Borovo: Ditching Ghosts of the Past Through Export

Total Croatia News

The famous Vukovar based company is recovering from years of neglect, looking to preserve and create jobs in the city everyone is proud of, but only in words

Once a successful water polo player, Gordan Kolundžić has been leading the Borovo company from Vukovar to a better future since 2014. The footwear company is celebrating 85 years, while their director compares sport and business: “In sports you always know who’s on the other side and who’s on your team, unfortunately in business not everything is that transparent,” reports on June 11, 2016.

It’s hard to compare it to the Borovo that once employed 23,000 and annually produced 23 million shoes. Currently they have 703 employees, of which 500 are in production facilities in Vukovar, making them the largest employer in the county, with an annual production of 400,000 shoes. Export opportunities are just arising, namely to Canada.

The former management from 2000 to 2012 left them with 24 million Euro debt. Today their production capacity is full until the end of the year. Part of its is due to a big contract with the Ministry of Domestic Affairs. In public procurement cases, the lowest price always gets the deal, regardless of quality, resulting in import of goods from Asia, even though the usage expectancy is 2-3 times lower than their products.

The domestic market buys 10-12 million shoes annually, while Borovo’s share is only 500-600 thousand. This could be due partly due to low marketing activity, but also the perception of the buyer. Their products are often more appreciated in foreign markets: France, Canada, South Korea, Slovenia and USA. Hence their desire to build export, from 10% last year to 17% next year and onwards to 30-70%.

Although 80% of shoe garment production is tied to Asia, whenever input prices jump, alternative sources are sought. Croatia is EU based and has a lower cost of labour, a comparative advantage they must take advantage of.

With the state being the only owner, the situation is unusual. Instead of profiting from domestic production and in that way investing back into the budget as well as the local Vukovar economy, the state stops at declarative support. Many politicians and leaders across the country hail Vukovar as a hero city, but not many go the distance to actually help where help is needed. Many talk of stopping depopulation, but don0t understand that preserving and creating jobs is key. The facade of Vukovar looks great, thanks to the government and international community. But the town is full of jobless ghosts looking for the next bus out.


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