is mainly a consequence of the number of employees working in enterprises of the group manufacture of refined petroleum products. It may be assumed that the labour market in the branch will furthermore develop, mainly in companies, where the foreign capital was invested. It Employment structure, according to the size of enterprises, in 2004 NACE and more 42% 0 9 1% % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 51

53 should be manifested by a gradual enhancement of both, i.e., the employment and the amount of wages. Application of the new chemical legislation (REACH) in practice and production of the pure (sulphur-less) fuels should contribute together with the programme for the creation of new jobs, which is a common project of the Ministry of Labour and Social Affairs, Ministry of Industry and Trade and Agency for Support of Business, to improvement of the situation namely in regions mainly affected by unemployment. 1.3 Foreign trade From development of the branch NACE 23 foreign trade the position of the group manufacture of refined petroleum products (CPA 23.2) in this branch clearly follows. The trade with the petroleum products, be it their export or import, is objectively influenced by the situation on the European market, where the prices are derived from the quoted prices of the refinery products and crude oil on the Rotterdam bourse. With respect to full liberalisation of market with the refined petroleum products in CR in force since 1997 this effect is fully decisive for results of the export and import and for the total balance. The attained results of export in 2004 were also partially influenced by the enhanced demand in the neighboured countries, namely in the commodity of fuels. Foreign trade development in CPA 23 products, in (Mill. CZK) Export , , , , ,4 Import , , , , ,2 Balance , , , , ,8 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 109,4 93,6 98,9 131,8 Import x 100,5 72,5 108,8 131,8 Source: Czech Statistical Office, MIT estimate 1.4 Investment The volume of the direct investments put into the branch fluctuated slightly above CZK millions. In the group 23.2 the foreign direct investment were not already deposited any more. In the period from 2000 to 2004 altogether CZK millions were invested into the refined petroleum products manufacture, including 14% of the import. After completion of the construction for the crude oil deep processing in Česká rafinérská joined stock Co., the investment activity in the indigenous refineries mainly focussed on implementation of technological innovations for the action Čistá paliva (Pure fuels), i.e., on the manufacture of the sulphur-less fuels by The costs of the investment actions connected with the environmental protection in the refinery industry fluctuated in the range from 2,1% (2002) to 9,7% (2003). In addition a preparation of investments for implementation of the Česká rafinérská joint stock Co. project adding of bio-fuels into the fuelling commenced. PARAMO had already implemented the needed investment for adding of the rape-oil methyl-ester into the diesel fuel. 1.5 Branch NACE 23 perspectives For the provision of competitiveness of the Czech industrial production in the branch 23, and of research and development in this sphere, it is necessary to ensure support to the development of the business environment. The field of the manufacture of refined petroleum products without problems adapts to the rapid development of the Central European market and to application of the new legislation. The indigenous refineries are complying with all Czech and European regulations on the protection of environment with a satisfactory allowance. In 2001 in consequence with the transposition of the respective EU directives on quality of the produced petrol and diesel fuels, legislative regulation were adopted, which considerably influenced the group 23.2 mainly from the point of 52

54 NACE 23 more stringent demands on quality of the motor fuels. The new chemical legislation (REACH) will also touch the refinery industry mainly by enhancement of costs on registration and verification of the dangerous properties of manufactured products (CZK 418 millions minimally). The market with the refined petroleum products in CR is fully liberalised and functioning without any larger problems. The indigenous subjects are involved in the global trade with the crude oil and refined petroleum products namely in the Central European area. In linkage to the presumed growth of the industrial production and with respect to the growing purchasing power of population a further growth of the motor fuels consumption for both, the motor vehicles and the aviation field, may be expected in the next years. For the Czech refinery industry to be able to stand competition, it is necessary to operate modernised refineries (modernisation of refineries focussed on the programme of Pure Fuels ) and to construct all new operational units in the field of the crude oil refinery processing in compliance with the Best Available Technologies BAT standards. It also necessary to optimise the trade policy and to implement a suitable interconnection of subjects acting on the market with the objective to acquire the maximal share on the indigenous market as well as conditions for export into the free territories. 53

55 MANUFACTURE OF CHEMICALS, PREPARATIONS, PHARMACEUTICALS AND MAN-MADE FIBRES DG 1. Manufacture of chemicals and chemical products NACE 24 The chemical and pharmaceutical industry NACE 24, belongs among the key branches of manufacturing. Its products find their use in all sectors of economy, in households and also in the spare time activities. It is divided into main seven products groups among which the decisive role play the groups Manufacture of basic chemicals (64% of the total receipts) and Manufacture of pharmaceuticals (17% of the total receipts). Shares of the other groups are lower: Manufacture of chemical specialities and fibres (9%), Manufacture of cleaning and cosmetic preparations (5%), Manufacture of paints and varnishes (4%), Manufacture of pesticides and other agrochemical products (1%). In 2004 the branch shared 2,2% in the created GDP. The share in the manufacturing industry receipts was amounted to 5,3%, in value added to 5,8% and in the number of employees to 3%. 1.1 Main production indicators of the NACE 24 branch Development of the main production indicators of the branch is for the period from 2000 to 2004 showed in the figure and table. Main production indicators in NACE 24, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 From the figure and table it is obvious that the year 2004 was extraordinary successful for the branch, which was caused by a high demand on chemicals at home as well as in abroad, by higher use of the manufacturing capacities and by the favourable margins in majority of commodities. The volume of receipts was in fact by approx. CZK 6 to 7 billions higher than reported by the Czech Statistics Office (organisational changes in the group 24.5 Cleaning and polishing preparations, cosmetic products). The branch achieved very good results in the indicator of labour productivity from value added in 2004 (933,8 CZK/employee), which presents more than double of the manufacturing industry average. It is witnessing that the chemical industry has succeeded in restructuring and in the reduction of costs. 54

56 NACE 24 Main production indicators in NACE 24, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,0 Year-on-year index x 100,1 101,0 101,4 109,2 Cumulative index 100,0 100,1 101,2 102,6 112,1 Value added , , , , ,7 Year-on-year index x 97,4 106,8 106,3 104,7 Cumulative index 100,0 97,4 104,0 110,5 115,7 Labour productivity from VA ,7 709, ,5 933,8 Year-on-year index x 98,6 106,4 109,9 112,6 Cumulative index 100,0 98,6 104,9 115,3 129,7 Number of employees , , , , ,0 Year-on-year index x 98,8 100,4 96,7 93,0 Cumulative index 100,0 98,8 99,1 95,9 89,2 Source: Czech Statistical Office, MIT estimate, * preliminary data 55

57 1.2 Employment in NACE 24 branch As it is obvious from the graph of employment structure, according to the size of enterprises, with respect to the character of production the decisive role play the enterprises with more than 250 employees (mainly the large chemical centres, synergic effects etc.), which in 2003 shared 74,3% in the total receipts, almost 72% in the created value added and 64% in the number of employees. Thanks to the implemented rationalising and restructuring steps the number of employees is decreasing in the same time. In the period from 2000 to 2004 it declined by almost 4,9 thousand employees (-11%) and in the year 2004 itself by more than 3 thousand of employees (-7%). Currently altogether 225 entrepreneurial subjects with more than 20 employees are acting in the branch; however, the new enterprises are arising much more slowly than in the rubber and plastic industry. The largest representation in the branch have the regions Ústí nad Labem (the share in receipts 19%, in the number of employees 17%) and Central Bohemia (the share in receipts 19% and in the number of employees 16%), where the largest chemical enterprises of the holding UNIPETROL, joint stock Co. and of the other large firms are concentrated. The wages in the branch are with respect to high demands on qualification of the personnel considerably higher than the manufacturing industry average, approximately by CZK 3 500; in the March 2005 they reached CZK , which represents a growth by 8% as compared with the same month of the preceding year). Employment structure, according to the size of enterprises, in 2004 NACE and more 36% 0 9 5% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 1.3 Foreign trade In the foregoing year the trade exchange of the branch reached a top turnover of CZK 277,8 billions (export CZK 97,2 billions and import CZK 180,6 billions). The adverse balance else worsened inter-yearly by CZK 4,4 billions, however, the rate of its growth slowed down, for the export grew more quickly than the import. The Foreign trade development in CPA 24 products, in (Mill. CZK) Export , , , , ,1 Import , , , , ,6 Balance , , , , ,5 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 102,6 89,1 108,8 132,1 Import x 108,4 97,2 110,3 118,3 Source: Czech Statistical Office, MIT estimate 56

58 NACE 24 export enhanced inter-yearly by more than 32%, which was influenced by the growth of prices of chemicals, by the exchange rate changes towards EUR and USD and by a high demand, mainly in Europe and Asia. The holding UNIP/ETROL, joint stock Co. ranked in the grade of the largest exporters on the third position in the foregoing year (export in an amount of CZK 30 billions). The export of the chemical products enhanced considerably (+ 18,3%), because the domestic firms were not able to satisfy the high demands on a wide assortment. The export performance of the branch was in the last years fluctuating around %, the penetration is gradually declining (in the last year 24,7%). The export performance depends in a great extent on development of the oil prices and on activities in the capital constructions. The development in this year is indicating that the export performance could enhance as well as the export kilogram prices, which were in an average by 35% lower than the import once. The territorial structure of our foreign trade changed only minimally recently. Our largest trade partner was in 2004 FRG (turnover of CZK 74,9 billions, CR adverse foreign trade balance of CZK 26,7 billions), which share in the total export was 25% and in import 28%. The high unfavourable balance was recorded with the most of EU-15 countries, on the contrary the balance with our second largest trade partner Slovakia was favourable (export CZK 13,6 billions, import CZK 10 billions, favourable balance of CZK 3,6 billions), similarly as with Poland and Hungary. 57

59 1.4 Investment The gross domestic investment into the branch considerably declined in 2004 (in const. prices by more than 20%, which includes a decline of investment in machinery and equipment by approx. 29%). Among the important investment actions of 2004 might be mentioned launching of the new manufacture of low-molecular resins in Ústí nad Labem, manufacture of the bio-preparations in Kouřim and few further project in the field of pharmaceutical products and cosmetics. In several investment incentives were approved in the branch, which concerned the bio-technological products, technical gases and pharmaceutics. In the foregoing years the incentives mostly concerned modernisation and enlargement of production of plastics and synthetic fertilisers. In 2004 guaranties of advantageous prices and credits were granted for 13 firms, subsidies within the programme TRH (MARKET) for 19 firms and within the programme MARKETIG for 14 firms. Beside this an incentive was approved for founding of the Czech Technology Centre of Inorganic Pigments in PECHEZA Přerov joint stock Co. The volume of the foreign direct investments has not changed in the last years (it reached altogether CZK 28,2 billions at the end of 2003), investment in abroad of our firms were very low and were mostly channelled into their foreign branches. 1.5 Branch NACE 24 perspectives An appraisal of the chemical industry perspectives is very difficult and depends on many factors on development of the oil, oil products and other raw materials world prices, on trends on the internal and world markets with chemicals as well as on changes in legislation (REACH) and regulations (they are more stringent in EU-25 then in other countries, which fact is declining the competition ability of Community). Most experts in prognostics are expecting that besides prices of the raw materials and oil, the labour and other costs will be also growing (impacts of the REACH legislation under preparation). Further development of the Czech chemical industry will also depend on further steps of the PKN Orlen Co. (Poland), which became the majority owner of the petroleumchemistry holding UNIPETROL, joint stock Co. (in 2004 it shared in the receipts of our chemical industry three fifth). In spite of this the perspectives of the branch might be evaluated as favourable, which is finally confirmed by the dynamic growth of receipts and value added in the branch during the first half of

60 NACE 25 MANUFACTURE OF RUBBER AND PLASTIC PRODUCTS DH 1. Manufacture of rubber and plastic products NACE 25 The manufacture of rubber and plastic products belongs among the most dynamic branches of the manufacturing industry. It incorporates two large product groups, where in the group 25.1 the production of rubber tyres and inner tubes is dominating; the group also incorporates the manufacture of packing, V-belts, hoses etc. In the group 25.2 a wide assortment of products and semi-products of plastics is manufactured plates, profiles, foils, packages etc. Importance of the group consists in a close linkage to the automobile and electro-engineering industry, construction industry, manufacture of cover and packages etc. and its share in the manufacturing industry has been permanently growing since 2000 in 2004 the share in receipts (in current prices) reached 6,1%, in value added 6% and in the number of employees 5,4%. In the last years no considerable variation affected the branch and thanks to the high capital constructions the branch has lured a lot of prestigious foreign firms into the country. The branch shared in 2003 in creation of the gross value added 4,5%, in the GDP creation in 2004 then approx. 2,2%. 1.1 Main production indicators of the NACE 25 branch Main production indicators in NACE 25, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 Receipts from sales of own product and services (in const. prices) were growing in the entire period under review by an extraordinary rate (2004/2000 increase by 94%), namely thanks to the manufacture of tyres and to the high demand in the automobile and electro-engineering industries. Similar development showed the value added indicator (2004/2000 increase by 76%). Favourable development showed also the indicator of the labour productivity from value added (in const. prices), which increased by almost 37% in the period from 2000 to 2004 thanks to a number of foreign investments, which brought a top technology and engineering into the country. 59

61 Main production indicators in NACE 25, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,1 Year-on-year index x 130,0 108,6 120,6 114,0 Cumulative index 100,0 130,0 141,1 170,1 194,0 Value added , , , , ,5 Year-on-year index x 111,8 109,7 125,3 114,5 Cumulative index 100,0 111,8 122,7 153,7 176,0 Labour productivity from VA ,8 411,5 447, ,2 Year-on-year index x 99,4 108,8 118,3 106,6 Cumulative index 100,0 99,4 108,2 128,1 136,6 Number of employees , , , , ,0 Year-on-year index x 112,4 100,8 105,9 107,4 Cumulative index 100,0 112,4 113,4 120,0 128,9 Source: Czech Statistical Office, MIT estimate, * preliminary data 1.2 Employment in NACE 25 branch Employment structure, according to the size of enterprises, in 2004 NACE and more 17% 0 9 5% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % A great weight of small and middle-sized enterprises in the branch NACE 25 is obvious from the graph. In 2003 the mentioned three categorize of enterprises (0 249 employees) recorded 47% of receipts, 46,5% of the created value added and 59% of the entire number of employees. Currently 615 entrepreneurial subjects with more than 20 employees are acting in the branch and their number is furthermore growing. The branch as one of a few in the manufacturing industry is recording the increase in the number of employees (in the period from 2000 to ,3 thousand of new jobs were created in the branch). Positively should be appraised that the new plastics industry are arising namely in regions with high unemployment (e.g., Ústí nad Labem region, Zlin region etc.). The business environment in the branch is favourable and is also stimulated by numerous investments incentives, which were granted in the last years for investment actions. The favourable economic situation in the branch, high interest of foreign investors and safeguarded indigenous as well as foreign sales are also playing up to this. It is also reflected in a progressive increase of wages, which are currently around CZK , i.e., slightly under the manufacturing industry average. By far the largest representation of the branch exists in Zlin region (the share of 19% in the number of employees, 34% in receipts). 60

62 NACE Foreign trade Foreign trade development in CPA 25 products, in (Mill. CZK) Export , , , , ,1 Import , , , , ,5 Balance , , , , ,4 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 110,9 110,4 107,6 124,0 Import x 109,1 101,1 110,6 121,4 Source: Czech Statistical Office, MIT estimate In the last year the export grew by a more rapid way (+ 24%) than the import (+ 21,4). In spite of this in 2004 the adverse balance reached CZK 12,9 billions. The group 25.1 is practically the only one in the entire chemical industry, which recorded the credit balance (CZK + 13,5 billions), namely thanks to the high export of tyres. The export performance of the branch is over the manufacturing industry average and varies around 55%. A favourable development was registered in the kilogramme prices, which were by approx. 50% higher in export than in import and such a development might be registered in few of the branches only. In the territorial structure the trade exchange with FRG plays the primary role (in CR export the share of 40% and in import 48%), another important partners are Slovakia, France and Austria. 1.4 Investment In the last years the branch NACE 25 belongs among the most active branches within the manufacturing industry with respect to investments. In 2004 the gross investments into the branch exceeded CZK 10,5 billions (+ 29% as compared with 2003) and in the last years a number of actions were finished, in which as a rule the prime foreign firms took share the (Continental A.G., AVON Automotive, Saar Gummi, Greiner, Daiho Industrial aj.). A considerable part of them was supported by investment incentives. The volume of foreign direct investments attained CZK 24,9 billions at the end of 2003, while our investments in abroad for the first time exceeded the amount of CZK 1 billion. In 2004 within the programmes determined for the support of small and mediumsized enterprises the branch gained 23 price-preferred guaranties in amount of CZK 35 mill., 26 preferred credits of CZK 30 millions, financial support within the programme TRH (MARKET) (certification) etc. In the last time also the means from Structural funds begin to arrive in firms. 1.5 Branch NACE 25 perspectives Perspectives of the branch might be assessed as favourable for the next years, for The branch has a firm raw material base for its disposal (plastics, synthetic rubbers), Close linkages exist to the domestic as well as to the foreign manufacturers of automobiles, electro-engineering and electronics, to the construction industry, manufacturers of packages etc., A number of strategic partners are acting in the country, many of them from abroad, The investment activity is permanently high and supported by incentives of the state, The environmental problems are not extensive, the old ecological loads are minimal, Possibilities of application of the plastics in all sectors of our economy are not exhausted by far, so much the better the consumption of plastics in the EU new member countries lays deeply under the developed industrial countries average, Competition ability of the branch has a growing trend thanks to the massive investments and thanks to the influx of the top technologies. 61

63 MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS DI 1. Manufacture of other non-metallic mineral products NACE 26 The branch of the glass, ceramics, porcelain and building materials industries incorporate altogether nine groups. The glass, ceramics and porcelain are determined in a great extent for the export, while the products of the building materials industry are placed on the domestic market on the first place. The largest shares in receipts from sale of own products and services (own P&S) had in 2004 the groups NACE 26.1 Manufacture of glass and glass products with its 38% and NACE 26.6 Manufacture of articles of concrete, plaster and cement 26%. A characteristic point of the branch presents the saturation of manufacture from the domestic resources. Within the manufacturing industry the share of the branch in receipts from sale of own P&S was amounted to 5,2%, in value added to 8,6% and in the number of employees to 5,8%. 1.1 Main production indicators of the NACE 26 branch Main production indicators in NACE 26, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 The favourable results of the economic development in the period from 2000 to 2004 were reached by restructuring of the manufactures (e.g., manufacture of the flat glass, glass fibres, tiles, bricks, roofing etc.) connected with modernising of the technological equipment and with the entry of foreign capital. The development of the main production indicators (receipts from sale of own P&S, value added and employment) of the branch was in the period from 2000 to 2004 favourable and as compared with the entire manufacturing industry a higher development dynamics was reached. The most significant yearly growths of receipts from sale of own P&S and of the value added were achieved in groups of the manufacture of products determined for the construction sector, due to the enhanced demand. In the labour productivity from value added the branch belongs to the above the average ones, the highest values are being reached in groups NACE 26.5 Manufacture of cement, lime and plaster and NACE 26.4 Manufacture of tiles, bricks and stoneware. The growth of the labour productivity has been safeguarded by restructuring in the prevailing part of firms 62

64 NACE 26 Main production indicators in NACE 26, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,8 Year-on-year index x 103,9 104,0 102,8 106,4 Cumulative index 100,0 103,9 108,0 111,0 118,1 Value added , , , , ,0 Year-on-year index x 101,8 103,8 109,3 108,3 Cumulative index 100,0 101,8 105,6 115,5 125,0 Labour productivity from VA , ,8 667,5 Year-on-year index x 102,3 105,8 116,1 112,0 Cumulative index 100,0 102,3 108,2 125,7 140,8 Number of employees , , , , ,0 Year-on-year index x 99,5 98,1 94,1 96,6 Cumulative index 100,0 99,5 97,6 91,9 88,8 Source: Czech Statistical Office, MIT estimate, *preliminary data 63

65 through improvement of effectiveness of the individual activities (sale and logistic inclusively), strengthening of the financial stability (by the entry of foreign capital), reduction of the production costs etc. 1.2 Employment in NACE 26 branch In 2004 the largest share in employment in the branch showed the organisations with 250 and more employees, producing mainly glass and glass products (NACE 26.1) and goods of concrete (26.6). Employment structure, according to the size of enterprises, in 2004 NACE and more 26% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % % 64

66 NACE 26 In 2004 the average monthly wage in the branch was amounted to almost CZK , which was by approx. CZK more than the manufacturing industry average. In comparison with the foregoing year it presented the growth of wages by 7,2%, which was proportional to the growth of the labour productivity from value added by + 12%. Among important enterprises in the branch belong the manufacturers of: Flat glass - Glaverbel Czech, joint stock Co., Teplice, AGC Automotive Czech, joint stock Co., Chudeřice; Utility glass - Preciosa, joint stock Co., Jablonec, Crystalex, joint stock Co., Nový Bor, Sklo Bohemia, joint stock Co., Světlá nad Sázavou; Technical glass - Sklárny Kavalier, joint stock Co., Sázava, STV Glass, joint stock Co., Valašské Meziříčí); Container glass - Avirunion, joint stock Co., Teplice, Vetropack Moravia Glass, joint stock Co., Kyjov; Glass fibres - Saint-Gobain Vertex, joint stock Co., Litomyšl; Cement - Českomoravský Cement, joint stock Co., Beroun, Lafarge Cement, joint stock Co., Čížkovice, Holcim (Czech), joint stock Co., Prachovice, Cement, joint stock Co., Hranice); Concrete - Zapa beton, joint stock Co., Praha, Skanska Transbeton, Co. Ltd., Praha, Metrostav, joint stock Co., Praha; Bricks - Wienerberger Cp, joint stock Co., České Budějovice, České cihelny Jos. Meindl, Co. Ltd., Stod); Roofing - KM Beta, joint stock Co., Hodonín, Bramac, roofing systems, Co. Ltd., Praha; Floor tiles - Lasselsberger, joint stock Co., Plzeň. 1.3 Foreign trade The favourable development in the period from 2000 to 2004 was in a great extent influenced by the results of export of some products of the glass, ceramics, and porcelain industries (safety glass, glass beads, beverage glass), which are exported to the EU countries for a long time. The value of export was in 2004 amounted to approx. CZK 39,3 billions. From the EU countries are mostly imported products as e.g., the glass tubes, sheet glass, cement etc. In the same year the value of import of these products was amounted to approx. CZK 30,2 millions. Foreign trade development in CPA 26 products, in (Mill. CZK) Export , , , , ,6 Import , , , , ,7 Balance , , , , ,9 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 105,3 94,2 105,4 111,4 Import x 115,6 106,9 106,0 116,8 Source: Czech Statistical Office, MIT estimate 1.4 Investment The state of affairs in the foreign direct investments in the branch was amounted to CZK millions as on The foreign investors mostly invested in modernisation of the existing manufacturing capacities (manufacture of the flat glass, reconstructions of brick and cement works) or construction of the new plants (manufacture of the roofing, gypsum-board, plaster mixture etc.). In compliance with the Law No. 72/2000 Vol., on investment incentives, in its consolidated version, 2 projects were supported in the branch (Vertex Glass Mat, Co. Ltd. manufacture of the non-woven glass mattresses and Vesuvius Solar Crucible, Co. Ltd., Frýdek Místek manufacture of the special ceramics for silicon melting). 65

67 1.5 Branch NACE 26 perspectives The branch is not worsening the quality of environment. Most of wastes are furthermore processed and in the air or in the waste waters, respectively, only a minimal amount of noxious substances is released. Among factors influencing the future development of the branch belong: Growth of competition of the Asia manufacturers on the market with the household glassware and utility porcelain, Development and orientation of the construction sector production, Growing demands on the manufacture of technical glasses (flat glass, safety glass, glass fibres etc.), Ability to establish qualitatively higher forms of collaboration with the domestic as well as foreign research base in the manufacturing and trade spheres. With respect to the foreign investments in the glass industry the manufacturers of the flat glass, textile fibres etc. will have an advantageous situation, on the contrary the manufacturers of the illumination glass and utility porcelain, where the demand of consumers of this products declined and the competition enhanced, might have problems. In the building material industry together with the development of the industrial enterprises infrastructure, housing construction, repairs of the housing fund inclusively, further development of the branch can be expected. Additional development of the new building materials, which by their utility characteristics (strength of material and its harmlessness for health, insulating properties etc) surpassed the classical materials used yet. In a great extent it will be necessary to implement the projects on brown-fields (problems of destitute farm-houses, the urban solution of housing estates and their infrastructure etc.). 66

68 NACE 27 MANUFACTURE OF BASIC METALS AND FABRICATED METAL PRODUCTS DJ 1. Manufacture and processing of basic metals NACE 27 The metallurgy forms a base for the linked manufacturing groups. One job in the metallurgy bounds another 3 4 jobs in the related groups. The metallurgic manufacture in the Czech Republic depends on imports of the basic input raw materials and belongs to the largest consumers of energy. The decisive position occupy, due to the ferrous metallurgy, the large enterprises concentrated in the Moravia- Silesian region (almost 68% of receipts, 64% of value added and 52% of employees). In the creation of GDP the branch NACE 27 shares 1,8%, for the decisive part of the value added is created in the linked branches and so in the metallurgy itself is relatively low. As a result of the development in late nineties, the branch structure of the industry shifted in favour of the finalising groups and the share of metallurgy declined. It was changed in 2004, when the demand after metals considerably increased. The index of the industrial production enhanced inter-yearly by 23% as compared with the average growth of the industrial production 9,9%. This increase was determined by both, enhancement of the tangible productions (receipts in constant prices increased by more than 10%) and namely by a considerable growth of the steel products prices, influenced also by the considerable growth of prices of the entering raw materials (ores, scrap etc.). 1.1 Main production indicators of the NACE 27 branch After the drop of economic activities in 2002, since 2003 the growth of the consumers demand after metal materials has renewed. It was manifested by the inter-yearly growth of the receipts in comparable prices (+ 13,3%), which continued in 2004 as well (+ 10,5%). In 2004 after two years, when the manufacturing prices had beed declining, the growth of prices in the metallurgy commenced together with the growth of the raw materials prices. The development of receipts was determining for the value added dynamics. Rationalising of the production of receipts together with the financial restructuring of large enterprises was acting positively as well. In 2004 the positive trends of the preceding years continued. The indicators of the receipts and value added Main production indicators in NACE 27, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

69 furthermore enhanced in 2004, the inter-yearly improvements of the gain were also sizeable. On the contrary to the preceding years, in 2004, however, the metallurgy was made to damp the growing prices of the raw and other materials within prices of its products. It was reflected in enhancement of the material costs and in the lower size of the gain (than expected). The growth of receipts and value added in comparable prices was due to the rationalising of the production accompanied by a considerable reduction of the number of employees at the real increase of their average earnings. In 2004 a relatively large growth of receipts was recorded at just a moderate decline in the total number of employees, which brought the growth of the labour productivity from value added by 52% in current prices. The given facts hang also together with the relative drop in the wages intensity. By using the share of labour costs in the value added as a measure, the wages intensity declined by approx. 28%. As a result a more rapid growth of the labour productivity from value added as compared with the growth of earnings was recorded, which presents a condition of the sustainable development. Main production indicators in NACE 27, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,1 Year-on-year index x 106,1 94,9 113,3 110,5 Cumulative index 100,0 106,1 100,7 114,1 126,1 Value added , , , , ,4 Year-on-year index x 100,7 95,5 113,9 80,6 Cumulative index 100,0 100,7 96,2 109,5 88,3 Labour productivity from VA , , ,2 Year-on-year index x 101,8 106,7 122,6 81,4 Cumulative index 100,0 101,8 108,7 133,3 108,4 Number of employees , , , , ,0 Year-on-year index x 98,8 89,5 92,9 99,1 Cumulative index 100,0 98,8 88,5 82,2 81,4 Source: Czech Statistical Office, MIT estimate, *preliminary data 1.2 Employment in NACE 27 branch It may be affirmed that the large organisation with more than 1000 employees occupying 48% of workers, produces 62% of receipts and create 61% of value added. It concerns mainly the large steel companies with lower share of the labour costs per unit of the production. The development of employment and wages in the branch bears on development of the labour productivity and on the economic situation of the decisive manufacturers. Since 2000 both the nominal as well as the real wages have been growing. The growth of earnings is based on the growth of labour productivity. At the average index of the growth of consumer prices by 2,8% a significant growth of the real earnings of workers was achieved. The growth of the nominal wages also bears on the change in the qualification structure and is strongly influenced by the development of prices in the largest metallurgic companies. The wage intensity is, however, declining due to the reductions of the labour forces. With respect to termination of the privatisation process and of restructuring mainly, the process of the release of workers in the metallurgy cannot be observed as terminated. The development of employment shows a trend of a radical declining of jobs in the metallurgy, mainly by a way of the servicing activities earmarking and manufacturing processes rationalising. The development of the number of workers in the individual metallurgic companies 68

70 NACE 27 is considerably differentiated and the main intensity in the decline of the number of workforces in the group is concentrated just to the years 2004 and Employment structure, according to the size of enterprises, in 2004 NACE and more 48% 0 9 1% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 1.3 Foreign trade An increase of the CPA 27 products export by 44%, in value terms, was recorded in 2004, in spite of the fact that in the volume term it enhanced by 0,5% only. The difference is given by the assortment composition and by the exchange rate effects, but also by the increase of export prices. The increase of the total value of export in 2004 is given by the price level of the metallurgic products export on the foreign market on the first place. In 2004 the value of the import of CPA 27 products enhanced by 43%, while in the volume term just by 23,2%. The difference is again given, besides the assortment composition, mainly by the development of import prices (growth by 21,1%). The export prices so achieved in 2004 approximately 80% of the import prices level. The higher level of the import prices is given by the composition and quality of the assortment (higher share of the flat products and highgrade steels). The unfavourable balance of the foreign trade in CPA 27 group is in value terms influenced mainly by the group 27.4 as well as by the group The groups 27.1 and 27.2 producing the steel products are keeping a favourable foreign trade balance. The export performance of the group CPA 27 is else showing a growing trend, however, it is more and more influenced by orientation of the domestic producers on the domestic market. Higher export performance show the Foreign trade development in CPA 27 products, in (Mill. CZK) Export , , , , ,5 Import , , , , ,5 Balance , , , , ,0 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 108,5 92,7 112,2 144,0 Import x 104,8 92,0 107,6 143,0 Source: Czech Statistical Office, MIT estimate 69

71 groups CPA 27.2 and The import intensity is growing due to the growing demand, after the steel products mainly, which shows higher growth dynamics than the indigenous production dynamics. CPA 27.4 products show the highest intensity in a long term. By enlargement of the EU market by the new countries a considerable enhancement of the total volume of export in this territory was recorded. In 2004 its share reached 80,5% of the total volume of export. Almost 88% of the export volume is determined for the European Continent. 1.4 Investment The decisive part of investments is realised in the several largest steel enterprises, which are able to ensure their financial coverage even in case that the long-term return of the deposited financial means is concerned. All the time higher stress is given on the ecological investments else necessary from the point of the prepared more stringent ecological standards. In relation to the privatisation a growth of the foreign direct investments into the group is recorded and its dynamic is more significant than in the entire manufacturing industry. Both are corresponding to the already larger globalisation of the market, where a significant concentration of the capital in the largest multinational companies is obvious. 1.5 Branch NACE 27 perspectives The metallurgy has with respect to the intensity of consumption of the basic metallurgical products a permanent reasoning. The engineering sector, the automobile industry inclusively, remains to be the main consumers of the steel, followed by the construction sector. The trends and future development of the metallurgy are being consolidated by the construction of large units, fusions and strategic alliances, which present a response to the global character of the market with steel and to 70

72 NACE 27 internationalisation connected with activities crossing borders of the individual states, with an objective to strengthen the position of steel and steel companies. In this iniciated worldwide trend the branch NACE 27 in CR is also involved. The first step presented the privatising of metallurgical plant Nová huť, joint stock Co., into the LNM Holding (Ispat) and subsequently to Mittal Steel Co., i.e., to the largest steel manufacturer. As an example may serve Třinecké železárny Co., which is implementing the creation of product chains, i.e., consolidation in the line of long products, rolled, drawn, ground and peeled steel material. In the sphere of the product assortment an unambiguous shift towards products with higher use value, as necessary measure maintaining the competitiveness, will be necessary. Development of the branch is also significantly influenced by legislation adopted in the sphere of environment. For fulfilment of demands given by this legislation sizable means are being deposited by the metallurgy every year. It is expected that for ecologic measures in the metallurgic production it will be necessary to deposit yearly approx. CZK 6 7 billions until For the next period the continuing demand on metallurgic materials will be decisive, which intermittently declined due to the growth of reserves. In further period maintaining of the favourable results by the end of 2007 is expected, which hangs together with cycles in the economic development and with the expected development in the EU countries economies. In 2008 achievement of the level of 75 85% in the productivity and effectiveness is expected in the steel metallurgy and in 2012 even the level of 90 95% is expected. The fundamental challenges for the next period, necessary for enhancement of the competitiveness of the Czech metallurgic production within EU, present termination of the restructuring processes in the steel metallurgy and application of the EC ecologic legislation by 2007 (IPPC, BAT). 71

73 1. Manufacture of structural and fabricated metal products NACE 28 The production of the branch of structural and fabricated metal products is linked to the domestic metallurgic base and the production assortment of the branch is safeguarding the more sophisticated production of steel structures, machinery and equipment for the capital goods, general and transport goods engineering as well as of semiproducts for the electro-engineering industry. The manufacture of structural and fabricated metal products has an important place within the manufacturing industry. In the period from 2000 to 2004 it showed also a favourable dynamic rate, for the receipts from sales of own products and services in the current prices increased by 39%, the value added enhanced by almost 50% at the growth of employment by 11%. The branch shares within the entire manufacturing industry 8,1% in receipts from sale of own products and services, 10,2% in value added and 12,9% in employment. The branch shows a very favourable development in the short-term horizon. In comparison with the 2003 data, in 2004 the receipts from sale of own products and services increased by 17% and the indicator of value added showed an increase by 15,4%. 1.1 Main production indicators of the NACE 28 branch Main production indicators in NACE 28, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 The results reached in 2004 are showing favourable trends and witnessing the running boom in the branch. Development in the domestic and foreign demands was favourable and the production of the industrial enterprises in CR was growing during the entire year by a high rate. These results are also showing a quick development of firms under the foreign control, which are creating a new industrial nucleus of the Czech economy and which take share in the substantial changes of our economic structure. The growth of the branch of structural and fabricated metal products keeps on for four years. In 2004, when retardation due to the low demand in EU was rather expected, the dynamic of the growth even enhanced. The production of the branch stepwise develops towards products with higher value added. Together with the revival in EU a higher demand on products and services in abroad will appear which will be profitable for the indigenous manufacturers as well. 72

74 NACE 28 Main production indicators in NACE 28, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,3 Year-on-year index x 113,4 101,5 101,7 108,8 Cumulative index 100,0 113,4 115,1 117,1 127,4 Value added , , , , ,8 Year-on-year index x 111,0 104,7 102,7 110,8 Cumulative index 100,0 111,0 116,2 119,4 132,2 Labour productivity from VA ,9 292,7 317,1 320,1 340,1 Year-on-year index x 102,7 108,3 100,9 106,2 Cumulative index 100,0 102,7 111,3 112,4 119,4 Number of employees , , , , ,0 Year-on-year index x 108,1 96,6 101,7 104,2 Cumulative index 100,0 108,1 104,4 106,2 110,7 Source: Czech Statistical Office, MIT estimate, *preliminary data 1.2 Employment in NACE 28 branch The branch shows a favourable development of employment, when during the period under review more than 7000 of new jobs were created. Employment structure, according to the size of enterprises, in 2004 NACE % 1000 and more 3% % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % % Small and medium-sized enterprises of the branch with less then 250 employees take share of 83% in employment in the branch and are by the registered 74% participating in receipts from sale of own products and services. They also positively influence development in regions undergoing the structural changes and by such a way also the social and economic development of the society. 1.3 Foreign trade The development of foreign trade with products of the branch Manufacture of structural and fabricated metal products is characterized by high rates of the growth of export as well as import. 73

75 Foreign trade development in CPA 28 products, in (Mill. CZK) Export , , , , ,3 Import , , , , ,9 Balance , , , , ,4 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 108,8 93,3 111,7 124,6 Import x 112,9 100,8 110,4 121,4 Source: Czech Statistical Office, MIT estimate The higher growth rate of export as compared with the growth rate of import might be evaluated positively. The development had a favourable effect on the trade balance and herewith also on the credit balance of the foreign trade. The inter-yearly increase between 2004/2003 is sizeable, when changes of the export and import prices also took share in it. The prices of production reflected, beside the exchange rate variation of CZK towards EUR and USD, the price development on the world market in 2004, namely the growing prices of the raw materials and fuels. The highest share in the reported credit trade balance of the entire branch had the groups 28.7 Manufacture of other fabricated metal products and 28.1 Manufacture of metal structures and prefabricates. The higher import intensity, which is in addition connected with the unfavourable balance of foreign trade showed the group 28.6 Manufacture of cutlery, tools and general hardware. It is given by the variety of assortment in the mentioned group, where a large number of competing foreign products exist on the market. In spite of this even in this group the unfavourable balance is gradually decreasing. Together with farther development namely in the automobile and electro-engineering industries the increase of imports into the branch might be expected, whereby the favourable balance will be reported in the other branch manufacturing the final products. The promise for the future successful development of the foreign trade seems to be the knowledge that the foreign trade results of the branch further improved after the accession to EU. 1.4 Investment The industry of structural and fabricated metal products manufacture belongs among the branches with a great influx of the foreign investments and with permanently growing volumes of investments, which are bringing both, the new technologies as well as the new sale possibilities. For the future a space might be seen even for an expansion in abroad, namely in the groups 28.4 Forging, pressing and further forming of metal and 28.5 Surface treatment and coating of metals, namely into countries with a lower price of the labour. 1.5 Branch NACE 28 perspectives Development in the metal industry in is ranging the NACE 28 branch among the important branches of the manufacturing industry. In spite of a different development in the individual groups, which is given by an enormous diversification of the production, in the entire branch favourable results were reported for the entire period under review. These results are in addition accompanied by a desirable dynamic of export with a favourable foreign trade balance. The inter-yearly trends 2004/2003 recorded in the development of export are witnessing the running boom in the branch and documenting that the accession to EU was profitable for the branch. Results recorded in the period from 2000 to 2004 are showing that neither the development of the raw material 74

76 NACE 28 prices nor the strong exchange rate of CZK was manifested in the decline of competition ability of the indigenous production. In the branch development in the sale of automobiles can be manifested in the long term. An important factor influencing the future development of the branch should become the implementation of the CR energy resources programme, with its decisive impact on development in the group 28.3 Manufacture of steam generators, except central heating hot water boilers which belonged in the recent past among the carrier programmes of the CR capital goods engineering. The intended programmes for the investment activities of the ČEZ company (complex of firms acting in the energy sector) in Romania and Bulgaria might favourably influence the actual results of the branch. 75

77 MANUFACTURE AND REPAIRS OF MACHINERY AND EQUIPMENT DK 1. Manufacture and repairs of machinery and equipment NACE 29 The branch NACE 29 Manufacture of machinery and equipment, is an important branch of the Czech manufacturing industry. It incorporates the manufacture of turbines, transport machinery, ventilating and air-conditioning equipment, agricultural, food-industry, textile, paper and construction machinery as well as the machine and forming tools, machines for manufacture of weapons and ammunition, up to the household appliances and equipment. The branch is occupying an important position within the manufacturing industry. In the manufacturing industry receipts from sale of own products and service in 2004 it shared the entire 8,0%. Since the most unfavourable year 2002 a moderate growth (by 8,0%) has been registered in the mentioned area. The share of 11,0% in the number of employees means a decline by 1% as compared with The NACE 29 shared in ,5% in the value added of the entire manufacturing industry. Since 2002 (the share 9,2%) a gradual increase of the share in value added up to 10,0% in 2004 has been registered. In the short term (2004/2003) slightly increased receipts and value added (in the order tenth of%). 1.1 Main production indicators of the NACE 29 branch The branch showed a gradually growing share of receipts from sale of own products and services in the period from 2000 to A considerable increase was registered in 2004, when the CR accession to EU took place. A similar course showed also the value added. This favourable process is resulting from a number of favourable effects, i.e., the mentioned accession to EU, termination of the world economic recession and not at last, termination of the transforming and restructuring processes in a number of subjects of the branch. The most dynamic development of the production indicators was registered in the group 29.3 Manufacture and repairing of agricultural and forestry machinery. This result was achieved mainly thanks to the traditional Czech manufacturer ZE- TOR, joint stock Co., Brno. With respect to the continuous setting of the new technologies into the manufacturing processes within the entire branch, a gradual decrease in the number of employees has been registered. Main production indicators in NACE 29, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

78 NACE 29 Main production indicators in NACE 29, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,5 Year-on-year index x 110,9 104,4 110,2 112,7 Cumulative index 100,0 110,9 115,8 127,6 143,8 Value added , , , , ,3 Year-on-year index x 108,0 91,0 106,3 125,3 Cumulative index 100,0 108,0 98,3 104,5 131,0 Labour productivity from VA ,2 346, ,5 426,7 Year-on-year index x 111,3 91,8 105,5 127,2 Cumulative index 100,0 111,3 102,2 107,8 137,1 Number of employees , , , , ,0 Year-on-year index x 97,0 99,1 100,8 98,5 Cumulative index 100,0 97,0 96,2 96,9 95,5 Source: Czech Statistical Office, MIT estimate, * preliminary data The labour productivity from value added has been increasing every year (except 2002) in the period under review, i.e. from 2000 to With respect to the fact that the productivity is directly influenced by initiation of the new technologies and by application of the science and research results, in 2004 (in the first year of our EU membership) its increase was registered, among others thanks to contribution of the foreign investors. 1.2 Employment in NACE 29 branch The centre of gravity of employment lays on the categories of enterprises with employees and employees, respectively, which is given by the fact that the manufacture in the branch is mostly technically as well as technologically demanding, so the smaller firms provide the less technically demanding manufacture or deliver sub-deliveries or co-operations. The companies with more than 1000 employees generally are already not many in the manufacturing industry. The industrial base in the branch was in 2004 created by altogether 1043 enterprises with the total number of employees exceeding More than (i.e. 34,3% of employees in the branch) recorded enterprises of Employment structure, according to the size of enterprises, in 2004 NACE and more 12% 0 9 7% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 77

79 the group 29.5 Manufacture and repairing of other special purpose machinery. On the contrary the lowest number of employees was recorded in 2004 in the groups 29.7 Manufacture of household appliances and equipment (almost employees, which is 4,7%) and 29.6 Manufacture and repairing of weapons and ammunition (almost employees, i.e., 3,3%). The average salary within NACE 29 was in 2004 CZK /month, the highest average salary was documented in the group Manufacture of machinery for the production and use of mechanical power (CZK/ month ) and the lowest average salary was recorded in the group Manufacture of electric appliances and equipment for household (CZK/month ). The foreign direct investments have a positive effect on development of the branch. The preservation of the foreign investors interests is supported by a favourable business environment, which is co-created by a stable and transparent legislation, tax preferences, transport attainability, quality and sufficiency of the labour force. A favourable impact on results of the branch has the system of supports to small and medium-sized enterprises (SMEs) provided in MIT, which is being delivered through differently focussed programmes. 1.3 Foreign trade The foreign trade of the CPA 29 goods branch had showed an unfavourable balance before The competition ability of the branch is improving, due to the influx of foreign investors, use of new know-how, effective technologies etc. After the CR accession to EU substantial changes of conditions for export into the member state have been recorded, i.e., not only elimination of the custom tariffs, however, the custom measures of EU, which prevent imports of goods for the damping prices into EU, give opportunity for the Czech goods to compete. 78

80 NACE 29 Foreign trade development in CPA 29 products, in (Mill. CZK) Export , , , , ,9 Import , , , , ,3 Balance , , ,3 450, ,6 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 114,8 99,2 116,2 125,7 Import x 116,2 91,8 111,5 116,9 Source: Czech Statistical Office, MIT estimate 1.4 Investment By implementation of the system of investment incentives an important condition was prepared for enhancement of the foreign investment influx into the CR manufacturing industry. A strong impulse has been by this given for development of the domestic investments. Within NACE 29 altogether 25 projects were supported in the total amount of investments almost USD 790 mill. as on The investment incentives are also a resource for creation of the new jobs in regions most affected by unemployment. 1.5 Branch NACE 25 perspectives The CPA 29 products have in the Czech Republic a long tradition and CR is famous by its exports of the capital goods units, the essential components of which are mostly just the CPA 29 products. The volume of the CR export into EU countries has been permanently growing since 2000 (increase by 13,5% in 2003). Currently after the CR accession to EU another enhancement might be legally expected. Comparison with the other CEFTA countries results is also showing a favourable situation, where our export by its share occupies the leading position in the CEFTA countries export into EU (36,7%). These data are witnessing the continuing good competition ability of our mechanical engineering products. Development in the competition ability of the branch must be ensured by a continuous improvement of the technical level of final products, technologies and pre-manufacturing stages, by a consistent monitoring of quality, by flexible response to demands of customers, by complexity of deliveries, by achievable and quick services and by total solidity of the firm. The branch 29 by its five groups of seven has close linkages to the investment activity. For this reason and based on the last years results its further successful development might be expected. Respecting the fact that a number of enterprises of the NACE 29 form a part of multinational corporations and develop a successful activity, the globalisation on the world market (according to the existing experience) should not present an obstacle to the success for the healthy enterprises. 79

81 MANUFACTURE OF ELECTRICAL AND OPTICAL EQUIPMENT DL 1. Manufacture of office machinery and computers NACE 30 Export of production of the export oriented electronic and electro-technical industry (subsection DL) reached in 2004 CZK mill. and was so creating 23,6% of the production of goods in the Czech Republic manufacturing industry. The drawer of the industrial production dynamics of growth was in 2004 the production of electronics and electro-technical equipment, where the receipts have grown by 28,7%. The share of the subsection DL in receipts from sales of own products and services in constant prices was CZK ,1 mill. in 2004 and reached 17,8% of the total manufacturing industry receipts. Launching of new production capacities in the subsection DL continued. The foreign direct investment in the subsection DL, at implementing of more than sixty projects, have reached CZK ,2 mill. The favourable dynamics of growth was in 2004 manifested by growth of the labour productivity in the manufacturing industry by 10,9%. Most distinctly it was growing in the subsection DL branches, namely by 24,6%. The drawer of the labour productivity dynamics of growth was the production of computers. By the foreign capital influx the proficiency and competitiveness has grown, whereat the foreign mother companies ensured the approach on the foreign markets, which was manifested by the growth of receipts from the direct export by 20%. The proficiency of the manufacturing industry was in 2004 affected by the growth in branches with the significant share of foreign capital. In organisations under foreign control was in 2004 implemented 52,8% of the manufacturing industry production and 72,2% of the Czech Republic export of goods companies under foreign control are acting in the manufacturing industry, which are occupying employees. 1.1 Main production indicators of the NACE 30 branch Transformation of the Czech Republic manufacturing industry has brought significant changes. In the period from 2000 to 2004 new centres of the production of computers custom-made were built up at utilisation of foreign direct investments in the form of implementation of investment projects on green-field. Main production indicators in NACE 30, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

82 NACE 30 The branch 30 includes the manufacture of office machinery and the manufacture computers and other machinery for data processing. The manufacture of office machinery and computers is understood as including the installation, however, without maintenance (NACE 72.5), without software design (NACE 72.2), without manufacture of electronic components for devices controlled by computers (NACE 32.1) and without manufacture of the electronic games (NACE 36.5). The export of the production of computers from the Czech Republic reached CZK ,6 mill. The share of the export of computers in the export of goods production of the manufacturing industry reached 6%. Companies from the first ten largest goods production manufacturers of the Czech Republic exported in 2004 by 76% more then in The second position occupied FOXCONN CZ Pardubice exporting computers amounted to CZK mill., which presents the inter-annual increase by 22,1%. The ninth position occupied the company FIC CZ Rudná u Prahy exporting computers in amount of CZK mill., which is presenting the inter-annual increase by 76,3%. The most important investors, which in 2004 decided to invest in the Czech Republic took over valuation called INVESTOR OF THE YEAR For the largest economic contribution was appraised the company ASUS Czech Ostrava for the project of the computers manufacture centre and for the project of the high-tech European repair centre in Ostrava. The investments will make preconditions for creation of new jobs. The new technology centres and centres of strategic services in CR are leaders as to the productivity in the all-european scale. In 2004, i.e., in the tenth anniversary of the Czech TOP 100, the companies FOXCONN CZ Pardubice, FIC CZ Rudná u Prahy, Hewlett-Packard CZ Praha, AAC České Budějovice and ed _systém Czech Ostrava ranked among the TOP 100. In 2000 to 2004 the performance of the branch was influenced by the start up of new manufacturing capacities in the companies under foreign control. The share of the branch 30 in receipts from sales of own product and services, in constant prices, has in 2004 reached CZK ,9 mill., i.e., 5,1% of the manufacturing industry receipts. The 03/04 index is documenting an inter-annual rise of the receipts from sales of own products and services in the branch of office machinery and computers by 62,9%. The receipts in the branch raised in 2004 seventeen times as compared with Also in the first quarter of 2005 a growth of the production by 4,1% at the growth of receipts by 13,1% was registered. Putting of the new capacities in service accompanied by widening of the manufactures manifested in Main production indicators in NACE 30, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,9 Year-on-year index x 348,5 260,3 117,1 162,9 Cumulative index 100,0 348,5 907,1 1061,8 1729,8 Value added ,3 822, , , ,0 Year-on-year index x 75,3-134,8 975,6 107,9 Cumulative index 100,0 75,3-101,5-990,0-1068,0 Labour productivity from VA ,6 129,4-128,2-1284,5-1192,1 Year-on-year index x 41,5-99,1 1002,0 92,8 Cumulative index 100,0 41,5-41,1-412,2-382,6 Number of employees , , , , ,0 Year-on-year index x 181,3 136,1 97,4 116,2 Cumulative index 100,0 181,3 246,7 240,2 279,2 Source: Czech Statistical Office, MIT estimate, *preliminary data 81

83 the subsection DL by the growth of employment by 5,9% in the first quarter of The labour productivity from receipts increased by 6,7%. The nominal labour unit costs decreased by 5,2%. The production is export oriented, which was manifested by the growth of receipts from the direct export by 15, 4%. The newly closed orders in the manufacture of computers enhanced distinctly, i.e., by 36,9% and thereof 37,2% are orders from abroad. 1.2 Employment in NACE 30 branch Creation of more than 6000 new jobs and growth of the number of workers was in the period from 2000 to 2004 influenced by the start up of new capacities in the companies under foreign control. The 04/03 index is documenting the inter-annual growth of the number of employees in the office machinery and computers branch by 16,2%. The cumulative index is proving the growth in the number of employees by 179,2%. As to the size structure of companies, a high growth of receipts was achieved the organisations with more than employees. In this group namely the companies under the foreign control are acting possessing good export possibilities, which is manifested in the growth of receipts from the direct export. Employment structure, according to the size of enterprises, in 2004 NACE and more 41% 0 9 7% % % Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated % 1.3 Foreign trade Export of the office machinery and computers production (CPA 30) reached in 2004 CZK ,6 mill. The newly closed orders distinctly enhanced in the production of computers of which 43,9% are from abroad. The share of the export of computers in the total manufacturing industry export of goods achieved 6%. The export intensive branch of computers contributed to the active trade balance of CR. The inter-annual index 04/03 is quoting the growth of export by 17,2%. Foreign trade development in CPA 30 products, in (Mill. CZK) Export , , , , ,6 Import , , , , ,5 Balance , , , , ,1 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 199,7 197,9 111,7 117,2 Import x 145,3 110,8 97,5 122,4 Source: Czech Statistical Office, MIT estimate 82

84 NACE 30 In 2004 export of the production of computers consisted of the economic tariffs items HS 8471 Machinery for automatic data processing, units, readers in amount of CZK ,4 mill. and HS 8473 Parts of the type writers, computing machines etc., automatic data processing in amount of CZK ,9 mill. 1.4 Investment By utilisation of the foreign direct investments new centres of the manufacture of computers had been constructed in the Czech Republic in the period from 2000 to It concerns namely the projects implemented by FOXCONN CZ v Pardubice (computers), FIC CZ v Rudná u Prahy (computers) and Celestica in Ráječek at Blansko (basic units of computers). Another phase presents creation of the preconditions for the development of technology centres and centres of strategic services. The framework programme to the support of their establishment was accepted by the Government Resolution No. 1238/2003. The high-tech repair and service centre of FOXCONN Co. in Pardubice launched its activity in ASUS Czech Co. is implementing the high-tech repair centre for computers and electronic devices in Ostrava. ACER Co. is implementing a repair centre and centre to the support of ACER IT products clients in Brno. Incline Global Technology Services Co. opened a high-tech centre for repairs of the flat LCD panels of notebooks in Prague. SPC International Co. is realizing a high-tech repair centre for bankomat (cashomat), computers and line code readers in Tábor. 1.5 Branch NACE 30 perspectives One of the main challenges presents in the Czech Republic implementation of the national economic strategy focused on the long-time sustainable economic growth with a goal to approach to developed countries in the main economic indicators. By the Law on investment incentives the preconditions of the credible environment were created in CR for the foreign investors. The direct foreign investments influx positively influenced the computers manufacture development. Next phase presents development of the strategic services. Czech Republic was with respect to its suitable position and to existence of the qualified workforce selected by the high-tech companies. The Computer Associates (CA) Co. decided to create in Prague a Centre for development of software solutions of the new generation, i.e., Mainframe Centre of Excellence. The competition ability of the office machinery and computers production branch (CPA 30) may be quantified by comparison of the positions of countries with transition economy (CEFTA) on EU Member States market. As it follows from the Eurostat data, the export of the production of computers (CPA 30) from CR to the EU countries reached EUR 1 795,3 mill., i.e., 46,1% of the CEFTA export of the production of computers. The continuing influx of foreign capital in the manufacturing industry was manifested in structural changes, when the weight of the branches with higher level of challenging technologies was growing. The largest export item of the high-tech were computers, which are creating 50% of the Czech Republic high-tech production export. This export item had also the highest favourable balance, namely in amount of CZK ,1 mill. The export intensive branch is so significantly contributing to the credit balance of CR. 83

85 1. Manufacture of electric machinery and equipment NACE 31 The assembling character of the products and machinery is for this branch typical. From the point of economic activities (NACE) the branch is distributed into six groups. The traditional main groups with respect to the production and export volumes are electric motors, generators, transformers and electric distribution and control apparatuses as well as cables and insulated wires. In the last years the group of other electric equipment accomplished them also, namely the equipment for the automobile industry. Particularly due to its completing character the entire branch presents an inevitable part of the manufacturing industry. From the point of the share in the entire manufacturing industry receipts ranked the branch 31 on sixth place. Between 2000 and 2004 the share of the branch within the whole manufacturing industry was fluctuating from the lowest in 2002, when it reached 5,8% only, up to the largest in 2004, when it reached 6,4%. In 2003 this share was 5,9%. 1.1 Main production indicators in NACE 31 branch When comparing the year 2000 with 2004, it is obvious that the significant receipts from sales of products and services of the whole branch significantly increased, namely in the group 31.5 lighting equipment and electric lamps. It is the group, where the receipts from sales of products more than doubled. The growth in the group 31.6 electric equipment is also significant as well as in the group 31.4 primary cells, primary batteries and accumulators. The lowest increases were registered in the group 31.1 electric motor, generators and transformers, 31.2 electricity distribution and control apparatus and 31.3 cables and insulated wires. The growth of the labour productivity in the entire branch (by 49%) should be assessed positively similarly as in majority of its groups. This significant growth has been achieved at a contemporary low growth of the number of employee and a moderate drop of products prices. The labour productivity is significantly influenced namely by the value added and number of employee. This very important economic indicator, even if growing, is in comparison with the developed countries still lagging behind. 84

86 NACE 31 Main production indicators in NACE 31, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 Main production indicators in NACE 31, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,1 Year-on-year index x 118,2 100,5 109,2 125,1 Cumulative index 100,0 118,2 118,8 129,7 162,2 Value added , , , , ,4 Year-on-year index x 129,3 98,5 111,9 117,9 Cumulative index 100,0 129,3 127,3 142,5 168,1 Labour productivity from VA ,7 369,6 413,5 465,5 Year-on-year index x 115,0 103,0 111,9 112,6 Cumulative index 100,0 115,0 118,5 132,5 149,2 Number of employees , , , , ,0 Year-on-year index x 112,5 95,6 100,0 104,8 Cumulative index 100,0 112,5 107,5 107,6 112,7 Source: Czech Statistical Office, MIT estimate, *preliminary data 1.2 Employment in NACE 31 branch In the figure indicating the size structure of employment, the share is showed of the individual size groups of firms (starting with firms having 0 to 9 employees up to firms with and more employees) in the entire number of employees in the branch. The largest shares in both, i.e., employment and receipts from sales of products and services have the middle-seized enterprises with 250 to 999 employees. The large enterprises (with 1000 and more employees) are achieving the larger value added and the larger labour productivity. The occupation in the branch is usually challenging and also demanding minimally the technical education (vocational training), in spite of this the achieved average salaries were lower than in the majority of the other 85

87 Employment structure, according to the size of enterprises, in 2004 NACE and more 19% % % Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated % % branches in 2004 and were about by 10% lower than the average in the manufacturing industry. In comparison with the entire industry was the difference of average salaries even higher. The employment is influenced by the creation of the new jobs on the first place, be it by enlargement of the manufacture or by establishment of the new manufacturing capacities. The enterprises constructed in the form of the investment incentives on grounds with ensured infrastructure and without an ecological load are creating the most new jobs. The competitive environment is for enterprises very demanding. It is manifested by the growth of receipts accompanied by a minimal growth of the number of employees, by growth of the labour productivity, but mainly by lowering of prices of some commodities. The economic situation of enterprises is good up to very good. Companies under the foreign control on the first place have the sales of their products satisfied, create satisfactory profit and are possessing of sufficient financial funds for their development. As an example the firm Siemens might be mentioned, which is acting not only in its main manufacturing commodity, i.e., electric motors, but also in four other groups of this branch and in many groups of the other branches. 1.3 Foreign trade The export of branch 31 manufactures is showing a growing trend. In the period from 2000 to 2004 the branch 31 achieved the growth of export by 49%, when the largest growth of export was registered in the distribution and control apparatuses and in electric equipment (mainly for automobiles). Import of the branch grew in the period under review as well, namely by more than 37%. Also in this case the largest volume was achieved in the distribution and control apparatuses. Foreign trade development in CPA 31 products, in (Mill. CZK) Export , , , , ,1 Import , , , , ,2 Balance , , , , ,9 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 113,6 93,6 111,5 125,7 Import x 117,6 85,5 110,5 124,2 Source: Czech Statistical Office, MIT estimate 86

88 NACE Investment Development of the branch depends on several factors and one of them is the amount of investments in new technologies. The largest growth of manufacture linked just with the new investments of capital has been for a longer time achieved in the group 31.6 electric equipment not elsewhere mentioned. In connection with the construction of new Toyota-Peugeot-Citroen factory in Kolín a significant influx of the Japanese capital has been observed in the branch. It has been estimated that from abroad altogether CZK 30 bill. were invested in 2003 and only lesser part of investors demanded the investment procurement incentives according to the Law No. 72/2000 Vol. An offer of areas for construction of new objects in technology parks equipped by the respective infrastructure is now taken for a satisfactory impulse. An indispensable part presents availability of the qualified workforce, which seems to be the decisive item in the next years. 1.5 Branch NACE 31 perspectives Future development of the branch is underpinned by its growing importance within the entire manufacturing industry. Today machinery without any electrical equipment practically does not exist. For this reason the group electric equipment not elsewhere mentioned keeps on in its significant development. The level of the branch is even now based on development of new progressive products and on construction of new economically beneficial technologies. CR keeps on in being interesting territory for investments of foreign companies, namely because availability of qualified and in the same time cheap workforce. Up to now the branch growths by a few percent every year and this growth has been continuing since For this reason certain development slowdown might be expected in the near future. It will be connected with transition of the investors to building of largely manufacturing capacities for construction of technology centres and centres of strategic services. Demands on qualification of workers will increase. According to the data available, the CR is lagging behind the developed countries just in the number of highly qualified workers. Investments into the new research, development, innovation and technology centres will be steadier in the future. Simple production can be transferred into new costs-advantageous countries in a short time. Under conditions of mass production and globalisation of the world market the production costs play in this case a decisive role. 87

89 1. Manufacture of radio, television, and communication equipment and apparatus NACE 32 Development of the production of electronic components of devices was in the Czech Republic conditioned by the foreign direct investments input of multinational companies, which ensured the transfer of the production base into the country possessing an advantageous territorial position, satisfactorily built up infrastructure and achievable resources of manpower. Transformation of the Czech manufacturing industry has brought important changes. In the period from 2000 to 2004 by help of the foreign direct investments new centres of the manufacture of electronic components and devices were built up in the Czech Republic by implementation of investment projects on green fields. 1.1 Main production indicators in NACE 32 branch Export of the production of the export oriented branch of electronic components and devices attained in 2004 the value of CZK ,1 millions. The share of export of the production in the manufacturing industry production of goods is 6,3%. In the branch NACE 32 the initiation of the new manufacturing capacities continued. The foreign direct investments in the subsection DL reached CZK ,2 millions at implementation of more than sixty projects. The companies from the first ten largest exporters of the Czech Republic production of goods were in 2004 exporting by 76% more than in The eighth position occupied Panasonic Co. AVC Networks from Plzeň with its export of colour TV receivers in amount of CZK millions (inter-yearly growth by 71,2%). Enhancement of the export hangs together with implementation of the production of colour TV receivers with LCD and plasma picture tubes. The most important investors, which decided to invest in CR in 2004, took over the ministers appraisal called INVESTOR OF The company TYCO Integrated Systems in Brno gained the second place for the project of research centre of electronic devices used for wireless communication as well as the second place in the category of investments with the largest innovation potential. The share of the production of electronic components (NACE 321) in receipts of the branch 32 from sale of own products and services in 2004 was amounted to 29%. The share of deliveries of the mobile telephone sets and networks for electronic communications (NACE 322) achieved in the receipts of the branch 47%. The share of the consumer electronic devices (NACE 323) in receipts of the branch 32 attained 24% in Main production indicators in NACE 32, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

90 NACE 32 Main production indicators in NACE 32, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,5 Year-on-year index x 119,1 127,2 111,9 137,4 Cumulative index 100,0 119,1 151,5 169,6 233,0 Value added , , , , ,9 Year-on-year index x 111,4 122,9 97,6 124,1 Cumulative index 100,0 111,4 136,9 133,6 165,7 Labour productivity from VA ,4 338,8 446,8 440,5 497,2 Year-on-year index x 101,3 131,9 98,6 112,9 Cumulative index 100,0 101,3 133,6 131,7 148,7 Number of employees , , , , ,0 Year-on-year index x 109,9 93,2 99,0 109,9 Cumulative index 100,0 109,9 102,4 101,4 111,5 Source: Czech Statistical Office, MIT estimate, *preliminary data Performance of the branch of electronic components and device was in the period from 2000 to 2004 influenced by opening of the new capacities in companies under foreign control. The share of the branch in receipts from sale of own products and services in an amount of CZK ,5 millions in 2004 achieved 4,3% of receipts of the manufacturing industry. The inter-yearly growth of receipts in the branch was 37,4%. The cumulative index 04/00 is documenting the increase of production by 133,0%. In the first quarter of 2005 putting of the new capacities in operation was recorded in the branch. The production of the branch is an export oriented one. It has been manifested by a growth of receipts from the direct export by 20,9%. The newly concluded orders in the branch, namely orders from abroad, enhanced by 55,4%. 1.2 Employment in NACE 32 branch The creation of almost new jobs and the growth of the number of employees in the period from 2000 to 2004 were influenced by opening of the new capacities in companies under foreign control. The index 04/03 is documenting the inter-yearly growth of the number of employees in the branch of electronic components and devices by 9,9%. Employment structure, according to the size of enterprises, in 2004 NACE and more 33% % % % Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated % 89

91 In the size structure of the industrial enterprises, the high growth of receipts was achieved in companies under foreign control, which are possessing good export possibilities. It is manifested by the growth of receipts from the direct export. The share of the individual size groups of organisations in employment within the branch of electronic components and devices (NACE 32) in 2004 is given in the graph on the size structure of the branch. 1.3 Foreign trade In 2004 the export of electronic components and devices (CPA 32) reached CZK ,1 millions. The number of newly concluded orders in the manufacture was enhanced considerably, including enhancement of orders from abroad by 42,7%. The share of the electronic components and devices in export of the manufacturing industry production of goods attained 6,3%. The index 04/03 is documenting the growth of the electronic components and devices export by 56,5%. The export of production in 2004 equals a double of the export in The largest share in the electronic production export had in 2004 the export of goods according to the economic tariff sub-chapters HS 8528 Television receivers and combined sets in amount of CZK ,4 million, HS 8525 Transmission equipment for television and the radio broadcasting, and television cameras worth CZK ,6 million, HS 8529 Parts of broadcasting, receiving, television, and radio sets worth CZK ,8 million, HS 8540 Electronic tubes, tubes with a cathode, or photo cathode worth CZK million and HS 8532 Electric fixed, rotary, and tuning condensers worth CZK million. Foreign trade development in CPA 32 products, in (Mill. CZK) Export , , , , ,1 Import , , , , ,5 Balance , , , , ,4 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 133,8 93,2 101,2 156,5 Import x 111,5 100,5 110,9 118,5 Source: Czech Statistical Office, MIT estimate 1.4 Investment In the period from 2000 to 2004 new centres for the electronic components and devices manufacture were built up in the Czech Republic by use of the foreign direct investments. It concerns namely the implemented projects of the company Panasonic Mobile & Automotive Systems Czech Pardubice (mobile telephone sets and radio-receivers for cars), Panasonic AVC Networks Czech Plzeň (colour television receivers), LG. Philips Displays Technology Center in Hranice na Moravě (colour television picture-tubes), AVX CZ in Lanškroun (tantalum chip capacitors), ON Semiconductor CHC Czech Republic in Rožnov pod Radhoštěm (integrated circuits), AEG Components in Jičín (electric capacitors), Celestica Kladno (mobile telephone sets), ROHDE & SCHWARZ in Vimperk (telecommunication devices), ALPS Electric Czech in Boskovice (tuners for digital television receivers). Another stage presents creation of the preconditions to development of the technological centres and centres of strategic services. The framework programme for support of their formation was accepted by the Governmental Resolution No. 1238/2003 Vol. Czech Republic has in the field of the foreign direct investments already a very strong position for a few years. After the recount per citizen, the Czech Republic is together with Estonia and Hungary possessing a position of one of the three most successful countries in the Central and East Europe. The trust of investors, positive experiences and references present an important presumption for acquisition of projects in the sphere of strategic services and technology centres, which number is growing. 90

92 NACE 32 The project on enlargement of the technology centre for development of the colour television receivers in the Panasonic AVC Networks Czech in Plzeň is one of the first projects in the field of high-tech centres in CR. The project is creating presumptions to the creation of new jobs with high demands on qualification. ON Semiconductor CHC Company in Rožnov pod Radhoštěm plans to enlarge the development centre focussed on optimising and transfer of the manufacture processes. The intention of the group ALPS is to transfer the development activities, which are currently for the European manufacturing plants provided in UK, into the company ALPS Electric Czech in Boskovice. The centre will be specialised on development and innovations of the TV tuners and satellite convectors. The AMI Semiconductor CZ company in Brno is one of the development centres of the multinational group focussed on design, development and testing of the custom-made integrated circuits and standard integrated circuits. The technology centre of the Tyco Integrated Systems Co. in Brno will focus on development of pick-ups and detectors, control devices, sensors, breathing monitors etc. 1.5 Branch NACE 32 perspectives The investment intensity presents a common symptom of the technology processes in the electronic components and devices manufacture, where the manufacturing technologies are lagging behind by a quicker way than it happens in the traditional branches of the manufacturing industry. By the Law on investment incentives, preconditions were created in the Czech Republic of the trustful environment for foreign investors. The foreign direct investments influx influenced favourably development of the branch of electronic components and devices. The competition ability of the production of branch of electronic components and devices (CPA 32) can be quantified by comparing the position of the countries with transition economy (CEFTA) on the EU market. As it follows from the EUROSTAT data, the export of electronic production from CR into EU countries achieved EUR 1 659,6 millions, i.e., 19,9% of the CEFTA countries export. The 03/02 index is documenting the inter-yearly growth of export by 18,4%. The continuing influx of capital into the manufacturing industry was manifested by structural changes, when the weight of the branches with higher technology intensity was growing. The export of electronic components and devices creates 20% of the CR high-tech production export. 91

93 1. Manufacture of medical, precision, optical, and time measuring instruments NACE 33 The branch NACE 33 is manufacturing a large assortment of products with special manufacturing technologies, commencing by simple devices, over optical lenses up to complex devices and machinery, with a major share of mental labour, small material inputs and minimal impact on the environment. The main traditional groups with respect to the production and export financial volume are the measuring and control equipment, medical and surgical equipment and apparatus and optical instrument (the spectacle lenses on the first place). The NACE 33 branch occupies within the entire manufacturing industry in its share in receipts the eighteens position. Within the period from 2000 to 2004 the receipts of the branch from sale of own products and services varied inter-yearly from the growth by almost 17% (in 2001) down to the drop by 9% (in 2003). The share within the manufacturing industry so slightly varied. The largest share was recorded in 2002, when it was 1,7% and the lowest one then in 2004, when it achieved 1,4% only. In 2003 the share 1,5% was recorded. 1.1 Main production indicators of the NACE 33 branch The receipts of the entire branch grew by almost 32%, when comparing the years 2000 and The largest growth was registered in the group 33.1 Medical instruments, when its receipts enhanced by more than one half. The growth in the groups 33.2 Manufacture of instruments and appliances for measuring, checking, testing, navigating and other purposes, and 33.3 Industrial process control equipment was also significant. Enhancement of receipts in the group 33.4 Optical and photographic instruments and equipment lies near to the level of inflation. A substantial drop was registered in the group 33.5 Time measuring equipment. Positively should be assessed the growth of labour productivity, for in this indicator the branch still keeps on its lagging behind the developed countries. The labour productivity growth was favourably influenced also by the 92

94 NACE 33 growth of value added. The largest increase of the labour productivity in constant prices as compared the years 2004/2000 was registered in the group medical instruments. It should be positively appraised that the growth was achieved at a contemporary small growth of the number of employees. Main production indicators in NACE 33, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 Main production indicators in NACE 33, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,7 Year-on-year index x 117,6 112,8 90,6 109,5 Cumulative index 100,0 117,6 132,7 120,2 131,7 Value added , , , , ,6 Year-on-year index x 107,8 111,2 112,0 112,0 Cumulative index 100,0 107,8 119,9 134,3 150,4 Labour productivity from VA ,2 328,8 380,6 406,6 463,3 Year-on-year index x 105,0 115,8 106,8 113,9 Cumulative index 100,0 105,0 121,5 129,8 147,9 Number of employees , , , , ,0 Year-on-year index x 102,7 96,0 104,9 98,3 Cumulative index 100,0 102,7 98,7 103,4 101,7 Source: Czech Statistical Office, MIT estimate, * preliminary data 1.2 Employment in NACE 33 branch The small enterprises and craftsmen with 0 to 9 employees have largest share (24%) in employment. This group had also the largest share in the value added. The large enterprises (with 1000 and more employees) and also the middle-sized enterprises are attaining a larger share in value added than in the number of employees and so they record a higher labour productivity. 93

95 Employment structure, according to the size of enterprises, in 2004 NACE and more 15% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % % For execution of jobs in the branch a vocational training or secondary school education is needed, but often even university degrees are necessary. For these reasons higher wages than in some other branches are here being achieved. The attained average salaries in 2004 were just a little bit higher than the manufacturing industry average. In comparison with the entire industry, however, the average salaries in the branch were lower. The employment is being influenced by cancellation of jobs during restructuring or bankruptcy of firms, but on the first place by creation of the new jobs at enlarging of the manufacture, or at construction of the new capacities. The most jobs are being created in companies implementing new, more progressive and economically more suitable manufacturing technologies, which implementation is often supported by investment incentives. Fewer jobs are created within the support programmes for creation of the new technology and strategic services centres. The enterprises have mostly very strong competitors, be it the firms acting on our territory or firms just importing their products. It is manifested by the permanent restructuring of firms, by the permanent growth of receipts at a minimal growth of the number of employees, by growth of the labour productivity, but mainly by the stagnation or declining of prices in some commodities (control and measuring equipment). The economic situation of companies is different, beginning by a very stressing situation up to a good or very good one. The companies under foreign control on the first place have sales of their products secured, are creating satisfactory large gain, and so have enough financial means for own development. As an example the firm Siemens VDO CR might be mentioned, which is mostly producing measuring devices for the automobile industry. The mother company Siemens is acting in more branches. 1.3 Foreign trade Foreign trade development in CPA 33 products, in (Mill. CZK) Export , , , , ,5 Import , , , , ,5 Balance , , , , ,0 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 121,4 99,7 120,5 140,1 Import x 109,8 97,9 106,8 108,8 Source: Czech Statistical Office, MIT estimate 94

96 NACE 33 The import of the NACE 33 products is showing a growing trend. In the period from 2000 to 2004 the export of the branch was growing by 104%, when the largest volume of export was recorded in the measuring and control instruments and devices. The second largest volume occurred, thanks to the spectacle lenses, in the group of optical and photographic instruments and devices. The group of medical instruments did not fall back as well. The import of the branch in the period under review also grew, namely by almost 25%. Even in this case the largest volume of import was achieved in products of the group of measuring and control instruments and devices. The largest growth of import was recorded in the group of optical and photographic instruments and devices. 1.4 Investment Development of the branch depends on a few factors, one of which presents the amount of investments into the new technologies. It is obvious that the foreign investments into organisations of the branch NACE 33 form for growth of the branch an important part. It is estimated that in 2003 almost CZK 9 billions were invested into this branch, however, only the smaller part of investors asked for an investment incentive, according to the Law No. 72/2000 Vol. Some investors namely prefer the prepared infrastructure without an old ecologic load to the financial advantages, which in addition are accompanied by an enhanced paper handling. An indispensable part of investments presents also availability of the qualified workforce, which absence can occur in some fields even today and which seems to become a decisive problem in the next years. After implementation of support a number of firms, which want to construct a technology centre, or a centre of strategic services, is growing. In these centres workers having the university degree are needed on the first place. 95

97 1.5 Branch NACE 33 perspectives Development of products of the branch is determined by a constant importance of their consumption in the entire society and in the industry. Today products of the branch, namely the measuring and control instrumentations are used in many spheres and machineries. A considerable development is still being recorded in the measuring and control instruments and devices and in medical instrumentation. The level of the branch is even now based on development of the new progressive products and on building-up of the new economically advantageous technologies. The only exception presents the group of time measuring instrumentation, which fell in recession. The CR remains to be an interesting territory for investments of the abroad firms, due to the availability of a good-class and at the same time relatively cheap workforce. A certain slowdown of the growth of branch might be expected in the next future. It will be connected with the transfer of investors to the construction of predominantly manufacturing capacities and to construction of technology centres and centres of strategic services. So the demands on qualification of workers will grow, in which the university graduation will be more and more demanded. 96

98 NACE 34 MANUFACTURE OF TRANSPORT MEANS AND EQUIPMENT DM 1. Manufacture of motor vehicles, manufacture of trailers and semi-trailers NACE 34 The automobile industry belongs among the powerful and extraordinary important branches of the Czech economy for a couple of years. Though the development definitively was not positive in all manufactured commodities, in total the growing trend is giving good presumptions for development of the branch even in future. The dominant position without any doubts occupies the manufacture of passenger cars, followed by the manufacture of buses and trucks. However, in 2004 again the production of accessories overtook the production of vehicles. In the same time the automobile industry is forming almost one fifth of the domestic export and its representation in the foreign trade will be even growing. In 2004 manufacturers enhanced the share of the spare parts and accessories by 1% at 53%, by which, on the contrary, the share of the manufacturers of vehicles declined (45%). The remaining 2% present the receipts of the manufacturers of bodies (coachworks), trailers and semi-trailers. In this year altogether pieces of vehicles were manufactured. It means a growth by 1,63% as compared with ŠKODA Auto, joint stock Co. manufactured pieces of passenger cars. In the category of trucks a decline of production was recorded during the last two years (the largest drop of the production recorded Daewoo Avia, Co.), the manufacturers of buses manufactured by 198 pieces more (+ 11,09%) on the contrary. 97

99 1.1 Main production indicators of the NACE 34 branch The growth of receipts as well as of the labour productivity is being recorded for a long time. The main driver of the growth of the automobile industry receipts are the manufacturers of auto-accessories and auto-parts. The enhancement of their participation in receipts was manifested in the growth of the number of employees in this production group. During the last years many foreign companies built-up their branches and commenced to manufacture. Most of these companies are exporting their products in the EU countries. Main production indicators in NACE 34, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of 2000 Main production indicators in NACE 34, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,7 Year-on-year index x 117,2 105,0 107,1 112,9 Cumulative index 100,0 117,2 123,0 131,7 148,7 Value added , , , , ,2 Year-on-year index x 119,6 105,7 113,3 117,8 Cumulative index 100,0 119,6 126,5 143,2 168,8 Labour productivity from VA ,3 649,1 655,2 744,7 834,7 Year-on-year index x 110,9 100,9 113,7 112,1 Cumulative index 100,0 110,9 111,9 127,2 142,6 Number of employees , , , , ,0 Year-on-year index x 107,9 104,7 99,6 105,1 Cumulative index 100,0 107,9 113,0 112,6 118,3 Source: Czech Statistical Office, MIT estimate, * preliminary data 98

100 NACE Employment in NACE 34 branch The branch NACE 34 has been showing with respect to the employment a growing trend except 2003, when a moderate decline of the number of employees was recorded caused by the discharge of employees by the manufacturers of vehicles. In the coming years another increase of the number of employees is expected. Wages in this branch of the manufacturing industry lay above the average wages of the manufacturing industry in all regions of the Czech Republic. The automobile industry companies belong among the largest recipients of grants for the creation of new jobs within the provided investment incentives. The automobile industry built up a position of one of the most important branches of the national economy. In the automobile industry the large and middle-sized enterprises are dominating. It is given by the manufacture-intensive production, by the costs of the purchase of new machinery and mainly by the production in large series. Employment structure, according to the size of enterprises, in 2004 NACE % % % 1000 and more 54% Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 1.3 Foreign trade The automobile industry is an export oriented branch. The total export of the branch is enhancing as well as its presentation within the Czech Republic export. Its favourable balance is approving its competitiveness on abroad markets. The largest exporter is traditionally the ŠKODA Auto joint stock Co. with its total share in the Czech Republic export exceeding 9%. The manufacturers of this branch rank among the largest exporters. The total export of automobile spare-parts and accessories in the last two years exceeded the export of vehicles. The foreign trade surplus achieved almost 37% of its total receipts. In 2005 the manufacturers of vehicles should again record an export exceeding the export of automobile spareparts manufacturers. The ŠKODA Auto joint stock Co., as well as TPCA will be exporting more than 80% of their production. Foreign trade development in CPA 34 products, in (Mill. CZK) Export , , , , ,1 Import , , , , ,1 Balance , , , , ,0 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 115,5 99,6 106,8 121,5 Import x 119,9 103,5 109,5 121,8 Source: Czech Statistical Office, MIT estimate 99

101 1.4 Investment This branch gained the largest share of investments in the Czech Republic among all branches of the manufacturing industry. The most important investment presents the TPCA automobile Co. in Kolín. The majority of investments will exceed the border demanded for the investment incentive award and so even the newly arising plant of foreign companies can be ranked among the small and medium-sized enterprises, according to the number of employees, i.e. enterprises, which draw down advantages of the law. On the contrary the possibility of supports to small and medium-sized enterprises awarded through the Operational Programme Industry and Business is not being utilised by the small and medium-sized enterprises. 1.5 Branch NACE 34 perspectives The Czech Republic is becoming to be an important manufacturer of automobiles in Central Europe. A production of 800 thousands of automobiles is expected until 2006, including the export of cars in a year. In future the ŠKODA Auto joint stock Co. and TPCA automobile companies will present 12 15% of the Czech Republic export. In the NACE 34 branch every year a growth of receipts from own products and services has been recorded and this growth even enhanced after the CR accession to EU. In 2005 an increase of receipts by more than 20% is estimated, mainly due to the new automobile factory TPCA in Kolín and its deliverers. The manufacturers in the European Union have to keep the ever more stringent ecological laws on traffic of vehicles (standards EU IV, limitation of the use of lead and other heavy metals in the automobile industry). These laws, which are improving the environment, unfortunately, for the European manufacturers of vehicles present a handicap on the world market. In the time being the price of vehicles is influenced by the price of steel on the world markets. Its price is continuously growing and as a law it is reflected in the enhanced costs at the manufacture of vehicle. Another factor influencing the price of vehicles presents the prices of crude oil, which is influencing both, the inputs of the manufacture, and the decision making at the purchase of the new car of the final customer. 100

102 NACE Manufacture of other transport equipment NACE 35 The branch Manufacture of other transport equipment belongs together with the manufacture of motor vehicles, trailers and semi-trailers into the aggregation Transport equipment industry and according to the Branch Classification of Economic Activities (NACE) includes the following product groups: 35.1 Building and repair of ships and boats 35.2 Manufacture and repair of railway, tram and subway locomotives and rolling stock 35.3 Manufacture and repair of aircrafts and spacecrafts 35.4 Manufacture of motorcycles, bicycles and invalid carriages 35.5 Manufacture of other transport means and equipment As it is obvious from the structure of groups, the branch NACE 35 participates by a decisive way in saturation of the domestic transport infrastructure and ranks among branches with the expressively export-oriented character. A dominant position occupies in the branch the manufacture of railway and tram locomotives and rolling stock, namely by its share of 56% in receipts of the branch from sale of own products and services as well as by the largest volume of the branch export. The second range occupies the manufacture and repair of aircrafts and spacecrafts with its share of 26%. The other groups provide only lesser shares in the receipts of the branch, i.e., 11% the group 35.4, 4% the group 35.5 and 3% the group Position of the entire branch in the manufacturing industry is slightly declining year by year. In comparison with the other branches of the manufacturing industry, the manufacture of transport equipment occupies as far as the seventeenth position among 22 manufacturing branches. In receipts, value added and employment of the manufacturing industry the branch NACE 35 shares approx. 1 1,5% only. 1.1 Main production indicators of the NACE 35 branch Development of the branch had been showing oscillating trends in most of the production indicators in the period from 2000 to The year 2004 was not exceptional for the Czech transport equipment engineering in any way. In the branch a decline of the receipts (2%) as well of the employment (6,9%) was registered. The price indices development did not recorded any significant changes similarly as the development of labour costs. The accession to European Community expected for a long time and accompanied by simplification of the trade activities and easier access to the EUR zone, brought only an apparent increase of export (17,7%). Main production indicators in NACE 35, in constant prices, in % Number of employees Value added Receipts from sales of own P and S Labour productivity Source: Czech Statistical Office, MIT estimate, for 2004 the preliminary data are indicated; const. prices of

103 In the last year a decline of receipts was recorded within the manufacture of aircrafts and railway vehicles, which was caused by the lack of financial resources, i.e., by shifting of the planned modernisation of the Czech Railways rolling stock as well as of some transport enterprises in the Czech Republic. As the aircraft industry is concerned, the receipts were influenced by instability or inability of the key manufacturers of aircrafts to acquire sales of their production. Commencement of favourable trends was recorded in the manufacture of ships, motorcycles and bicycles on the contrary. Main production indicators in NACE 35, in , in constant prices (Mill. CZK, employees) * Receipts from sales of own P and S , , , , ,6 Year-on-year index x 124,1 93,3 111,1 90,7 Cumulative index 100,0 124,1 115,8 128,6 116,6 Value added , , , , ,7 Year-on-year index x 113,0 68,4 104,9 95,4 Cumulative index 100,0 113,0 77,3 81,0 77,3 Labour productivity from VA ,3 408,6 283,3 325,8 333,8 Year-on-year index x 108,9 69,3 115,0 102,5 Cumulative index 100,0 108,9 75,5 86,8 88,9 Number of employees , , , , ,0 Year-on-year index x 103,8 98,6 91,2 93,1 Cumulative index 100,0 103,8 102,4 93,3 86,9 Source: Czech Statistical Office, MIT estimate, * preliminary data The growth of competitiveness of the Czech enterprises in the transport engineering is additionally paid back by a decline of employment in the branch. The number of manpower in the branch is declining in the entire branch every year. The labour productivity is, however, growing, which is accompanied by the decline of the total as well as of the labour costs. The labour productivity in the branch shows a similar development as the productivity in the entire manufacturing industry. 1.2 Employment in NACE 35 branch Development of the employment within the branch is given by the regular decline of the number of employees. In 1997 altogether workers were employed in the enterprises with the respective content of manufacture. Currently workers are employed in the branch only. Development of the number of workers in the individual groups is not uniform and is definitely showing a declining trend in the sphere of the manufacture of aircrafts, railway vehicles and other transport means. An increase of the number of workers might be recorded in the manufacture of ships and boats on the contrary, which is given by the growing activities of foreign firms on the Czech territory. A moderate growth of the number of employees can be registered in the manufacture of motorcycles and bicycles. The largest share in the number of employees is registered in enterprises with 250 to 999 employees. Into this category belong mostly enterprises from the manufacture of railway vehicles and enterprises of the aircraft industry. In receipts, value added and number of employees within the branch, this group shares approx. 62%. In the category from 50 to 249 employees are registered the manufacturers of sub-assemblies for the railway vehicles and aircrafts, cargo ships, partially also bicycles, and the railway repair and engineering shops. In the category employees are recorded the manufacturers of other transport means and equipments and the manufacturers of bicycles, where the manufacture has the character of an assemblage from imported parts. 102

104 NACE 35 Employment structure, according to the size of enterprises, in 2004 NACE and more 10% 0 9 3% % % Source: Czech Statistical Office, MIT estimate; for 2004 the preliminary data are indicated % 1.3 Foreign trade The branch of the manufacture of transport means and other transport equipment in its entire composition of assortment has an export character with very small absorption capacity of the indigenous market. By the Czech Republic accession of the European Union there were opened new export possibilities for our manufacturers. This change was expressively reflected in the sum of the foreign trade balance in the last year, which was amounted to CZK 3 651,5 millions. Development of the foreign trade was underpinned by the increase of export by 17,7% and by the decline of import by 8% on the contrary. The most expressive, favourable reverse of the foreign trade balance occurred in the manufacture of aircrafts and spacecrafts. The largest part of the Czech production is traditionally channelled on the EU markets. The year 2004 did not differ in this. A considerable success was rerecorded on the traditional German markets. The components of the railway stock, river-see cargo ships and sport, training and ultra-light aircrafts present the decisive export item. A significant sales area of the Czech aircraft industry, the aircraft components and sport aircraft, respectively are USA. The main import items are the large transport airplanes, helicopters and their parts. The volume of export into the EU countries shows a permanently growing trend. It is documenting a good competitiveness of the branch and witnessing the fact, that the Czech Republic on the European as well as on the international markets still keeps the position of traditional producer and exporter. Foreign trade development in CPA 35 products, in (Mill. CZK) Export , , , , ,9 Import , , , , ,4 Balance , , , , ,5 Year-on-year index 00/99 01/00 02/01 03/02 04/03 Export x 121,8 82,3 122,5 117,8 Import x 99,2 81,5 150,8 92,1 Source: Czech Statistical Office, MIT estimate 1.4 Investment The positive results of the Czech economy mainly bear on the foreign capital influx. The foreign investors are providing a more sophisticated organisation and control of the manufacture, new technologies and afford easier access to the international markets. 103

105 In the context of the stable position of the Czech transport engineering in abroad, a steady interest of the foreign investors on investments in the Czech Republic can be still recorded. CR still belongs to countries with the highest volume of the foreign direct investments per citizen. In the last year CZK 8 993,1 millions were invested in the branch of transport engineering. The volume of investment into the branch 35 goes beyond the investments in the other manufacturing industry branches. 1.5 Branch NACE 35 perspectives The manufacture of transport means and equipment belongs without any doubt to the traditional and important branches of the manufacturing industry. It is a sign of the technical advancement of the state and becomes to be an indispensable resource of receipts. The strategic objective of the transport engineering may be seen in such industrial potential, which would be fully comparable with the European Union what its share in the creation of GDP and in the quality and effectiveness of the production as well as in the labour productivity are concerned. A challenge will be to find sales areas and to ensure enough financial means for such manufacturing technologies, which together with the effective organisation of labour will safeguard the cost competitiveness. By such a way the difference between the Czech Republic and European Union in the labour productivity indicator will be declined and new jobs will be created. Namely it is not possible to enhance the labour productivity through the enhancement of the unemployment for a long time. The medium term perspectives of the branch must be based on the enterprise and research programmes, to which the universities research should be also incorporated. The high ambitions in the productivity of products are possible only by looking for the new manufacture possibilities. It will be possible under the presumptions of the high level of the science and its technological applications and of the higher capital concentration to creation of the economical base necessary for higher level of the research and development. For perspective foreign markets are kept mainly the European Union countries and for the future also the region of East Europe and Russia, in which our manufacturers are acquiring back their former strong position. The dominant customer of the branch continually remains to be Germany. 104