ENGINEERING

1928 2018

CHALLENGES FOR CZECH ENGINEERING

UNIQUE NATURE OF CZECH AVIATION INDUSTRY SUCCESSFUL DEVELOPMENT OF RAIL TRANSPORT THE SUPPLY OF INDUSTRIAL PROPERTIES WILL FURTHER INCREASE

ENGINEERING 3 2018

SHEET METAL MANUFACTURING DESIGN DEVELOPMENT SHEET METAL JOB SHOP POWDER COATING WELDING ASSEMBLY

Contact: ASPERA, spol.s r.o. .ĜLåtNRYD ýHVNp %XGČMRYLFH &= ±

WHO LQIR#DVSHUDWHFKQRORJ\ F] www.asperatechnology.cz e-shop: www.kovovybaveni.cz

CZECH BUSINESS AND TRADE

Czech Business and Trade – With a Tradition of 90 Years Economic Magazine is Designed for Foreign Partners, Interested in Cooperation with the Czech Republic Issued by PP AGENCY s.r.o. in cooperation with  Ministry of Industry and Trade of the Czech Republic  Ministry of Foreign Affairs of the Czech Republic  Ministry for Regional Development of the Czech Republic  Confederation of Industry of the Czech Republic  Confederation of Employers‘ and Entrepreneurs‘ Associations of the Czech Republic  Czech Chamber of Commerce  CzechTrade PARTNER OF THE MAGAZINE: ICC Czech Republic EDITORIAL BOARD: Vladimír Bärtl, Jiří Hansl, Marcela Havlová, Jaromír Kohlíček, Dagmar Kuchtová, Martin Lukáš, Karel Machotka, Marie Pavlů, Tomáš Seidl, Miroslav Somol, Jarmila Škvrnová, Jan Špunda, Martin Tlapa, Jan Wiesner

MANAGING EDITOR: Pavla Podskalská

 INTRODUCTION Questions of the Month for Marta Nováková, Minister of Industry and Trade

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 ENGINEERING Challenges for Czech Engineering Future of Machine Tools and Forming Machine Sector

5 10

 ANALYSIS Agricultural Engineering is Using Up-to-Date Technology

14

 PR CLASSIC Oil – Czech Leader in Manufacture of Cooling Fluids Storing Solution by Proman New Machine from Varnsdorf

19 28 42

EDITOR: Jana Pike TRANSLATION: Vlasta Benešová

 TREND Unique Nature of Czech Aviation Industry

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PROOFREADING: Ivana Kadlecová, Matthew Booth, Pearl Harris GRAPHIC DESIGN: Stanislava Podaná

 RAILWAY INDUSTRY Successful Development of Rail Transport

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COVER PHOTO: pixabay.com DEADLINE: 25/8/2018 © PP Agency ADDRESS: Myslíkova 25, 110 00 Praha 1 Czech Republic e-mail: journal@ppagency.cz www.ppagency.cz, www.doingbusiness.cz Press run: 10 000 copies. It is not allowed to reproduce any part of the contents of this journal without prior consent from the Editor.

Attitudes expressed by the authors of articles carried by CBT need not necessarily be consistent with the standpoint of the Publisher.

MK ČR E 6379, ISSN 1211-2208 „Podávání novinových zásilek povoleno Českou poštou, s. p., odštěpný závod Přeprava, č. j. 3468/95, ze dne 24/10/1995“

 RESEARCH Research Combined with Practice Bears Fruit

30

 LOGISTICS Czech Logistics Market Is Keeping Pace with Innovative Solutions and Benefits from It Supply of Industrial Properties Will Further Increase

32 38

 PRESENTATION OF FIRMS ARGO-HYTOS s.r.o.; ASPERA, spol. s r.o.; ATURN cnc, s.r.o.; Bisnode Česká republika, a.s.; CLASSIC Oil s.r.o.; Česká exportní banka, a.s.; ENERGO - PRO a.s. (HATcom); CHEMOTEX Děčín a.s.; KOVOSREAL s.r.o.; M - KOVO s.r.o.; PROMAN s.r.o.; STEATIT s.r.o.; TOS VARNSDORF a.s.; Veletrhy Brno, a.s.

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INTRODUCTION

Questions of the Month for Marta Nováková, Minister of Industry and Trade

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You said that you wanted to focus on digitalisation and robotisation and on getting the decision on the construction of additional blocks in the Dukovany or Temelín nuclear power stations. Can you give us more details?

Yes, I see no reason why today, when State institutions are equipped with the most sophisticated technical facilities, businessmen should be obliged to do the rounds of public authorities. They should be doing business and not be queuing at the doors of all sorts of institutions, wasting their precious time. I see tremendous opportunities in the further digitalisation of State administration that will make our enterprises, especially small and medium-size businesses, more efficient. This is my first priority – less red tape and more work... I know from my own experience what the situation in the offices is like and what needs to be done in this area.

With regard to the development of our nuclear programme, the priorities are clearly given, and we are working on their specification together with our colleagues from the Permanent Nuclear Energy Commission. In future, our country

will not be able to do without nuclear energy. And our task today is to create the optimum conditions for its sound development in the coming decades and to find a suitable model for its financing.

This is our responsibility, which we accept, although from time to time we are criticised for not seeking other ways. The truth is that we are seeking them, but at the moment the first priority for our economy, based on industrial production, as well as for households, is to unequivocally ensure future energy security based on nuclear power.

Can you see any major trend or expectation influencing the Czech economy and industry in the year 2018?

In 2018, we celebrate the centenary of the existence of the independent Czechoslovak Republic. This year we also mark the 60th instalment of the International Engineering Fair in Brno. These are natural highlights we can be proud of, regarding both the more than two-century-long industrial tradition, which is the basis of our current prosperity, and the Brno Trade Fair, which has successfully stood the test of keen world competition. Nevertheless, if you ask me about the activities that should influence our economy, my unequivocal answer is digitalisation and a resolute reduction of bureaucracy in business. We have a self-conscious sector of big firms, but a well-balanced economy must be formed by medium and small enterprises, including family firms. This is our family silver and the salt of our business and enterprise. So far, our State has not been too friendly towards these respectable people. This is what I want to change. We have at our disposal digitalisation, electronisation of State administration and other means of reducing superfluous administration, which unnecessarily stifles creative and active people. So that if I really wish and expect anything, it is the creation by the State of a fair environment also for small and medium enterprises. When this is achieved, the Czech economy will rise still further above the level at which it now stands.

Photo: Ministry of Industry and Trade archives ; www.freeimages.com

What are your priorities as Minister of Industry and Trade regarding the support of export, business and investment in 2018?

For our open economy, export is a key prerequisite of success. With its volume of 4.2 billion, export last year surpassed the magic four-billion crown limit. This year, however, Czech exporters will hardly be able to catch up with this record high limit, owing to external aspects. In this respect, a certain role is played by exchange rate differences and the activities of the Czech National Bank. But even if the final figures are not at last year´s record level, it is clear that Czech exporters are doing well, on the long-term basis, in the European markets, to which the overwhelming majority of Czech production is targeted, as well as in other countries, such as China, the USA, Russia and India.

I am glad that these good results are also largely due to our economic diplomacy, which we share with our colleagues from the Ministry of Foreign Affairs.

At the moment, Czech producers are hindered in their further upswing by the labour shortage. We are a country with the lowest unemployment rate within the EU on a long-term basis, which naturally has its social benefits. The current labour shortage, however, is too big to be saturated by our own resources. Our Ministry is therefore working on programmes, which are already bearing fruit, to bring

skilled workers to the Czech Republic from other countries.

With regard to the business sphere, you know that I myself come from the business environment, and this explains why my clear priority is to radically reduce the administrative burden of our businessmen. My principle is that not businessmen, but papers should be making the rounds of the offices. That is why I place such emphasis on the digitalisation and electronisation of State administration.

And, concerning the investment environment, it is unequivocally targeted towards projects with high value added and based on a high proportion of research and development work. Inferior projects have no chance. We do not want to and we shall not be a country of assembly, using journalism terminology. We´ll be a country of research, development, investment and higher pay for employees doing skilled work. This is my objective.

CZECH BUSINESS AND TRADE

Challenges for Czech Engineering According to the latest Study of the Czech Engineering Industry, the overwhelming majority of firms (97 %) agree that Czech engineering is expected to grow by 3.4 per cent this year. Next year, however, companies forecast a slowing down of the favourable growth trend and expect stagnation (a mere 0.5 % growth).

Nearly half of the firms (42 %) even predict a decline.

“I am expecting the industry to grow, but its growth will depend on the situation in foreign markets, in particular as regards the automotive segment, which has the greatest impact on Czech industry. For energy and raw material engineering, the most important factor will be the development of commodity prices, which conditions the investment decisions of raw material extractors and processors,” says Antonín Růžička, Managing Director of Wikov Industry, a.s. This is confirmed by Robert Keil, Business Development Manager for Advanced Engineering, CzechInvest, who adds: “Czech engineering has a very good reputation around the world. However, in spite of its relative stability and the prediction of just a moderate decline, it is faced with a relatively complicated task. If it wants to keep its position at the very top of technological advancement and participate actively in the technological revolution of the Internet of Things and smart factories, it must be able to apply the new technologies in practice without delay. This, of course, will depend on the education we are able to offer students and prospec-

tive workers, who will have to master new and continuously developing sophisticated skills and knowledge. Of key importance in this connection will be the availability of a sufficient supply of experts.”

 INNOVATION AS A PRIORITY Under pressure of the labour shortage, Czech firms actively innovate by using the latest inventions in the area of automation and robotisation. Potential reserves in production can be spotted by production IT (MES) systems, which in digital factories can control a part of the manufacturing operations. Some Czech enterprises already use digital factory applications with Industry 4.0 characteristics.

Foreign demand is expected to continue growing significantly, even though the risks are now more acute in connection with the slower growth of the economy than at the beginning of 2018. Czech exports will benefit from this favourable outlook, as indicated by export expectations, which, if fulfilled, would be an indication of a more massive growth of exports than in the first quarter

of 2018. The greatest risks are geopolitical issues in connection with another potential escalation of business wars or greater slowing down of the Chinese economy, which would probably affect even German exports. The stronger crown and higher wages are additional risks, although not unmanageable at the moment. “Czech engineering plays an irreplaceable role in the country´s exports and it will be most important for it to maintain its position in the traditional markets, while seeking ways to expand to new territories. In view of the steadily growing competition, mainly from China and other Asian countries, a very important role will be played by active government support in financing and insuring export projects through the Czech Export Bank (CEB) and the Export Guarantee and Insurance Corporation (EGAP). An important question is how the sanctions issue will be solved in connection with exports to the Russian Federation, Iran, etc. Another important task will be to ensure the supply of qualified labour, especially as regards technical professions, where the shortage of labour is critical. One 5 |

ECONOMIC POLICY

 GROWTH FACTORS ARE BASED

ON GROWING FOREIGN DEMAND The revenues of engineering firms will grow by 5.1 % this year. Next year will show a slowdown to 2.9 %, with one-fifth (20 %) of the companies expecting a decline in their revenue. The profit rate will decline in one-quarter (26 %) of firms and next year in one-third (34 %) of them. Currently, however, the total manufacturing capacity of engineering firms is filled at 92 % and the job vacancy rate is down to a mere 2 %.

The proportion of companies having more contracts than in the comparable period of last year has declined to less than onehalf. “Growth factors, in my opinion, are the growing demand for Czech engineering products in foreign countries, growing productivity and efficiency of production, and the general growth of business confidence and optimism. The greatest anti-growth factors, as I see it, are the shortage of skilled | 6

and unskilled labour, the strengthening crown and growing costs (input raw materials, wages, external services),” says Petr Novák, Managing Director of Koyo Bearings Czech Republic, s.r.o. (kBCZ).

The revenue of Czech engineering firms derived from export will grow by 5.2 % this year on average, which mainly concerns large companies (by 5.8 %). Small and medium-sized firms will show a growth in their revenues derived from export by approximately one percentage point less (4.6 %).

Next year, company managers expect the growth of their revenue derived from export to slow down to a rate of 3.3 %.

Brisk firm is fully export-oriented, with 97 % of its revenues being derived from the export of its products to 77 countries on 5 continents. It exports its goods to the strategically most important markets, such as the whole of Europe, Russia and the former CIS states, the USA and South America, Africa, the Middle and Near East, Australia, Malaysia, Indonesia, Thailand, and China. All

Photo: www.bigstockphoto.com; Siemens archives

way to solve this problem is development and technical innovation, their practical application and closer collaboration of engineering companies with research and development institutions,” adds Vanda Petrov, Director of OT průmysl, ABF, a.s.

Double Anniversary at ARGO-HYTOS s.r.o., Vrchlabí ARGO-HYTOS s.r.o., Vrchlabí celebrates two anniversaries in 2018, namely the 25th anniversary as a member of the ARGO-HYTOS group and the 15 year anniversary of the name change from Hytos a.s. to ARGO-HYTOS a.s.

In 1993, today’s ARGO-HYTOS Group, together with the former partner Ulbrich GmbH, took over the majority of the shares in Hytos a.s.

In 2003, Hytos a.s. was renamed ARGO-HYTOS a.s. in the course of the restructure of the ARGO-HYTOS Group. Furthermore, in 2007 the company was transformed into a GmbH, s.r.o.

In 2006-2008 significant investments were made by the ARGO-HYTOS Group in Vrchlabí. For example, around EUR 8 million were invested in expanding the production area by twice the old space, renovating the old production area and in building a new high-bay warehouse.

Another EUR 10 million were invested in new machinery and new assembly lines with new test benches.

These high investments combined with the great commitment of the employees have paid off.

ARGO-HYTOS s.r.o. today has one of the most modern production facilities for hydraulic products in Europe. Within the ARGO-HYTOS Group, ARGO-HYTOS s.r.o. is the competence centre and the main production site for the hydraulic Fluid & Motion Control (FMC) product range.

With around 650 employees and the functional areas of development, ssales, finance, purchasing / logistics, production, IT and quality assurance, ARGO-HYTOS s.r.o. is not only the largest production site within the A ARGO-HYTOS Group, but also a development centre for the product A groups valves, control blocks, and power units. The rapid growth of these product groups in recent years shows that the price-performance ratio and the quality of the products are in demand worldwide.

ARGO-HYTOS s.r.o. will continue to work intensively over the next few years to further adapt the product range to the needs of the markets by expanding and modernising the product range by means of stronger electrification of the products, the expansion of system technology and the implementation of digitisation solutions. In addition to product development, the introduction of further automation solutions and the use of the latest production technologies will be a key objective in the following years.

ARGO-HYTOS s.r.o. · Dělnická 1306 · 54315 Vrchlabí · Czech Republic · Tel.: +420 499 403 111 · info.cz@argo-hytos.com

its investment and business activities are targeted so as to ensure a permanent yearon-year progressive growth of revenue. In the past few years, its total revenue has been growing by 5-6 % a year on average and the same stable growth is expected in 2018 and subsequent years, mainly thanks to the planned schedule of new projects – deliveries of spark plugs and sensors for the serial production of large car factories.

“The current structure of the product, client and market portfolio eliminates the loss of revenue risk in one segment, one client, one territory. The firm supplies spark plugs

and sensors for primary production and as spares. However, we are not dependent exclusively on the automotive industry; our products are intended for aircraft engines, motorcycles, ships and garden equipment (OEM supplies its products to the largest garden machinery manufacturers in Sweden, the USA, and China),” says Mojmír Čapka, Chairman of the Board of Brisk, a.s.

“Our plan is to increase exports by at least 10 %, specifically to Sweden, Germany, France, the Netherlands and the USA. We are profiting from our long-term, active and hard work with customers in those

countries. And this is by no means an easy task, especially as regards delivery requirements and the quality of products, where requirements are increasingly demanding.

Another problem is the shortage of skilled workers on the part of the clients, and their inadequate theoretical and practical knowledge. The problem is precise specification of what the client really wants. The young generation of PC and SW developers will create anything, even things that cannot be realised in practical production,” states Tomáš Prášil, Project Manager of the Motor Jikov Group, a.s.

Czech Engineering An important sector of the Czech manufacturing industry is the manufacture of CZ-NACE 28 category machines and equipment. It comprises a very broad range of equipment used for processing materials mechanically or thermally, or carrying out production processes on materials (e.g. manipulation, spraying, weighing, packing), including the production of their mechanical components producing or using force.

It also comprises specially made parts for those machines and equipment. The sector further includes fixed, moving and manually operated equipment, regardless of whether it is intended for industry, crafts, construction and agriculture or household use. The sector also comprises the manufacture of special equipment for personal or cargo transport. It accounts for approx. 8 % of the

revenue derived from own products and services of the manufacturing industry. The dominant category within the sector is large and medium-sized enterprises. Large enterprises accounted for 56 % of the revenue, 52 % of value added and 48 % of employed persons. The shares of medium-sized enterprises were from 31 to 36 %.

One of the important sectors of Czech general engineering is energy engineering, which is experiencing a period of prosperity thanks to a growing global demand for energy. Energy engineering comprises the manufacture and delivery of equipment for various general engineering sectors, ranging from the manufacture of turbines, fixtures, compressors and pumps, to lifting and handling equipment. The affiliation of Czech energy equipment manufacturers with supranational companies often opens

the way for them to gain foreign contracts.

At the same time, a number of purely Czech companies are successful exporters of energy equipment thanks to their long tradition and favourable references.

The manufacture of industrial cooling and air-conditioning equipment is another group with good prospects, as the refrigeration sector impacts practically all branches of human activities, including the safety and quality of foods in the supply chain from the harvest to the consumer; air-conditioning of buildings, pharmaceutical production and healthcare, and the low temperature and gas liquefaction and cooling equipment used in all sectors of industry. The tradition and current high standards of machine tool production, which forms an indispensable part of the sector, augurs well for the further successful development of this group.

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Photo: www.bigstockphoto.com

ECONOMIC POLICY

CZECH BUSINESS AND TRADE

www.s-radiatory.cz

Storage radiators

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V tůních 1636/1 • Praha 2 - Nové město • 120 00 • Czech Republic • info@s-radiatory.cz • venclin@gmail.com 9 |

ENGINEERING

Future of Machine Tool and Forming Machine Sector

will long continue to be used as basic technologies in engineering.

 OUTPUT OF MACHINE TOOLS

AND FORMING MACHINES IN 2017

The basic requirements placed on machine tools are precision, productivity, safety and reliability. In the area of electronics, drives, mechatronics, and technology management software, Czech machine tools are at the absolutely highest level. Practically all Czech manufacturers use the same components for their products as their rivals and can connect the machines they manufacture to the Industry 4.0 communication structures. Although new technologies are being introduced gradually, such as additive production, machining and forming | 10

In 2017, production in the sector declined by 4.7 % and exports by approximately 3.5 %. The main causes of the decline were problems in the eastern markets, especially the continuing unfavourable situation in Russia, and the stagnant demand in European markets, especially in Germany, which is the Czech Republic´s main export territory. As a result, the CR dropped to 15th position on the world scale of machine tool and forming machine manufacturers.

The Czech Republic´s main export territories are Germany (31 %), China (approx.

9 %) and Slovakia (7.7 %), followed by Russia, Poland, the USA, and Italy. At the moment, exports to Germany are showing a slightly upward trend, but sales to the Russian Federation are falling further in consequence of the continuing sanctions and the general economic situation in Russia.

In comparison with 2014, this is a decline of approximately 60 %. After a massive fall of exports to China in 2016, the year 2017

showed a moderate growth. The efforts to strengthen the position in other markets are most gratifying. In 2017, exports to Slovakia and Poland increased.

The domestic market is naturally very important for most Czech manufacturers, who are taking full advantage of its competitive advantages. Czech manufacturers have a share of approx. 30 % of the domestic market. In export, the CR is at a comparable level with, for example, Austria or France. In the framework of the CECIMO member states, the Czech Republic holds 8th position.

With regard to export commodities, leading items are grinders, followed by lathes, machining centres, and milling machines.

The main sectors purchasing engineering technologies are the automotive industry and its subcontractors, manufacturers of tools and moulds, and the defence, aviation, and energy industries.

 ACHIEVEMENTS OF CZECH FIRMS

WITHIN THE SECTOR IN DOMESTIC AND FOREIGN MARKETS Czech firms take part in practically all important international exhibitions and fairs.

Photo: ŠMERAL Brno archives, BBV archives

The machine tool and forming machine sector is the cornerstone of the entire Czech engineering industry. Its development is essential for the promotion of other engineering branches and consequently the entire industry. Its characteristic features are high technical standards and a high level of technological advancement.

CZECH BUSINESS AND TRADE

In 2017, for example, they participated in the CCMT exhibition in Shanghai, the Metalloobrabotka exhibition in Moscow and the EMO fair in Hannover. A very important event for all domestic manufacturers is the International Engineering Fair in Brno, which in even years goes under the name of IMT, the acronym for International Machine Tools exhibition. In 2018, the most important international event will be IMTS Chicago, the largest and probably most important global exhibition within the sector.

The Czech Republic will be represented there by several companies, including SST.

SST Priorities The Association of Engineering Technology (SST) is a member of the European Association of the Machine Tool Industry (CECIMO). This Association represents about 36 % of the world’s machine tool and forming machine production. In 2018, the aggregate output of its members is expected to be better than in 2017. Current calculations indicate that the total output will be at the 2014 level. Considering the continuing high volume of production in the au-

ď Ž STRONG TRENDS

tomotive industry and the generally favourable economic situation in the Czech Republic, the Association expects domestic demand to grow for machine tools in 2018. As regards exports, sales to China are very likely to increase, and so are exports to Germany and other European countries. On the other hand, there are certain unfavourable factors, such as the effect of the trade restrictions imposed by the USA, Brexit, and the strengthening of the crown in relation to the euro.

these trends are being adversely affected by a lack of skilled labour.

AND EXPECTATIONS The main trends are the continuing promotion of robotisation, automation, digitalisation and connectivity, referred to as Industry 4.0. New technologies, in particular additive production technology, which represents a new quality in the production of special parts and shape-complicated structures, are becoming increasingly important. The advances in electromobility and artificial intelligence are most likely to influence the further development of machine tools and forming machines. At the moment,

ď Ž INNOVATION IN THE MACHINE

TOOL AND FORMING MACHINE SECTOR The high standard of Czech machine tools and forming machines is largely due to the innovative activities of most manufacturers, such as the companies TOS VARNSDORF, KOVOSVIT MAS, TAJMAC – ZPS, TOSHULIN, TOS Kuřim, and FERMAT. The basis is their own construction and development facilities, supported by collaboration with higher-learning institutions, such

Hi-tech CNC turning

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ENGINEERING

MACHINE TOOL EXPORT ACC. TO TERRITORIES IN 2017 Germa ny Chi na 30.56%

31.13%

Sl ova ki a Rus s i a Pol a nd

3.13% 8.92%

3.61% 3.86% 4.63%

USA

7.66%

6.50%

Ita l y Indi a Others Source: SST

EXPORT AND IMPORT IN CR 2008 - 2017 (HS8456-8463) IN CZK MIL.

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Oldřich Paclík Director, Association of Engineering Technology www.sst.cz

Export

Source: SST

Czech firms displayed their products at the CCMT China CNC Machine Tool Fair in Shanghai Czech engineering firms, with support from the Ministry of Industry and Trade, took part in the CCMT Fair, one of the world´s largest engineering fairs held in Shanghai. Twelve companies presented their products at the Fair in a joint exhibition on a surface area of 296 sq. m.

“Czechs are among the Fair´s traditional partners and among the important countries using national pavilions to present themselves. This is in keeping with the position of Czech manufacturers, who, thanks to the quality of their products and their presence in the Chinese market of more | 12

as the Research Centre of Manufacturing Technology (RCMT) attached to the Prague Technical University, and independent research workplaces, e.g. VÚTS Liberec, a.s., and manufacturers and suppliers of electronic and mechatronic components, tools and robots. It is gratifying that, besides continuously improving their current machine tool concepts, Czech manufacturers are also keeping pace with regard to new technologies. For example, in 2018, KOVOSVIT MAS presented its first hybrid machine enabling the combination of conventional machining with additive technologies. One of the main limiting factors in the development of the sector is the inadequate supply of accomplished graduates of technical and vocational schools.

Although the situation has somewhat improved, enterprises are obliged to seek their own ways to find skilled workers. The secondary technical school founded by TOS VARNSDORF in 2016 is a unique example to be followed by other companies. For the time being, most firms rely on cooperation with regular vocational schools and apprentice training centres.

than 65 years, rank alongside respected Chinese partners. There is keen competition in the Chinese market, and this is another reason why systematic work and this form of support are needed to assist Czech firms.

We appreciate the very well organised B2B meetings of Czech and Chinese firms, also attended by important representatives of the China Machine Tool & Tool Builders´ Association (CMTBA) and big Chinese firms,” said Bedřich Musil, professional guarantor of Czech participation and Project Manager of the Association of Engineering Technology. Twelve exhibitors – ČKD BLANSKO-OS, FERMAT CZ, KOVOSVIT MAS, KSK Precise Motion, Pilana Metal, RETOS VARNSDORF, Škoda Machine Tool, TOS Olomouc, TOS

KUŘIM – OS, TOSHULIN, TOS VARNSDORF, and ŽĎAS – presented their companies at the joint Czech exhibition. The representatives of participating Czech companies conducted some 200 business encounters, some of which had been pre-arranged and some with new potential partners from among the visitors. Czech firms valued their participation in the Fair as very positive and many of them would like to attend the next CCMT Fair. “A great advantage is that the Fair is held in the most important part of China, in the centre of industry and trade. A large number of Chinese businessmen visited our exhibition and a large number of interesting discussions were held there,” said Luboš Janoušek, Sales Director of Fermat.

CZECH BUSINESS AND TRADE

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ANALYSIS

Agricultural machines are among traditional Czech export commodities. The character of the machines has radically changed over the past 30 years, with the agricultural machinery sector of today comparing well with the technologically most demanding industries, by the use of modern materials and even space technologies.

Sophisticated production is a common feature in Czech factories, with firms promptly meeting demand, introducing new models and high-quality processing, all at competitive prices, even in foreign markets.

 STABLE SALE OF UNIVERSAL

TRACTORS The sale of universal tractors is stable, according to long-term statistics, which show that since the beginning of this decade approx. 2 200 tractors were sold each year.

With regard to the sale of combine harvesters, the capacity of the Czech market is estimated at some 170 machines. Their sale, however, fluctuates year-on-year. In 2017, which was more or less an average year, altogether 2 247 tractors and 162 combine harvesters were sold.

 EFFECT OF EU DIRECTIVE

INTRODUCING STRICTER EMISSION STANDARDS ON SALES There are some 100 agricultural and forestry machine manufacturers in the Czech Republic. The Agricultural and Forestry Machinery Association A.ZeT has 43 members, including all the major domestic producers and both the country’s agricultural universities plus the Agricultural Research Institute. The total output of the member firms is worth around CZK 20 billion (approximately EUR 750 million), which accounts for 80 % of total production in the Czech Republic. Total Czech agricultural and forestry machinery exports are worth CZK 17.4 billion (approx. EUR 660 million).

Of this amount, the export of A.ZeT members accounts for 85 %. Agricultural machinery manufacturers employ an estimated 10 000 people, about one-third of the number the sector employed 20 years ago. | 14

A new Directive, EU 167/2013, which enacts stricter rules for placing new tractors on the market and their registration, came into force at the beginning of 2018. Manufacturers were prepared for the new situation and the change only had some effect at the end of last year, when dealers were trying to place on the market machines made in the previous year. This resulted in an extra high number of new tractor registrations. At the beginning of the new year, however, sales stabilised and returned to normal

 CZECH PARTICIPATION IN

TRADE FAIRS AND EXHIBITIONS, SUCCESSFUL BUSINESS MISSIONS The production potential of Czech agricultural engineering exceeds the absorption capacity of the domestic market. One of

the main activities of A.ZeT therefore is to support Czech exports, such as presenting Czech manufacturers in other countries.

Our most important foreign undertakings take place at trade fairs, for example at SIMA in Paris and AGRITECHNICA in Hannover. Both these exhibitions are the most important events within the sector not only on the European scale, but also in the world context. The disadvantage is that both these exhibitions are held in the same calendar year, always the odd year. Czech firms never miss them and have been present there every time since 1995. A positive aspect, on the other hand, is that, in the even years, Czech firms can concentrate on the TECHAGRO domestic fair.

In the past, the Association also organised joint participation of Czech firms in trade fairs and exhibitions in Ukraine (Kiev), Denmark (Herning), and Poland (Poznan), and mediated the firms’ presence at the International Specialised Exhibition of Agricultural Machinery, AGROSALON, in Moscow.

In addition, it has twice organised the participation of its members at EXPO AGRO in Argentina. An important event for small agricultural machinery manufacturers is the GaLaBau fair in Nuremberg.

Representatives of our firms take part in business missions led by officials of the Ministry of Agriculture. In the past two years, we have had an opportunity to present our industry in Tanzania, Zambia, Nigeria, Senegal, and China. The concerted approach of the suppliers of agricultural and food industry

Photo: Zetor archives

Agricultural Engineering is Using Up-to-Date Technology

CZECH BUSINESS AND TRADE

15 |

ANALYSIS

SALES ON THE CZECH MARKET – TRACTORS

Source: A.ZeT

SALES ON THE CZECH MARKET – COMBINE HARVESTERS

Source: A.ZeT

technologies, possibly including genetic material, may bring Czech manufacturers synergic effects in establishing business and cooperation relations in specific regions.

The quality of Czech products compares well with European standards, as is illustrated by the large number of Czech-made machines ploughing and tilling the fields and harvesting grain in a number of European countries, which were developed and made in Czech factories and for commercial reasons are flying the colours of the manufacturers’ foreign trade partners.

 SUCCESS OF CZECH FIRMS

WITHIN THE SECTOR IN FOREIGN MARKETS The largest trade partners of Czech manufacturers are firms in neighbouring Germany, Austria, and Slovakia, followed by France and Poland. Here, much depends on the actual products. For example, the Czech| 16

made Zetor tractor is traditionally much in demand in Poland, Scandinavia, and the Balkan States. The manufacturers are rediscovering their partners in the countries of the former Soviet Union – Russia, Ukraine, the Baltic States, and also in the new EU countries – Romania and Bulgaria.

The most important Czech export items are fodder crops and culm crops harvesting machines, which comprise all mowing and cutting machines, including grass mowers, raking machines, tedders, etc. These machines account for 40 % of total agricultural machinery exports. Tractors take a share of 22 %, the same as soil preparation and soil treatment machines.

Important Czech exporters are FARMET at Česká Skalice in East Bohemia and BEDNAR FMT Praha, followed by OPaLL AGRI Dolní Životice and SMS CZ Rokycany, all manufacturing soil treatment machinery, AGRIO MZS Křemže known for its sprayers, ZDT Nové

Veselí exporting trailers and semi-trailers.

Other export articles include mowing machines, front loaders, manure spreaders and the full range of small agricultural machinery, including tools. Special machines, such as stump cutters and oleaginous seed processing refineries, are also much in demand.

Specialising in stable machinery manufacture are the firms FARMTEC Jistebnice, BAUER TECHNICS Tábor and AGE České Meziříčí.

Zetor tractors are experiencing a comeback to the largest world markets. Zetor company exports 90 % of its output and the rest is sold at home. The latest tractors feature a new design created in cooperation with the renowned design company Pininfarina, which expresses the strength and durability of ZETOR machines combined with an attractive appearance. The new design is being applied to all the Zetor model series.

The main agricultural machinery import items are machines which are not made in the Czech Republic, such as higher output tractors (over 120 kW), combine harvesters and presses, and regrettably also cutter harvesters, which we used to manufacture in the past, and even to export. The same fate has befallen rape harvesters, where, too, we must completely rely on import.

In the past five years, Zetor tractors have regained their position as leaders in the Czech market, with a 24 % share, followed by foreign-made John Deere tractors (18 %), New Holland tractors (17 %) and Case IH tractors (11 %). As regards combine harvesters, Class and New Holland machines each have a 31 % share of the market, with John Deere and Massey Ferguson together holding the remaining one-third share (20 % and 8 % respectively).

 TECHAGRO OFFERS A DISPLAY

OF THE LATEST CROP PRODUCTION TECHNOLOGIES AND MACHINES Czech manufacturers and the largest importers closely cooperate with the organisers of two most significant domestic agricultural machinery exhibitions, Brno Trade Fair, a.s. and České Budějovice Exhibition Grounds a.s. The complex of the TECHAGRO / SILVA REGINA / ANIMAL VETEX / BIOMASS international fairs in Brno comply with the strictest international comparative criteria. Over the years, it has achieved outstanding international renown and now ranks second in im-

CZECH BUSINESS AND TRADE

Contacts: CHEMOTEX Děčín a.s.

Tovární 63 Děčín XXXII-Boletice nad Labem 407 11 Děčín, Czech Republic Phone: +420 412 709 222 E-Mail: chemotex@chemotex.cz

CHEMOTEX Děčín a.s. is a continuator of a traditional Czech chemical production. Since 1993 we are a joint stock company with more than 20 years of experience not only in the production of industrial chemicals. Due to substantial investments into buildings, production technologies and equipment, our company keeps competitive ability in today’s highly competitive environment. Moreover, it keeps on track with market demand with the emphasis on the flexible reaction to customer needs.

We have a broad product portfolio for practically all sectors of industry, including engineering. Our R&D department can tailor the requirements of its customers according to their needs based on the expertise, market research, as well as own surveys. Moreover, modification of existing products according to the specification of a customer does not pose any problem for our experts.

In our work, we try to keep the pace with the latest scientific knowledge and trends of development.

Products useful for engineering: Q degreasing products – product line EBOL and KORYNT

(water soluble, solvent types) Q Water mixable cutting fluids – product line IDAZOX (mineral base, semi-synthetic, synthetic) Q Anti corrosion paints – product line RISTIN

Certificates: ISO 9001:2009, 14001:2005 Responsible care

w w w.chemotex.cz 17 |

ANALYSIS

portance after the SIMA Paris and AGRITECHNICA Hannover agricultural trade fairs. Its initiator in 1994 was A.ZeT Association, which has been one of the co-organisers of the fair participating in preparing the concept of the fair and the accompanying programme. Our firms traditionally occupy an important part of the exhibition surface area.

In recent years, TECHAGRO has been the most successful project of all trade fairs and exhibitions organised in the Czech Re-

with previous years. In 2011, foreign trade experienced a revival and this trend also continued in the following years. The 2017 agricultural machinery trade turnover amounted to over CZK 35 billion, while exports and imports remain at approximately the same level (CZK 17.4 billion and CZK 18.0 billion, respectively). In other words, the volume of imports is comparable with that of exports expressed in Czech crowns.

AGRICULTURAL AND FORESTRY MACHINERY BALANCE OF TRADE 20 000

15 000

10 000

5 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 export CZK mil.

import CZK mil.

Source: MIT CR

public. In April this year, it once again broke all records: 88 000 sq. metres of exhibition surface area, 112 000 visitors and nearly 800 exhibitors from 42 countries.

 DEVELOPMENT IN

AGRICULTURAL AND FORESTRY MACHINERY PRODUCTION Czech firms are becoming increasingly involved in international trade. The import of foreign machines grew at practically the same rate until 2008 as did Czech machinery exports. Like domestic sales, foreign trade, too, plunged by approximately 30 % in 2009 and 2010, in comparison

 STRONG TRENDS

AND EXPECTATIONS A relative advantage of Czech agri-engineering is the structure of the manufacturing firms. The majority of them are small and medium-sized enterprises, capable of flexibly responding to demand, and which can turn out machines precisely according to the specific requirements and wishes of customers, even in serial production.

Agricultural machinery reflects the requirements of farmers for higher efficiency and better quality of work operations.

From precision farming, the beginnings of which date back to the mid-1990s,

agri-engineering has advanced to what is called smart farming. Similar rhetoric as that used in industry is beginning to find its use in the sector, where we speak of agri-technics 4.0, which means using ICT not only in machines as such and interlinking and connecting them to the smart data network using accurate navigation systems, for example in tractors and self-propelled machines, but also monitoring and controlling separate working systems. In all these aspects, Czech manufacturers are competitive even in international comparisons.

The Czech economy is small and open and consequently dependent on export.

Agriculture is a sector greatly dependent on political decisions, at both national and EU levels. Regular competition is also being disrupted by the policy of supply chains on which farmers are inadequately dependent owing to existing legislation.

A controversial issue dividing EU member states is Common Agricultural Policy (CAP) financing, which disrupts free competition by unbalanced and unjust interventions and subsidies, thus demotivating hundreds of Czech farmers, even from meat, cereal, milk, fruit and vegetable production, where Czech farming is competitive.

In view of the different approaches, the question is to what extent it will be possible to push through changes leading to lower CAP financing, giving greater support to rural development and improving the quality of life in the countryside, while reducing production subsidies and restricting regulation in the sector to eliminate the asymmetrical solution putting certain states (including the Czech Republic) at a disadvantage.

Dušan Benža Director of the Agricultural and Forestry Machinery Association A.ZeT Secretariat www.zetis.cz

Development of foreign trade – forestry and agricultural machinery production (in CZK million) year

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

CZK million

7 493

8 562

9 432

11 091

12 116

8 651

9 686

11 830

14 612

15 001

15 198

16 575

16 706

17 445

import CZK million

7 741

8 933

10 586

13 280

14 393

9 684

9 711

13 600

15 285

15 197

17 059

18 521

15 880

17 979

export

Figures in millions of CZK, 1 EUR=26.00 CZK Source: Ministry of Industry and Trade CR (MIT CR)

| 18

CZECH BUSINESS AND TRADE

CLASSIC Oil – Czech Leader in Manufacture of Cooling Fluids

Photo: CLASSIC Oil s.r.o.°; Cryostat – determination of solidification point -90o C

CLASSIC Oil, leading Czech oil dealer and at the same time leader in own antifreeze production in the Czech market, owes much of its success to intensive development. The firm standing on two pillars – the sale of a full range of automobile oils and industrial lubricants and development, production, and the filling of special cooling fluids – antifreezes, sets itself ambitious aims: enlargement of its production capacity, breaking into foreign markets while maintaining abovestandard customer care and, of course, flexibility. “In our line of business, only individual care taken of the customer and maximum effort to meet all his requirements will bring success,” says Viliam Blumtritt, Vice-President of CLASSIC Oil Czech Republic.

Can you give us a short history of your company?

We are a Czech family company, founded in 2007 by Roman Šroba, whose special emphasis from the very outset has been on quality, personal contact and strong, longterm relationships with the customers. The firm based in Kladno near Prague operates in Germany, Slovakia, Austria, Romania, and many other markets, in addition to the Czech Republic.

You have made tremendous progress over the past few years as regards the production and sale of antifreezes. In the wide spectrum of products, from antifreeze fluids for the automotive sector to heat-transfer fluid filling and supply for the technical systems in buildings, you are one of the largest producers in the

Czech Republic. Wherein rests the secret of your success?

We know that we can only succeed in the market with our products if we approach the customers individually and do our utmost to meet their requirements. Our great advantage is that all our employees are used to doing their work with total responsibility and flexibility.

You provide the private sector with a full service and offer firms the filling of lubricants and operating fluids in containers provided with their own labels.

A special service is the complete revision of documents and labels for all products.

Are there any interesting references you can be proud of in this area?

It is a service used especially by big firms and supranational chains, such as spare part deliveries for automobiles, and by firms having their own retail network. The size of the deliveries range in the order of thousands of tons.

You invest considerable sums in the development of production and the growth of your firm. Your own laboratory is unique in the Czech Republic, especially in the area of antifreeze production. Can you give us some details?

We realise that only product development and continuous improvement can ensure a future for our firm, which must naturally go hand in hand with investment in the training and education of employees at all echelons. You are right in saying that our laboratory is at a very high level and, as regards antifreeze, I consider it one of the best in the Czech Republic. As an example, I can mention our automatic titrator for water content determination using the Karl Fischer method, the apparatus for anticorrosion testing according to ASTM D1384 standard and the Shimadzu gas chromatograph with autosampler. The complete list of our equipment can be found on our websites www.classic-oil.cz.

Do you want to broaden your presence in foreign markets? Why should discerning customers collaborate with you?

We are well aware that customers need quality products, a personal and flexible approach in contracting and the negotiation of technical parameters. All these

are things we can offer our customers as a matter of course.

An innovation in July 2018 was that we decided to enter the Bulgarian market with our own commercial representation. The representation will provide commercial services to both wholesalers and final retailers.

We are also planning an active foreign acquisition in the area of heat-transfer fluids for administration buildings, hotels, production and warehousing facilities, breweries, ice rinks and many other sectors.

You are regular participants in important domestic and international trade fairs.

Which new items are you going to present at the International Engineering Fair in Brno in 2018?

At the Brno International Engineering Fair, we would like to present a unique comprehensive series of products named “SNIPER” and specified as “Unique Liquids”, targeted at ammunition manufacturers. This means everything included, from the first pressing and forming operations to final chemical polishing, so that customers will have everything needed for production, including service, at one address!

19 |

TREND

Unique Nature of Czech Aviation Industry

 THE CZECH REPUBLIC

AS AN IMPORTANT SUPPLIER

In 2017, Czech aviation industry export grew by a record 42 %, accounting for 0.2 % of the Czech Republic´s total exports. Traditionally, Czech aviation product manufacturers export most of their products to the United States, France, Russia, and Iraq. Being a global business, the industry´s export is spasmodic, with changing highs and lows.

As shown by statistics, its leading outlets in recent years were the United Arab Emirates. Czech firms export mainly helicopters of an unladen weight of under 2 000 kilograms, small and medium-size aircraft under 15 000 kilograms and accessories thereof, going mainly to France, and aircraft and helicopter parts and small aircraft and helicopters exported to the United States. | 20

An important role in the aviation industry on the world scale is played by Aero Vodochody, which, after a pause of more than 20 years is once again building its own training planes. In 1996, Aero stopped serial production of its training planes, at that time the most popular training engines worldwide. Its first new-generation plane is planned to soar into the skies by the end of next year. The firm´s ambition is to manufacture 150 planes over the next decade, which accounts for about 10 % of the world’s training aircraft market, excluding the USA and Russia. Aero has important subcontracts with the Brazilian firm of Embraer, for which it makes parts for its KC-390 transport plane. The firm also participates in the development and supply of wings for type C-Series medium-size transport planes made by the Canadian manufacturer, Bombardier. Another important manufacture is also that of cockpits for UH-60M Black Hawk helicopters built by the Sikorski firm, which have been made at Vodochody since 2011. Another Czech firm which would like to set foot in the overseas market is První brněnská strojírna (PBS) engineering works at Velká Bíteš,

which prides itself on a tradition of more than 50 years and which exports its aviation and engineering products to 40 markets worldwide. The firm specialises in the manufacture of auxiliary energy units used for plane starting and in air conditioning systems. It further manufactures turbine and turbo-propeller engines for small piloted and unpiloted aircraft and helicopters. Another firm manufacturing parts for aircraft engines is Jihostroj, a Czech engineering firm with a tradition going back to 1919.

It also manufactures hydraulic elements and aircraft components and has started work on the GE Catalyst engine for the American Cessna Denali aircraft. Its novel items are silent hydraulic pumps and the development of toothed hydraulic pumps.

With its strategic partner, the firm of Parker Aerospace, the firm´s aviation division has launched a project focused on a new GE Catalyst engine. Last year, it started serial deliveries of fuel system devices for the modernised L-410 NG transport plane and the development of a new product for the Korean customer, Hanwha Techwin. It has developed and supplied components for aircraft manufacturers in the USA and EU, including the firms of Honeywell and UTC. In the Czech Republic, its aviation division

Photo: AERO Vodochody AEROSPACE arcives, Martin Pinkas

The Czech aviation industry this year celebrates the centenary of its successful existence.

Today the industry occupies a position at the top among global manufacturers of aircraft engines and ultralights.

Dozens of Czech firms figure in the sector, which has become a representative of Czech high-end technology, attracting investment projects such as those of the companies Honeywell and GE Aviation.

CZECH BUSINESS AND TRADE

Investments In 1993, the American company Honeywell opened laboratories in Prague, where it collects data and optimises processes in many branches of its activities. In 2003, it based its laboratories in Brno´s Technological Centre, where it innovates aviation and automobile industry products. It is the third largest centre within the concern, after the United States and India. In the Czech Republic it operates two factories, in Olomouc and Brno. In 2016, Bell Helicopter opened a paint shop and a transfer centre for European clients. The firm makes parts and whole doors for Airbus, Boeing and Embraer aircraft, and operates a Research and Development Centre there. The American aircraft engine manufacturer, GE Aviation, is building a global centre in the Czech Republic for the development, testing and manufacture of Advanced Turboprop (ATP) tur-

supplies some of its products to GE Aviation Czech, První brněnská strojírna, Aircraft Industries and Aero Vodochody.

 CZECH SPACE ODYSSEY The space industry is another unique sector in the Czech Republic which can pride itself on top-standard projects. The CR is a member of the European Space Agency and six years ago Prague became the administrative centre for the Galileo satellite navigation system. During those six years, Galileo has taken not a step, but a leap forward to becoming fully operational. In collaboration with the European Space Agency (ESA), which is Galileo´s system architect, the construction of the cosmic segment for launching satellites sending out navigation signals is making good progress. In December 2016, Galileo started initiation services with 18 satellites. Full operation, however, will be in place no sooner than in 2020, when the full constellation of 27 satellites will be in orbit. Certification procedures authorising airports to use the EGNOS system for the approach phase of aircraft before landing have been taking place since 2012. Successful applications are being used in logistics, agriculture, environment monitoring and mapping, in addition to transport.

bojet engines. It will be fully operational by the end of 2022. This year´s test of the most advanced ATP turbojet engine is another step taken in the fulfilment of the investment contract signed with the Czech Government in 2016. Some 500 new jobs will thus be created in the Czech Republic over the next five years.

Last year, 170 workers were already taken on and 80 more will become employed this year. GE Aviation is planning to collaborate with Czech universities and domestic suppliers in development and production. The full capacity of the Centre will be more than 400 engines per year. ATP engines will also be used by the completely new Cessna Denali aircraft of the Textron Aviation firm.

The main outlet for the engines will be North America. The first tests inside the test room were made at the end of 2017, and the actual testing on the plane will take place later this year.

The first Czech space incubator, ESA BIC Prague, established two years ago, is entitled to use ESA (European Space Agency) technologies and systems. This year, on the occasion of the 40th anniversary of the first space flight of the Czechoslovak astronaut Vladimír Remek, a branch of the space incubator was opened in Brno, South Moravia.

will strike up collaboration with established firms and supranational corporations operating in the region,” says Jan Vitula, Vice-President of the South Moravia Region. Besides the 40th anniversary of the first space flight of a Czechoslovak – and at the same time the first non-American and non-Soviet astronaut, 2018 is the year of yet other impor-

“The region is a good site with a suitable environment, where space and aviation technologies are faring well and are one of the region´s priorities. New start-ups that will be included in the project will profit from the vicinity of research and scientific centres, specialised institutes of Brno universities, and

tant events in the epoch of “space conquest” with a Czech connection. In October 2018, 40 years will have passed since the launching of the first Czech satellite, Magion 1, and in November 2018 the Czech Republic will mark 10 years of its membership of the European Space Agency.

21 |

TREND

WORKING IN COMPLIANCE WITH NATURE

ENERGO-PRO is an independent power producer and supplier engaged in the generation, delivery, and cross-border trading of electricity. The Group is involved in the design and manufacture of power generation and industrial equipment as well as hydroelectric power plant engineering. We are specialists in the hydro power sector and related industry.

We build, own, and operate hydro power plants and electricity infrastructure in Central and Eastern Europe. Along with our core business we have developed in-depth expertise in power distribution and trading activities in different countries. We offer integrated solutions for hydroelectric power generation equipment with unit output up to 350 MW.

BASIC FACTS: 5 Established in 1994 in Svitavy, the Czech Republic 5 Main focus in Central and Eastern Europe, Black Sea and Caucasus 5 More than 9 thousand employees in 5 countries 5 More than 2 million grid customers 5 Total installed capacity 862 MW: • 2 Hydro power plants in the Czech Republic • 14 Hydro power plants in Bulgaria • 15 Hydro power plants in Georgia • 1 Gas power plant in Georgia • 5 Hydro power plants and 2 Hydro power plants under construction in Turkey

| 22

5 5 5 5 5 5

Several hydro power plant projects in development Engaged in international power trading Environmentally-friendly power generation over 3 TWh per annum Supplier of technological equipment for hydropower plants and pumping stations all over the world Developing historical industrial tradition of Central Europe Promoting two famous brands worldwide – Litostroj Power and ČKD Blansko Engineering

CZECH BUSINESS AND TRADE

www.energo-pro.com

23 |

RAILWAY INDUSTRY

Successful Development of Rail Transport The present successful development of rail transport has been enabled thanks to more than 200 years of traditional development of the Czech railway industry.

The former ČKD and ŠKODA plants, together with a range of other manufacturers, have always been at the top of their professions. The quality of their products can be shown through the large export.

This long-standing tradition is successfully linked to the present representatives of the Czech railway industry, who do not rely only on tradition but invest significantly in the development of new products, in the purchase of high technologies and renewal of production areas. This technological innovation is a necessity to ensure the competitiveness of this indus| 24

ACRI has been representing the Czech rail manufacturing industry since 1995.

ACRI represents the joint interests of the railway supply industry on behalf of Czech institutions, rail operators, rail infrastructure managers and via its membership in UNIFE, also on behalf of EU institutions. ACRI is the unique Centre of Technical Standardisation acting in the railway sector, involved in the transfer of European technical standards to the Czech national standards system.

The Association represents 50 Czech companies, significant manufacturers and suppliers of products and services for rail transport. It represents en-

new products, in the purchase of high technologies and renewal of production areas. This technological innovation is a necessity to ensure the competitiveness of this industrial branch. gineering, design, manufacture, maintenance and refurbishment of rolling stock, infrastructure, signalling and other services. ACRI members currently employ more than 21 000 people in the Czech Republic and their annual turnover is more than EUR 3.5 billion, of which exports account for more than 56 %.

Our vision: The Czech Railway Industry – a profit-making, flexible and highly technically developed sector with many years´ tradition, actively participating in employment, economic growth and development of the transport system in the Czech Republic and worldwide.

Photo: ACRI archives

trial branch. This long-standing tradition is successfully linked to the present representatives of the Czech railway industry, who do not rely only on tradition but invest significantly in the development of

CZECH BUSINESS AND TRADE

safety when driving through a curve A series of technologically innovative products is gradually coming into serial production. The main innovations in this direction include a traction drive for a three-system Emil Zátopek locomotive, which places extraordinary demands on power electronics. Traction converters must adapt to the three-power systems.

The most difficult part of the research concerns electromagnetic compatibility and the suppression of interference of the railway interlocking system in all countries where this vehicle is to be operated.

CZ LOKO is a reliable partner for railway transporters in terms of construction, modernisation, repairs, and maintenance of diesel locomotives and special railway vehicles.

SIGNALLING AŽD Praha company is a significant manufacturer and supplier of signalling, telecommunication, information and automation technologies. It is mainly focused on the rail and road transport field, including telematics and other technologies.

 CZECH RAILWAY INDUSTRY –

SUCCESS STORIES ROLLING STOCK ŠKODA TRANSPORTATION offers the solution for the production and development of low-floor trams, trolleybuses, and hybrid vehicles for ecological urban public transport. The company is also focused on the production of locomotives and trains of various concepts. Škoda Transportation focuses on the improvement and prediction of critical properties for future products, such as noise resistance, safety of traction drives, electromagnetic and thermal calculations and the subsequent optimisation of engines. Results of the research are products with pivoting bogies which have low-energy electric wheel drives, thus reducing the maintenance costs of vehicles and infrastructure. Škoda has a technology workplace for the development of synchronous motors

with permanent magnets – which are a vital part of the traction drive of the ForCity Alfa tram. These motors are world leaders and enable the construction of lowbed pivoting bogies with a direct drive (without a gearbox). Each traction motor is individually controlled from its own inverter, and this allows the movements to be individually controlled for each wheel.

Each traction container is designed for one traction bogie and represents the total utilisation of current high-performance electronics. By means of quick communication, it is possible to optimise passes through a curve and achieve increased

Promising sectors with a high added value – tradition of Czech industrial manufacture lasting more than 200 years – the densest railway network in Europe – every 6th Czech commutes by train to go to work (CER Yearbook) – the railway is a meaningful, ecological, and economic, alternative to road transport

25 |

RAILWAY INDUSTRY

| 26

high-technology products for the most demanding clients and railway applications. ŠKODA ELECTRIC offers development, production, and integration of the propulsion

and control systems for various rail vehicles i.e. metros, locomotives, EMUs, low-floor trams, trolleybuses, and battery vehicles for environmentally friendly public transport.

Photo: ACRI archives

COMPONENTS GHH-BONATRANS – premium supplier of railway wheelsets and their parts. This is a company with a history of more than 200 years, with delivery footprints in more than 80 countries worldwide. It represents an impressive part of the history of wheelset design and manufacture. Generations of true experts continuously contribute to the evolution of the wheelset. Respecting the past but looking ahead, the pioneers of wheelset manufacture produce premium solutions for the railways of the world.

The development and manufacture of brake systems for metro vehicles has been a major part of DAKO-CZ activities.

PARS KOMPONENTY has extensive experience in the manufacture of automatic plug doors, electric sliding doors, swing doors for drivers and inter-vehicle wing doors, in addition to tilting and fixed windows for subways and suburban trains, offering

CZECH BUSINESS AND TRADE

Škoda Electric also has experience with PMSM motors, SiC semiconductors, TCMS and system integration, so is a reliable partner and technology leader in the field of the propulsion system for rail vehicles.

AMiT is a supplier of industrial electronics and reliable solutions for public and mass transportation, industrial automation and building automation. AMiT Transportation is among the most important players in Central Europe in the field of the development and production of control systems for transportation, mainly for railways and rolling stock.

 PROSPECTS FOR THE CZECH

RAILWAY INDUSTRY The Czech railway industry has tremendous potential. Investment in this sector will have a multiple effect on domestic economic development. Specifically, it will have a favourable impact on employment, will improve the quality of transport services and lead to a higher culture of travel, while also raising the export per-

formance of enterprises. In general, Czech railways will require considerable investments in the next few years to attain the desired standards. In particular, this means investment in the development of the railway infrastructure, in addition to the completion of the railway corridors and the modernisation of key railway junctions. We must also not forget about regional railway lines. To be competitive, we must fit the main corridors with the ERTMS/ETCS European train control system, modern-

M-KOVO s.r.o.

RanơƎov 143 588 41 Vyskytná nad Jihlavou CZECH REPUBLIC

ise freight corridors passing through the Czech Republic, harmonise the costs of all types of transport, invest in the modernisation and purchase of new carriages and, last but not least, start preparations for the construction of high-speed lines that will make the conventional lines available for freight transport.

Marie Vopálenská Association of the Czech Railway Industry E-mail: vopalenska@acri.cz

www.m-kovo.cz

Phone: +420 567 276 203

Engineering and locksmith´s producƟon including welding Surface Įnishing, zinc coaƟng, blackening Precision machining

27 |

PR

Storing Solution by Proman The Czech company, Proman s.r.o., is one of the most important suppliers of all types of racking systems in the market, whose much appreciated asset is that it responds promptly and reliably to all customers’ requirements.

“We´ll design the optimum solution for your warehousing space without delay, tailored to fit your needs,” says company director Pavel Nekut. The firm, which started with three people, today records a turnover of around CZK 700 million per year, excluding its foreign subsidiaries.

Flexibility and promptness, however, are not Proman´s only priorities. Over the 24 years of its activities at home and in many other countries the world over, the firm has gathered valuable experience on its way to becoming a supplier of genuinely comprehensive solutions for warehouses, from A to Z, including “lifelong” care for the racks. For this reason, the firm can offer not only high quality products, but also top standard services. All this augurs well for Proman´s future, as Pavel Nekut predicts in his replies to our questions.

| 28

Pallet racks, cantilever racks and shelving racks supplied by your Company are used in practically all sectors, such as warehouses, the banking sector, and State administration. What exactly can you offer your clients? Wherein rests the “secret” of your success?

Thanks to the wide spectrum of customers and our original solutions, we can respond to a wide scale of the needs of our customers, old and new. Of special value is the work of our excellent technicians, the main creators of new solutions. Our great advantage, of course, is also our forthcoming approach to customers and efforts to provide them with products and services to their full satisfaction.

You want to become more widely established in foreign markets. Why should discerning customers cooperate specifically with you?

A great advantage in the foreign competitive environment is our domestic production, where, in addition to competitive prices, excellent workmanship and good technical solutions, we have long experience in foreign markets and our activities in European markets is growing. We are trying to maintain our great strength and that is the emphasis on detail, which, as we can see, most firms are losing with growing pressure on quantity at the expense of quality.

Which are the greatest recent achievements of your Company you can be especially proud of?

Among our recent large projects, special mention should be made of 4PX Express CZ, whose Distribution Centre we furnished with our pallet and rack shelving systems.

This comprised some 30 000 pallet places in the first stage, followed by another 17 000 in the second stage. In addition to the pallet shelves, we supplied the Centre with shelving solutions comprising some 16 000 shelves. The stores are used for Internet trading. As regards long-term cooperation, I would like to mention our projects for Dřevo-Trust firms, whose sales rooms have been supplied with our console shelves designed specifically for storing atypical large-size boards. Another great project is the delivery of storage equipment for Maurice Ward in

Štěnovice, where Proman recently installed pallet and console shelves on a surface area of 14 000 sq. metres. A special project in Proman´s portfolio is the delivery of stock platforms (surface area of about 7 000 sq. metres) and pallet racks with 33 000 pallet places for SONY firm. An interesting job was the moving of a store for Globus firm while in full operation. Proman supplies Globus with shelves for its supermarket stores and its large central store.

What are your specific plans for the development of your company?

The long-term objective of our company is to supply our customers with a wide quality range of products and services. We want to continuously improve our services and products and further expand to foreign markets.

Do you participate in international trade fairs? This year, for example, you were the only Czech Company at the Intralogistics Fair in Paris, which offered unique products in the area of cantilever racks, archive storage systems and steel platforms. Can you give us more details?

The Intralogistics Fair in Paris is one of the largest fairs in its category in Europe. It opens up completely new markets to us and provides opportunities to strike up new relations and reinforce existing ones.

France is a big market, which, in addition, has close links, for example, with Algeria and Tunisia, as could be seen by the relatively large number of visitors from those countries. The visitors´ interest was attracted by our mobile shelving racks, which were installed in operational condition at our stand. An important factor was that potential customers could not only see, but also try out our products.

Do you observe any major trend influencing your business?

A major trend we have been observing recently is the effort to accelerate the entire storaging and picking up process, based on a higher degree of automation and the use of smart technologies in warehouse management. It goes without saying that the higher the sophistication, the higher the costs. And that is why a high percentage of our deliveries is still conventional racks.

CZECH BUSINESS AND TRADE

PROMAN s. r. o.

Za Pivovarem 830, 537 01 Chrudim Tel.: +420 469 699 570, +420 469 622 280 e-mail: proman@proman.cz

Proman s.r.o. was established in 1994, in Chrudim. For the whole of its existence it has been a purely Czech company. From the very beginning its specialisation has been the supply of a full range of racking systems. For its clients, the company designs racking systems according to their demands, ensures their realisation and provides a warranty and post-warranty service.

The firm has its affiliations in Slovakia, Poland, Croatia, Bulgaria, Romania, and Hungary. Its products, however, can also be found in Serbia, Bosnia and Herzegovina, Albania, Germany, Austria, and Ukraine. The company operates in about 20 European countries. Its products comprise all types of racking systems:

Q

pallet racks conventional stationary drive-in and drive-through racks gravitation mobile

Q

shelving racks conventional stationary gravitation mobile multilevel construction

Q

cantilever racks stationary mobile

cantilever racks Q automated shuttle systems Q

The above systems can be supplemented according to the client´s requirements and in accordance with the type of material to be stored.

One of the categories supplied is a mobile shelving rack suitable for archives, libraries, hospitals, museums, etc. The deliveries designed for museums in particular are widely diversified to meet the requirements of the different objects to be stored. Therefore, the deliveries include not only shelving racks, but also different types of accessories.

The multilevel construction is fixed on a chassis, which can be operated by hand or by electric motor.

A limiting condition for the installation of these systems is the access into the space where the shelves are to be installed. If the user has suitable space for the installation of mobile shelves, the following can be a solution: Q Rails – always hot dip galvanised rails laid on an existing floor rails laid on a false floor covered with chipboard and PVC rails laid on the upper floor layers and a concreted over

Q Chassis – always painted with komaxit Welded steel construction, usually divided. Inside the construction are metal beams connected by a continuous bar for driving the wheel.

A chain drive installed in front under the cover transmits the driving force to the wheels. The operator uses a control wheel. Each control wheel has a fail-safe device against the spontaneous travel of the racks.

The actual storage racks are anchored into the chassis.

Q These racks can be supplemented with additional elements, such as drawers pull-out shelves systems for suspension board storage folding tables at the front of the shelves chassis locks sealing elements (rubber, brushes) Most of these elements are manufactured in the Czech Republic according to our documentation, so that we are in a position to meet even the most intricate requirements of the system users.

www.proman.cz

29 |

RESEARCH

Research Combined with Practice Bears Fruit

 RESEARCH CENTRE FOR

MANUFACTURING TECHNIQUE AND TECHNOLOGY The main objective of the Research Centre for Manufacturing Technique and Technology (RCMT) is to create in the Czech Republic a professional research base for the Czech engineering industry, to bring up a new generation of young research workers in this sector and be a well equipped research, educational and training workplace.

Since 2012, the Institute of Manufacturing Machinery at the Faculty of Mechanical Engineering, Czech Technical University in | 30

Negotiations on RCMT´s Collaboration with Huawei In June 2018, an 11-member delegation of the Chinese firm Huawei held talks with RCMT representatives on collaboration in the area of mobile phone, server and telecommunication technology production. In the construction of mobile telephones, manufacturers often have to deal with problems such as difficult-to-machine and new materials, and this is where RCMT can offer Huawei cooperation in research, focused on

their machining and functioning. Other subjects discussed were, for example, the increase in machining productivity and automation of the mass production of telephones and electronic devices.

The delegation was led by Mr Yu Meng of the Huawei European Research Centre in Düsseldorf. Part of the meeting included the inspection of laboratories and their equipment in RCMT premises, with the presentation of research projects on which RCMT cooperates with industrial partners.

Prague has been working on a project of the Centre of Competence – Engineering Manufacturing Technology (CK SVT), which is supported by the Czech Technological Agency. The mission of the CK SVT project is to raise the technical excellence, competitiveness and production of the leading manufacturers of engineering manufacturing technology and the entire Czech engineering sector, with the aim of bringing the Czech Republic, currently occupying 13th position in absolute engineering production, within the “Machine Tools” sector on to the world scale among the top ten. CK SVT ensures long-term applied research and development in the progressive hi-tech sector, which turns out products of high complexity, with high value added and high profit. CK SVT is unique in that it strengthens the current collaboration between leading manu-

facturers in the sector and research centres in the Czech Republic and, at the same time, creates an environment supporting the growth of students and experts with the highest qualifications and erudition. The CK SVT team comprises more than 80 experts specialising in construction, development, technical analysis and research. The researchers focus on the development and application of modern advanced simulation methods, virtual testing, advanced machine optimisation methods, drive control and vibration damping, the use of unconventional materials and structures, research of new concepts of machines, advanced monitoring and diagnostics of machine tools, compensation of temperature errors of machines, multi-axis machining technologies and the minimisation of impacts of machines on the environment.

Photo: RMCT archives

Research work focused on both new technologies and automation, and collaboration with important players in the market is essential for Czech engineering if it wants to be competitive. Here are two important institutions which have a lot to be proud of.

CZECH BUSINESS AND TRADE

 NETME CENTRE NETME Centre is a technological integrator, the aim of which is the innovation of engineering in the Czech Republic. It assists in the development of expert knowledge, the aim of which is to ensure future growth and long-term sustainability of the engineering sectors. It employs more than 500 researchers. The Centre, linking up with long-term successful research activities of the Faculty of Mechanical Engineering of the Technical University in Brno, also cooperates with other leading universities in the Czech Republic and other countries. Nearly 40 % of its contracted research is with foreign institutions.,

INDUSTRY 4.0 Since about 2010, the development of automation in industry, accelerated by the tremendous information technology potential and high-speed computers, has been termed as the Fourth Industrial Revolution, or simply “Industry 4.0”. Where is research in the NETME centre and at the Faculty of Mechanical Engineering (FME) heading in this dynamic sector? FSI has been working on manufacturing machines with electronic control and production lines created with them since the 1970s, gradually integrating advanced technologies and quality management instruments into their development.

The following are the main elements on which it concentrates its scientific and research activities:

COLLECTION OF DATA FROM REAL PRODUCTION ON THE PART OF INDUSTRIAL PARTNERS Intelligent production cannot do without the development of knowledge systems focused on the description of real interactions between the machine, the operator, and the environment, to find how they influence the productivity of the machine and the quality of production. This entails the long-term collection of data and their evaluation, the development of applications for data processing and their storage on cloud or the firm´s internal server.

DEVELOPMENT AND CONSTRUCTION OF MACHINES FOR THE 21ST CENTURY Using the knowledge obtained from the collection of real production data, it is

possible to adjust the construction of the newly developed machines, integrate built-in sensors in them, reduce the weight or increase the rigidity of the construction elements. With the help of the modular concept of the machines and the open standards, it is possible to rapidly re-configure and integrate them more easily into the digitalised enterprise.

CYBER PHYSICAL SYSTEMS The development of cyber physical systems (CPS) means connecting the computing model of the machine and its physical realisation to form one interactive whole, which is controlled or monitored by computer algorithms, its parts communicating with each other and which can be visualised in the virtual reality environment. This makes it possible to simulate and visualise in advance different conditions of production on it and, on the basis of the results obtained, raise the adaptability, efficiency, functionality, reliability, safety, and usability of such a machine.

DEVELOPMENT OF NEW MATERIALS AND TECHNOLOGIES Another objective of NETME´s activities is the research and development of advanced metal materials, ceramics and composite materials, usable in the construction of sophisticated engineering applications in the power industry and the manufacturing, automobile and aviation industries.

VIRTUAL AND ENLARGED REALITY The Centre´s focus is on the development of applications for the visualisation of all the relevant data of the manufacturing machine that can support the decision-making processes of the workers during the whole life cycle of the product and on the assistant visualisation applications connected to the knowledge database, which supply the workers with comprehensive information and instructions concerning their tasks in the production process.

MACHINE CONDITION MONITORING, DIAGNOSTICS, AND MAINTENANCE The reliability and safety of the production facilities depend on their maintenance. The cyber physical system integration in the course of its maintenance makes it possible to continuously monitor the condition of the machine and use advanced techniques for the predictive and pro-active maintenance of the machine. The essentials are the built-in sensors, analysis of the data from the sensors, development of predictive algorithms and advanced methods of visualisation in the environment of enlarged or virtual reality.

ADDITIVE MANUFACTURING Challenges linked with the EU low carbon economy vision projected into the year 2050 and the current pressure to reduce greenhouse gas emission lead to the development of technologies that will ensure greater efficiency of the machine time and materials used combined with total energy consumption reduction needed for the manufacture of one piece. Additive manufacturing will also allow to better meet the individual requirements of customers.

MODELLING, SIMULATION AND OPTIMISATION OF PRODUCTS AND THE MANUFACTURING PROCESS In this area, the Integrator focuses on the development of computing machine models and the application of neuron networks for the prediction of the manufacturing machine and production line behaviour. On the basis of data collected from the production process, the use of applied mathematical disciplines (e.g. the front or the game theories) and the analysis of the manufacturing equipment, it is possible to optimise the production plan, analyse the influence of unexpected breakdowns and plan maintenance stoppages.

31 |

LOGISTICS

Czech Logistics Market Is Keeping Pace with Innovative Solutions and Benefits from It

Can you give us an outline of the development of the Czech logistics market?

Technical development, expanding markets and growing population boost demand for products and services. This demand is naturally putting pressure on production and consequently on logistics. This pressure may lead to higher production, the need to practise just-in-time | 32

communication, data processing, monitoring and control systems, including automatic identification and recognition applications, such as bar code reading systems and the RFID system.

The Czech logistics markets are keeping pace with these innovative solutions and benefit from them.

deliveries, ensure efficient manipulation, automation, massive digitalisation, etc. This necessitates the use of ever new innovative solutions making the processes more economical, friendlier to the environment and more transparent and robust.

Logistics plays a great role in the areas of output, profit and competitiveness. It is of paramount importance for the creation of values and is a source of sustainable competitive advantages. That is why logistics is considered one of the strategic priorities.

Automation in logistics often makes it possible to redistribute the sources and raise efficiency, which in turn may allow labour cutbacks. This, however, may involve the risk of losing important information and the know-how of those made redundant. Automation can be successfully used in areas involving physical stress or work in an unpleasant environment. As internal logistics often comprise a large number of manual, repetitive operations, involving the lifting of heavy loads and long transport distances, it is more advantageous to improve the working environment with the use of better ergonomy as one of the main advantages of automation in internal logistics. That is why automated loading and unloading systems are increasingly being used, with autonomously controlled trolleys, carousels, conveyer belts, and industrial robots.

The operation of these automated systems is supported by different forms of

You are President of the Czech Logistics Association. Can you tell us what tasks your Association has set itself for 2018?

We want to become a worthy partner and a good institution for our members. That is why we would like to organise expert seminars and excursions and seek support for our participation in trade fairs featuring logistics. Later this year, we´ll organise seminars on “Logistics in Viniculture” and “Logistics in Vegetable Growing”. Both seminars will take place in South Moravia. We are preparing a list of firms which we´ll be visiting and which will be put on our website, together with the programme: (http:// www.czech-logistics.eu). In September, we are organising an expert excursion to the Railway Testing Centre at Cerhenice, where test drives of conventional and unconventional rail vehicles are undertaken.

You are also Vice-Rector for Education at the College of Logistics. What can the graduates of your College offer would-be employers?

Our graduates have comprehensive knowledge of transport logistics, service logistics, information management and tourism, and are much demanded in the labour market across different sectors. Our Bachelor´s and Master´s degree courses prepare experts in specific multisectoral logistics and ensure the College’s full-fledged status among other technical higher learning institutions.

The courses and subjects prepare students to meet the requirements in the labour market as managers. The students are prepared to organise the targeted movement of people, information, materials, and intermediate and final products to the place of consumption.

Employers appreciate the fact that graduates are prepared for a systemic approach to solving problems and creative thinking oriented towards technical originality and practical usability of the required solutions.

Photo: Cushman & Wakefield archives, Václav Cempírek archives

What is the current condition of logistics in the Czech Republic?

“Modern technologies are being introduced much more readily than before. Let us take, for example, picking operations where the aim is to get the information in front of our eyes while at the same time having the hands free. Consumer electronics developers expect this technology to replace modern smartphones with the help of “smart glasses” fitted with 3D depth sensors allowing their carriers to physically control the visualised virtual picture,” says Václav Cempírek, President of the Czech Logistics Association.

CZECH BUSINESS AND TRADE

Wherein can you see opportunities or dangers in logistics?

Logistics is currently experiencing good times, because the economy is growing and so is demand for the management of material flows into production and the physical transfer of products to consumers. Global trading opportunities open up great opportunities to firms whose business it is to provide courier, express and parcel delivery services. In distribution, logistics is directly influenced by the depth of assortment, i.e. the number of different products in the particular sector. The customer has the choice of buying similar products from different manufacturers. In the case of natural persons, the volume of goods ordered from e-shops is increasing and their deliveries to consumers are partly responsible for the growth of road transport.

Logistics is negatively influenced by an inadequate transport infrastructure. This is probably the greatest threat. The basic motorway network and the corridors are not completed. Neglected maintenance during the past 20 years has led to various traffic restrictions

due to repairs and the modernisation of the infrastructure. Detours are becoming more frequent and are often in a bad condition, so that the full loading weight of the vehicles cannot be used, speed must be limited, etc. All this incurs additional costs to haulers.

This situation can be described as business restriction, not to mention the increase in fuel prices and the envisaged introduction of toll payment on certain up to now free first-class highways used in long-distance and interstate haulage.

The latest trend is the growing requirements for storage halls by their renters.

What is currently most in demand?

In the case of industrial property – new logistics centres – renters are increasingly calling for built-to-suit projects, realised so as to precisely meet clients’ needs. Developers select localities in the Czech Republic for domestic and foreign clients, precisely meeting their requirements, and build logistic centres there ready for use. In the case of these projects, the client designs the structure to precisely meet his specific

requirements, including the technological equipment and construction modifications of the interiors of the halls. In 2017, the largest area of completed surfaces, approximately 696 000 sq. m, was offered for immediate use in the industrial property market since the 2008 economic crisis. In spite of the large number of completed surface areas, the vacancy rate at the end of the year showed a decline, dropping to 4.1 %, i.e.

0.6 % less than in 2016. At the end of 2017, the total volume of modern A-class industrial property in the Czech Republic designed for rent increased to 6.98 million sq. m.

There was a very good start to the year 2018 and there have been no signs of any slowdown. However, as a result of the situation where demand surpasses supply, rentals are expected to increase.

Do you observe any trends influencing logistics services in the Czech Republic?

Modern technologies are being introduced much more readily than before. For example, as regards picking operations, the aim is to get the information before 33 |

LOGISTICS

| 34

will be connected to the Internet and will have a digital voice, so that they will be able to identify themselves, communicate and cooperate with other devices.

Last but not least, this is a platform of information and communication technologies designed for monitoring output in real time along the entire supplier chain, assisting firms to foresee all the potential disruptions of availability in real time by means of alarms. Maximum visualisation, for example of stock movement, is a key requirement for supply chains. Logistic service providers are strengthening their competitiveness by automatic order picking in the stores. Efficiency can also be increased by the reorganisation of key logistics processes.

What are your expectations for this year in your line of business?

This year, logistics will also be doing well in transport, as the evaluation of current overall and foreign demand is practically unchanged in comparison with 2017. The finished product stock indicator has stayed at the same level for three years running.

A positive factor is that entrepreneurs in

industry are expecting production to be growing faster in the next three months.

Employment is approximately the same in month-on-month comparisons and the expected development indicators for the entire economic situation until the end of the year are showing positive values. Confidence in the industry sector is higher in comparison with 2017.

How do the other states in the CEE region compare in logistics and transport?

The most attractive logistics locality in CEE is Central Poland. The first five localities in the rating are scattered all over the region, each of them being situated in a different country. Istanbul, for example, ranks 2nd, Prague 3rd, Bucharest 4th, and Budapest 5th. These results are part of a comprehensive report called “Expansion of the logistics properties network”, compiled

by Prologis. The main Central and Eastern European attractiveness factor is low costs (e.g. labour and property costs). The development of the infrastructure in those countries, however, does not meet the economic development requirements.

Photo: www.bigstockphoto.com

our eyes and at the same time to have the hands free. Developers of consumer electronics expect that in future this technology will substitute for today’s modern smartphones by using smart glasses fitted with 3D depth sensors, enabling the person wearing them to physically control the visualised virtual picture. Development is forging ahead. For example, eye lenses are being tested that will be controlled by wireless communication between the smartphone and blinking.

Drones – unmanned aerial vehicles – can be remote-controlled and fly autonomously according to programmed plans, or with the help of dynamic autonomous systems working through implemented sensors. Today, drones are used in activities linked with inventorying.

The greatest challenge for logistics is the fourth industrial revolution, the undeniable climax of the Information Age, where the real and the virtual worlds are very rapidly getting ever closer to each other. This process will lead to a concept defined as the “Internet of Things (IoT), which describes the future where everyday physical objects

CZECH BUSINESS AND TRADE

Data to drive you forward.

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www.bisnode.cz 35 |

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LOGISTICS

Supply of Industrial Properties Will Further Increase

Most developers foresee that the prices of land for industrial development will increase by an estimated 9 %, and so will rental prices. Customers usually rent industrial spaces for periods of three to five years.

Developers expect that in 2019 the supply of industrial properties will slow down its growth to 5.8 and 3.6 % respectively. “The development of the industrial development market and the industrial building sector in general is likely to be influenced by support given to investment projects. It is to be expected that in coming years this system will be targeted towards supporting higher value-added projects, such as research and development centres, testing and technological centres, and sophisticated manufacturing plants,” says Jan Lidral, Marketing Manager Central Europe of Takenaka Europe GmbH. | 38

“Demand for industrial spaces is certain to increase. The question, however, is whether sufficient projects will be prepared in time because of the lengthy and complicated building permission proceedings,” says Jan Palek, Country Manager Czech Republic & Slovakia for Goodman. David Plzák, Development Manager of Segro CR, s.r.o., agrees and says: “In general, supply will still be growing, but in some localities (especially in Prague and environs), the supply will be stagnant for the lack of new development surfaces.”

The prices of land for the construction of industrial halls have risen by nearly onetenth (9 %) over the past year, according to 86 % of developer company directors. Only 14 % of developer firms had the experience of the prices remaining unchanged. This is one of the reasons why developers expect the prices of rentals in the area of indus-

Photo: CTP archives

The supply of industrial properties will increase by a large margin. In 2018, the supply of industrial properties in the Czech Republic will increase by 10 %, according to the Q4/2017 Developer Companies study, compiled by the CEEC Research analytical company in collaboration with KPMG Czech Republic. In Prague, the supply will increase by 5.2 %. Demand for industrial properties outside the capital will rise by 8.3 % on average. The demand will be boosted especially by the need of existing firms to expand. The greatest demand for industrial development is shown by foreign investors.

CZECH BUSINESS AND TRADE

of 22 200 sq. m for Petainer in CTPark Aš.

Only 2 % of the total volume of newly completed spaces in the first quarter of 2018 were built on a speculative basis. The total surface area of modern warehousing and industrial spaces in the Czech Republic amounts to 7.18 million sq. m.

quarter of 2018, some 212 700 sq. m of new surface area was completed. The vacancy rate was 4.20 %, 45 base points more than in the previous quarter. Some 304 300 sq. m of modern industrial space ready for immediate move-in is currently available in the market.

 PROJECTS UNDER

 IMPORTANT RENTALS

CONSTRUCTION, RENTALS

The largest newly published transaction in the first quarter of 2018 was the renting of 14 200 sq. m for the Stavebniny DEK retail company in Prologis Park Prague Úžice. The speculative building covering an area of 28 300 sq. m was leased immediately after its construction had begun. “The renting of this speculative building so shortly after its construction had started, shows the high degree of demand for space in the region, which is rapidly becoming a new logistic hot spot on the territory of Prague and its environs,” says Martin Baláž, Director for Leasing and Development at Prologis for the Czech Republic and Slovakia. Prologis Park Prague-Úžice is a modern logistic park situated on the D8 motorway leading to Germany, just nine kilometres north of Prague. Two first-class buildings cover-

At the end of the first quarter of 2018, altogether 505 100 sq. m of warehousing and manufacturing surfaces were under construction, 39 per cent of which are situated in Prague and its environs. In the first quarter of 2018, work began on the construction of 155 700 sq. m of halls. The highest rent for industrial and logistic properties (prime headline rents) in the Czech Republic remained stable in the first quarter of 2018, ranging around EUR 4.50/sq. m/month.

 TOTAL SUPPLY OF INDUSTRIAL

SPACE IN THE CR In the first quarter of 2018, the total surface area of modern industrial spaces designed for rent in the Czech Republic rose to 7.18 million sq. m. In the first

trial properties to increase in the next two years. This year, 90 % of developer companies are expecting a price increase, and in 2019 an increase is expected by a full 100 % of developer company directors. The average net yield from industrial property renting is 8.7 %

 NEW SPACES COMPLETED

IN THE 1ST QUARTER OF 2018 Altogether 181 900 sq. m of warehousing area were completed in the first quarter of 2018 in 13 industrial parks in the Czech Republic. The largest completed projects include the distribution warehouse for Makro company in CTPark Prague North, occupying an area of 53 000 sq. m, the enlargement of the existing hall for DHL by 31 900 sq. m in Panattoni Park Cheb and a new warehouse covering an area 39 |

ing an area of 97 800 sq. m are situated in the Park, which has a potential for the construction of another 40 850 sq. m of surface area. In mid-2018, the buildings of Prologis, just as all the other new structures in Central and Eastern Europe, will undergo a sustainability test within the framework of BREEAM accreditation.

 ACCOLADE OWNS MORE THAN

quisition of another property. When this acquisition has been completed, the Fund will be the proprietor of more than 400 000 sq. m of industrial property, worth an aggregate of seven billion Czech crowns. All its properties have a 100 % occupancy rate. “Less than four years since its establishment, Accolade has become the fastest-growing owner of industrial property in the region,” says Milan Kratina, Chairman of the Board of Accolade Industrial Fund. “For comparison, the Fund started the year 2017 with a real-property portfolio comprising an aggregate of 128 000 sq. m of rentable surface. Together with the transactions which are now in the pipeline, it will own industrial property covering an area of 404 000 sq. m worth EUR 274 400 000,” Kratina adds.

Its most recent acquisition is a building with a surface area of 26 564 sq. m in Ostrov near Stříbro. It has been fully rented to KION, which is running one of the world´s most up-to-date engineering works there. Its core programme is the manufacture of robotic equipment for automated warehouses. KION is the renter of a neighbouring building also belonging to the Fund, where it manufactures logistic carts.

Both buildings have been leased for 15 years.

A deal to purchase 32 000 sq. m of surface in the industrial park in Cheb is awaiting signing.

The property is an extension of a building already located in the park and owned by the Fund, where DHL operates an Esté Lauder cosmetics centre. The original property is also rented to DHL as a service logistic centre for Sky Deutschland. The expansion of the centre for Sky Deutschland covers a surface area of approximately 2 000 sq. m. The remaining 30 000 sq. m will serve Estée Lauder as a new distribution centre. Last year, the Fund also purchased the second largest industrial rental building in the Czech Republic, which covers a surface area of 73 000 sq. m, leased to Tchibo in Cheb as a service facility for its clothing and accessories e-shop. The Fund has made its first entry into the Prague logistic market, where it acquired a building covering a surface of 1 000 sq. m. In Poland, the Fund has invested in industrial parks in Lublin, Stettin, and Bydgoszcz.

400 000 SQ. M OF INDUSTRIAL PROPERTY

 THE P3 INDUSTRIAL

 ARETE INVEST IS PLANNING TO

ENLARGE THE INDUSTRIAL PARK Arete Invest, too, is preparing to enlarge the Lovosice Industrial Park. In March 2018, this rapidly growing Czech real estate investment fund signed a new five-year lease contract with the Fiege logistic company for the rental of warehousing facilities in Arete Park Lovosice. In April, the company enlarged its warehousing surface area by 7 500 sq. m more to a total of 9 600 sq. m.

“By signing the new lease contract, we have stabilised our logistic park in Lovosice for five more years. At the same time, we are preparing the ground for the development of 11 000 more sq. m of storage and manufacturing surfaces,” says Tomáš Novotný, member of the Investment Committee of Arete Invest CEE II Subfund, responsible for asset management. On the newly rented surface, Fiege company will be serving the company of Automax, which is relocating its inflammable materials and chemicals store from its branch in Brno. The enlargement took place within the framework of the existing logistics building previously rented to the NCH company. The German company, Fiege, is one of the largest logistic firms in Europe. It employs more than 12 000 people in 15 countries worldwide.

Arete Park Lovosice is situated in a strategic locality at the exit from the D8 motorway near the German border. The high demand for renting logistic space in this locality has called for the expansion of the entire Park. The current rentable surface area of 18 500 sq. m has an occupancy rate of 92 %.

Accolade has already acquired more than 400 000 sq. m of industrial property. The Accolade fund owns 20 rental buildings for light industry and logistics in eight parks in the Czech Republic and Poland and is finalising the ac| 40

DEVELOPER PURCHASED A LOGISTIC PARK IN LOVOSICE FROM HB REAVIS P3 Logistic Parks acquired new property in the Ústí Region – the P3 Lovosice

Cargo – and is now the renter of the entire park. P3 uses the surface area of 43 500 sq. m as its base, including offices.

The new park is situated not far from the container transport international terminal, to which it is directly connected by a railway siding. The existing P3 Lovosice Park, the purchase of which the company announced in August 2017 and for which it already found the first renter in November of the same year, is situated in the vicinity of P3 Lovosice Cargo. When the P3 Lovosice has been completed, P3 will own more than 168 000 sq. m in the region for warehousing and light production in its two parks. These industrial parks could create several hundred new jobs in the Ústí Region. Good availability of labour adds largely to the attractiveness of both P3 parks, considering the labour supply problems experienced by most companies on a long-term basis.

The parks are also easily accessible to workers, thanks to the nearby bus and railway stations.

Photo: Cushman & Wakefield archives

LOGISTICS

CZECH BUSINESS AND TRADE

The Brno Industrial Market is Experiencing a Relatively Great Boom The Brno industrial market is experiencing a relatively great boom. The new industrial development projects are a continuation of the recent boom in administrative building construction in Brno. The projects are prepared by important international firms as well as local developer groups. Important clients have chosen Brno as an integral part of regional expansion. A characteristic feature of the supply of commercial industrial property in the environs of the Czech Republic´s second largest city is the long-term dominance of the CTP developer company. The surface area of its parks in Brno is more than 780 000 sq. m. VGP, the second largest developer of national significance, controls only less than 32 000 sq. m.

According to the 108 AGENCY real estate consulting company, however, a change awaits Brno as regards industrial construction, in connection with the notified arrival of important developers led by Prologis

and Accolade. “Strengthening competition between the developer groups will create a highly competitive environment, which will bring benefit to both the existing and the new renters in the form of better leasing conditions,” says Marek Sýkora, 108 AGENCY´s consultant, specialising in the South Moravia Region. The American developer company, Prologis, is preparing a completely new logistic compound in the locality close to the D5 motorway near Syrovice. Its plans provide for the construction of three halls in the locality on a surface area of approximately 90 000 sq. m. Another logistic zone could arise in the vicinity of Brno Airport in connection with last year´s entry of the important Czech developer group, Accolade, into the Letiště Brno (Brno Airport) Company. Local developers, too, are showing interest in building new industrial parks. An example is the project of a new park in Rosice, where the construction of halls covering an area of up to 9 000 sq. m is to begin next year at the latest. The exclu-

sive representation of this project has been entrusted to 108 AGENCY. The new transactions indicate the growing interest of clients in Brno and its environs. For example, Tamda Foods is renting another unit in CTPark Brno, covering a surface area of 1 723 sq. m, in continuation of its expansion started by its announced construction of a complete distribution centre in Prague´s Hostivice district to cover an area of 20 000 sq. m. Other interesting transactions are the renting of space for Bravo Europa, which will be using an additional 6 700 sq. m in the M7 Ivančice Industrial Park, and the renting of another 1 800 sq. m of surface by Rental PRO in the Pozemstav Park. In year-on-year comparison, before the end of the first quarter of 2018, 108 AGENCY had already mediated 80 % of the volume of transactions mediated in the whole of 2017. Those transactions included, for example, the renting of 3 000 sq. m of surface area for the important DSV logistic company and 3 524 more sq. m of distribution space for the Rohlík.cz company.

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PR

New Machine from Varnsdorf TOS VARNSDORF a.s., a company located in the north of the Czech Republic, in the foothills of the Lužické hory Mountains, is this year marking 115 years since its founding. Its core programme is the development, manufacture, sale, and servicing of machine tools, specifically horizontal boring and milling machines, used for the machining of work pieces in sizes of from 1 cu. m with final production precision of parts at the level of hundredths of a millimetre.

WHR 13 Q machine

Each year, the company presents at least one novel item, usually during the Customer Days, which have become a popular and widely visited event and an opportunity to present products using interesting technologies in full operation. Three years ago, the company presented a big table-type machine, WRD 180/200 H, in full workload, fitted with hydrostatic guidance on all the linear axes. This principle enables the construction of the heaviest machines, for the time being with a 200 mm diameter of the working spindle. One year before, it presented its WHR 13 (Q) machine, derived from the best-selling WHN 13 machine, with the

difference being that it is fitted with a slide ram. In autumn 2015, the company´s light horizontal boring and milling machine, WRD 13 (Q), also derived from the above-mentioned WHR 13 (Q), had its world premiere at EMO, the largest machine tool trade show. Another new machine presented recently is the WHtec 130 machining centre, which is already in regular operation in the firm. Last year, a new generation WHT 110 C machining centre was presented at the following EMO trade show. This machine, too, is already in full operation. The concept of these new machining centres makes it possible to extend the offer also to other segments of the market, as it makes the use of carouseling possible.

The above-mentioned new machines actually comprise the entire range of manufactured machines, because the company´s focus is on table-type horizontal boring and milling machines, desk-type horizontal boring and milling machines, and horizontal machining centres.

Last year´s successful premiere of the new series of the WHT machining centres was followed by the presentation of another member of the new machine tool series, the WHT 130 C, which had its world premiere at the TOS Customer Day in June. This is a horizontal machine tool, suitable for the most demanding operations requiring precise boring, thread cutting, carouseling, and milling. Machines of the WHT series

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can be designed as machining centres with a wide range of auxiliary devices, such as automatic technological pallet changer, special accessories, auxiliary carousel tables and a number of other devices meeting the requirements of even the most demanding applications in sectors such as the aviation industry, the energy industry, earthworks, the oil industry, and general engineering.

These machines are suitable for both piece and serial production.

The new machine tool and machining centre series was developed on request from customers for modern production. After nearly six years of development, which comprised first the development of the spindle units, followed by the frame and finally the application of auxiliary devices, technically unique machines have appeared in the market, whose performance, multifunctionality, operational convenience and unique design signify unique value added for customers. The priorities of these machines are their performance, universal use, multifunctionality, easy operation and service, and integration of the Industry 4.0 principles.

The properties and capabilities of the new machining centres from Varnsdorf greatly increase the possibilities of metalworking.

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