Veliko Tarnovo Furniture Cluster. Bulgaria
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1 Veliko Tarnovo Furniture Cluster Bulgaria
2 Dear Business Partner, Have you ever considered expanding your business into Bulgaria? We ask as we re looking to extend our Bulgarian manufacturing facilities to accommodate a partnering furniture producer and would like to highlight the benefits you could enjoy with us. We made the move into Bulgaria 20 years ago and we want to share our success story with you giving you an overview of manufacturing there and highlighting the potential benefits you could also enjoy. We ll introduce you to the country and region surrounding our factory in Veliko Tarnovo and will hopefully persuade you that Bulgaria is an attractive location for those of you who are looking to widen the geographical reach of your company. For Kronospan, doing business in Bulgaria has been a highly positive experience. We have built the facilities and fully implemented our corporate principles and philosophy, which were easily adopted by local employees. This means that our Bulgarian facilities operates just like any other Kronospan factory across the globe. Our location in Veliko Tarnovo is a convenient position in the centre of Bulgaria and in prime position of all key road routes. It s this favorable strategic location - and Kronospan s innovative business proposition that would put any furniture producer ahead of the game. To make your move into Bulgaria as straightforward and financially sound as possible, we would help you in your start up process - sharing our experience and administrative support. Most importantly, we would build premises in accordance with your production needs and provide you with quality facilities that are ready for use. Further benefits of such close proximity to us as a manufacturer include near zero transportation costs and just in time delivery of input material so together we would help reduce our industry s impact on the environment. Here we also give you initiative to explore advantages of the competitive tax environment in Bulgaria, the strong network of free trade agreements and possibilities of low operating costs. Our experience tells us that Bulgaria is a very attractive location for furniture industry development. We hope that this information is of interest and sufficiently enticing to encourage you to take advantage of the business environment in Veliko Tarnovo with us. Sincerely, Nikolay Bankov Commercial Director Kronospan Bulgaria EOOD 1
3 Kronospan Excellence in Transforming Wood 120 years of manufacturing experience Our core activity is the manufacture of wood-based panel products (particleboard, MDF and OSB) and related value added products. Vertical integration enables Kronospan to lead the way in both cost and innovation. We have invested in developing a vertically integrated supply chain that allows us to constantly improve upon and perfect every aspect of our products. Focus on the European Market Kronospan has more than 40 production facilities and is the world leader in the manufacture of wood based panels. For the last 20 years our major projects have been undertaken in Eastern Europe and Russia. Wealth creation in the medium and long term Being privately owned means that we take a long term view rather than focusing on short term achievements. Decentralized organization Kronospan is made up of several manufacturing groups. This allows decision making by local management. As a result we can be close to our customers, our suppliers of goods and services and our people. This provides a strong platform for growth. The structure also allows us to ring fence political and economic risks where appropriate. With this we get more commitment, more ideas which allow individuals and the company to grow. Customer service We aim to be the most service-oriented supplier in our sector. Our extensive market coverage and wide product range give us a significant competitive advantage. At Kronospan, we are close to our customers and our locations are a maximum of 400 km or 8 hours by truck from our customers which is a key advantage resulting in reduced transport costs, hence Kronospan can offer the best package. Advanced technology We have pioneered many of our industry s key advances and will continue to lead product development and innovation in the future. Our production asset quality is also first class. We are here to lead, not to follow; using for example state-of-the-art filter technology. Cost leadership Although our structure is decentralised we benchmark our production sites and with the support of our technical shared service centre ensure that they remain efficient low cost producers. Local financing Financing is obtained at a local level and we look for long term banking relationships. Our aim is to keep foreign exchange risks under control and therefore require finance as much as possible locally. Central support We use shared services where it is important and only centralise when and where it makes sense. Environmental responsibility Our aim is to manufacture with the least environmental impact and the maximum raw material yield no waste. 2 3
4 Kronospan Worldwide Production Sites: 1 Lungötz, Austria 15 Zvolen, Slovakia 29 Brasov, Romania Furniture Clusters: 5 Szczecinek, Poland 2 Salzburg, Austria 16 Egorievsk, Russia 30 Kastamonu, Turkey 12 Mielec, Poland 3 Chirk, United Kingdom 17 Sebes, Romania 31 Smorgon, Belarus 17 Sebes, Romania usa CHINA 4 Sandebeck, Germany 18 Bjelovar, Croatia 32 Burgos, Spain 21 Anniston, USA 5 Szczecinek, Poland 19 Novovolynsk, Ukraine 33 Salas de los Infantes, Spain 23 Veliko Tarnovo, Bulgaria 6 Poznan, Poland 20 Mohacs, Hungary 34 Elektrogorsk, Russia 26 Szombathely, Hungary 7 Lampertswalde, Germany 21 Oxford, USA 35 Ufa, Russia 27 Lapovo, Serbia 8 Sanem, Luxembourg 22 Riga, Latvia 36 Mogilev, Belarus 31 Smorgon, Belarus 9 Jihlava, Czech Republic 23 Veliko Tarnovo, Bulgaria 37 Auxerre, France 34 Elektrogorsk, Russia 10 Pustków, Poland 24 Ponterosso, Italy 38 Le Creusot, France 11 Burgas, Bulgaria 25 Spremberg, Germany 39 Ryomgaard, Denmark 12 Mielec, Poland 26 Szombathely, Hungary 40 Shippenville, USA 13 Danyang, China 27 Lapovo, Serbia 14 Bischweier, Germany 28 Strzelce Opolskie, Poland Chemical Plants: 1 Chirk, United Kingdom 8 Sebes, Romania 2 Burgos, Spain 9 Mogilev, Belarus 3 Aarhus, Denmark 10 Egorievsk, Russia 4 Lampertswalde, Germany 11 Ufa, Russia 5 Szczecinek, Poland 12 Kastamonu, Turkey 6 Ostrava, Czech Republic 13 Oxford, USA 7 Strazske, Slovakia 14 Danyang, China Distribution Centres: 1 Wielsbeke, Belgium 9 Ulyanovsk, Russia 2 Tárnok, Hungary 10 Moscow, Russia 3 Sofia, Bulgaria 11 Yekaterinburg, Russia 4 Samara, Russia 12 Novosibirsk, Russia 5 Saint Petersburg, Russia 13 Rostov-on-Don, Russia 6 Kiev, Ukraine 14 Krasnodar, Russia 7 Dnepropetrovsk, Ukraine 15 Goole, United Kingdom 8 Penza, Russia 16 Chatham, United Kingdom Service Centres: 1 Teheran, Iran 2 Baku, Azerbaijan 3 Tbilisi, Georgia 4 Istanbul, Turkey Nicosia, Cyprus Kaunas, Lithuania Shanghai, China Ports and Own Ships: 1 Gandia, Spain 4 Constanta, Romania 2 Aarhus, Denmark Loyalty; Reliability; Simplicity; Fidelity 3 Szczecin, Poland
5 Kronospan in the region South East Europe Kronospan already enjoys prominence in the Balkans and is the regional market leader in the wood-based panels industry. As such, we work with all major furniture producers which are predominantly exportorientated - as well as key distributors who supply small furniture companies. SLOVENIA Ljubljana Zagreb Budapest Tárnok Szombathely HUNGARY Mohacs Bjelovar CROATIA SERBIA Sebes ROMANIA Brasov MOLDOVA BOSNIA Sarjaevo Belgrade Lapovo Bucharest VELIKO TARNOVO, BULGARIA MONTENEGRO KOSOVO Podgorica Tirana Prishtina Skopje MACEDONIA Sofia BULGARIA Veliko Tarnovo Burgas ALBANIA BURGAS, BULGARIA SOFIA, BULGARIA GREECE Athens BRASOV, ROMANIA SEBES, ROMANIA LAPOVO, SERBIA MOHACS, HUNGARY SZOMBATHELY, HUNGARY BJELOVAR, CROATIA 6 7
6 Kronospan in Bulgaria Veliko Tarnovo - Our Strategic Location Kronospan Bulgaria is the leading supplier of wood based materials and accessories for the furniture industries in Bulgaria and the region. We have traditions in supplying the most prominent and well established furniture companies and we cooperate with a net of distributors throughout the country and abroad. Kronospan is active in the country since 1997 and has operations in three sites at the present: production sites in Burgas (1997) and Veliko Tarnovo (2006) logistic centre in Sofia (2009) New investments Kronospan plans to invest around 150 million in the next three years for its expansion in Bulgaria. Kronospan already started with new investments in the production facilities in Veliko Tarnovo which is strategically located in north-central Bulgaria and is the administrative centre of Veliko Tarnovo Province. The project includes installation of a new line for production of particle board (2016), followed by lamination (2017) and a new MDF line (2018). Serbia Vidin Sofia Ravno Pole Pleven Bulgaria Romania Stara Zagora Ruse VELIKO TARNOVO Burgas Varna 1997 Kronospan Bulgaria EOOD was officially incorporated. Kronospan commenced its opearations in Burgas by acquiring a local production facility with the following capacity as at today: PB line m 3 per annum OSB line m 3 per annum Melamine Faced PB - 8 Mio m 2 per annum 2006 Kronospan commenced its opearations in Veliko Tarnovo by acquiring a local production facility. PB line capacity m Kronospan finalized a new investment in a Logistic center in Sofia with convenient road and railway connections In Veliko Tarnovo Kronospan started a new investment in a state-of-the-art continuous PB line, increasing the production capacity to m 3 per annum Additionally will be installed 2 new melamine facing lines in Veliko Tarnovo with total capacity of 25 Mio m 2. Macedonia Greece Plovdiv Haskovo Turkey 2018 Kronospan is considering to invest in a new MDF production line with annual capacity of m 3. Today Kronospan Bulgaria EOOD directly employs 400 people and creates more than external jobs. 8 9
7 Product portfolio Kronospan s product portfolio consists of high quality woodbased panels - PB, MDF/HDF, OSB and associated value added products, paper, chemicals and laminate flooring. Kronospan supplies its products to the furniture and construction industry, specialist retail stores and the DIY business
8 A World of Design Possibilities MF Particleboard MF MDF Veneered Particleboard Veneered MDF Gloss Boards Mirror Gloss Boards with multilayer paper Composite Elements Acrylic Gloss HPL Lacquerd HDF (LHDF) Compact Interior Worktops Splashbacks Finger-joint panels Edging 12 13
9 A World of Advanced Building Possibilities Particleboard P2 Particleboard P3/P5 OSB 2/3/4 Superfinish OSB Firestop Particleboard FR MDF OSB Airstop OSB Reflex MDF MR MDF FR OSB Film Proform HDF DFP Betonyp 14 15
10 A New Generation of Hi-definition Architectural Facades Flooring Wall Panels Accessories 16 17
11 Kronospan in Bulgaria Kronospan has been present in the Bulgarian market for many years. This was originally through trading and distribution but during the last 19 years we have been manufacturing at our modern production facility in Burgas and Veliko Tarnovo. Today Kronospan is the leading wood-based panel producer in Bulgaria. We offer an excellent product, decor range and the very highest levels of customer service. We are able to produce E-LE (CARB II) certificated products. We ensure that all employees and suppliers adhere to ethical business practices. We acquire goods, commodities and materials from domestic suppliers
12 Why invest in Bulgaria? Geostrategic location Bulgaria is located in Southeastern Europe. It benefits from excellent water, road and rail transport connections to Western Europe and Turkey. European routes E 70 and E 85 which provide easy access throughout Western Europe, Turkey and the Near East meet in central Bulgaria. Copenhagen 1680km Oslo 2274 km Stockholm 2324 km Klaipėda 1696 km Helsinki 2304 km Tallinn 2217 km Riga 1909 km Vilnius 1696 km E 70 E 85 Dublin 2703 km London 1982 km Brussels 1672 km Amsterdam 1721 km Frankfurt 1287 km Hamburg 1547 km Berlin 1225 km Prague 896 km Warsaw 828 km Minsk 1513 km Kiev 979 km Key facts Official Name Form of State Republic of Bulgaria Democratic Republic Paris 1766 km Zurich 1175 km Stuttgart 1155 km Milan 1009 km Munich 930 km Salzburg 797 km Ljubljana 797 km Vienna 612 km Graz 575 km Zagreb 390 km Bratislava 578 km Budapest 384 km Belgrade 110 km Bucharest 641 km Chisinau 1057 km Area km ² Population 7.36 million Official Language Bulgarian Main Relligion Orthodox Christian Madrid 2586 km Marseille 1588 km Rome 1289 km Sarajevo 291 km Skopje Tirana 423 km 612 km Sofia 403 km VELIKO TARNOVO Alexandroupoli 630 km Istanbul 980 km Capital City Currency GDP (2014) Sofia: people Bulgarian Lev (BGN) 42 billion Lisbon 3142 km Igoumenitsa 924 km Athens 1132 km GDP pc (2014)
13 Why invest in Bulgaria? Inward Foreign Direct Investment In recent years, the Bulgarian economy experienced growth due to strong foreign investments and continuous improvement of its business environment. In fact, since 1996, Bulgaria has attracted more than 43 billion of inward foreign direct investment. 43 billion Inward FDI in Bulgaria Bulgaria is one of the best EU countries to invest in. Stable macroeconomic indicators are showing that Bulgaria has consistent growth and improving credit rating of the country. One of the lowest corporate taxes (10%) in EU, financial stability with currency board, strategic location and direct access to key market regions, are some of the advantages, which investment in Bulgaria provides to investors. Inward FDI by Industrials ( ) Industry Investment Value ( m) Real Estate Finance Manufacturing Trade Energy Construction Telecom Other Strategic location Located at the heart of the Balkans, Bulgaria is a strategic logistics hub. Ease of transportation of cargo is provided by: Five Pan-European corridors (IV, VII, VII, XI, X), which pass through the country Transport program TRACECA, which connects Europe with Caucasian and Central Asian region Four major airports: Sofia, Plovdiv, Bourgas and Varna Two main seaports: Varna and Bourgas Numerous ports at the Danube River Potential market Due to its location Bulgaria provides direct access to the following key markets: European Union - zero tariff market with population of 500 million CIS still not well penetrated market with a high potential Turkey - zero tariff market of near 80 million population Middle East a market with high purchasing power North African market Source: Bulgarian National Bank Political and business stability Bulgaria is strategically located and offers a combination of political and macroeconomic stability and incentives for doing business Stable parliamentary democracy; EU, NATO and WTO member Bulgaria s currency is fixed to the Euro under a currency board arrangement, pegging the Bulgarian lev to the euro at the level of 1.96 EU funding more than 8 bn in EU funds over the next years Bulgaria has one of the lowest government debts in the European Union (18.9 % of GDP) and one of the lowest budget deficits (-1.5%) as of 2013 Human resources Bulgaria has one of the most competitive costs of labor in Central and Eastern Europe and average monthly salary in Bulgaria is 450 (2015). Work force is well educated, highly skilled and multilingual 62.2 % of the total population is in working age (appr. 4.6 million) students annually graduate from 51 universities 98% of the high school students study a foreign language (usually English) and 73% study a second language (mainly German, French, Spanish, Russian) 94% of the schools have Internet access 22 23
14 Business environment Low cost of doing business Bulgaria has the most favourable tax regime in Europe. Corporate income tax is 10% flat rate, the lowest in the EU. Personal income tax is 10%, flat rate. Industries in highunemployment areas are granted 0% tax rate There is a 2-year VAT exemption for imports of equipment for investment projects over 5 million, creating at least 50 jobs 5% withholding tax on dividends and liquidation quotas (0% for EU tax residents) Favorable office rents and low cost of utilities. Bulgarian cost of electricity for industrial users is 70% of the European average Financial support for investors The Bulgarian government offers the following incentives for investors: Institutional support Financial grants of up to 50% for education and R&D projects and up to 10% for manufacturing projects Reimbursement of labor costs paid by the employer Support is applicable for new projects and the ammount of the support depends on: the number of new staff employed by the project the size of the company / investor and value of the investment One of the most competitive costs in Europe Electricity /kwh Gas Water /kwh 1.09 /1m 3 Cost of Labor Salary (Min.) Salary (Avg.) INVESTMENT CRITERIA Industry Priority Class A Class B Manufacturing Industry 50 million or 25 million and 200 working places Manufacturing Industry 5 million or 2 million and 150 working places Manufacturing Industry 2.5 million or 1 million and 100 working places State support The Bulgarian legislation introduces a system of promotion measures for initial investments in tangible and intangible fixed assets and creating new employment linked thereto, according to the legislation of EU. Investments must be related to the following sectors: Manufacturing Research & Development Education Healthcare High-tech services Warehousing and logistics The government incentives for: Class B Investment Projects Class A Investment Projects Priority Investment Projects GOVERNMENT INCENTIVES Include all the incentives for Class A and B Institutional Support Financial grants of up to 50% for education and R&D projects and up to 10% for manufacturing projects State tax exemption for changing the land status Acquisition of real estate private state or private municipal property without a tender and at a price lower than the market, but not lower than the tax assessment of the property Establishment of public-private partnerships with municipalities, universities, other organizations from the academic society and etc. Include all the Incentives for Class B Consulting and individual administrative services. Investors will be able to authorize Agency officials to obtain any documents for implementation of the corresponding investment project. Financial support for construction of technical infrastructure elements to the borders of the project site, needed for implementation of one or more investment projects. Information services Shortened administrative procedures: the central and local government authorities will provide administrative services shortened with one-third of the time period established by the law Financial support of up to 25% for the vocational training for obtaining professional qualifications. Reimbursement of labor costs paid by the employer. On the request of certified investor the corresponding authorities may transfer ownership rights or establish a limited ownership right over real estate (private state or private municipal property) without a tender. Source: Invest Bulgaria Agency
15 Our business proposition Veliko Tarnovo Furniture Cluster We are located in the Veliko Tarnovo industrial zone - a convenient position in the centre of Bulgaria - providing great access to all key roads. It s this strategic location, complemented by Kronospan s innovative business proposition, that would give any furniture producer the competitive edge. Kronospan owns m 2 of land in Veliko Tarnovo with well-developped technical infrastructure. Additionally Kronospan plans to provide more than m 2 area to build warehouses and manufacturing facilities to meet the needs of the potential partners - furniture producers. E 70 E 75 Romania We offer at your disposal more than m 2 potential area where the production facility could be built according to the needs of the potential partner furniture producer Utilities to site gas supply electricity supply water supply Ruse Railway connection Serbia Sofia Ravno Pole Pleven Bulgaria Stara Zagora Plovdiv VELIKO TARNOVO Burgas Varna The location is easily accessible because of internal railway connection to the train station in Veliko Tarnovo. Veliko Tarnovo is positioned on the major railway line Stara Zagora - Ruse and is 15 km away from the biggest railway station in northern Bulgaria (Gorna Oryahovitsa). Easy access 5 km to the Highway 10 km to Gorna Oryahovitsa 220 km 223 km to Sofia to Varna 215 km 199 km to Burgas to Bucharest 400 km to Constanza 470 km to Istanbul Macedonia Greece Haskovo Turkey Human resources The Municipality of Veliko Tarnovo operating 22 kindergartens, 13 primary schools, 4 secondary schools, 4 vocational school, 6 public vocational schools in the field - tourism, economy, light industry, electronics, construction, 1 private professionals High School, 2 special (auxiliary ) schools, 1 University with more than students in over 60 specialties. Sofia National road Varna, Ruse, Bucharest Veliko Tarnovo Furniture Cluster Railway 26 27
16 Business support Kronospan is willing to share its positive experience with potential investors/ customers and is prepared to support new investments. We have been operating in Bulgaria, for 19 years and have a thorough understanding of the Bulgarian market. We want to facilitate growth and development of our industry alongside furniture manufacturers in Bulgaria - due to our enviable geographical trading location and relationships with EU, non-eu and SEE countries. The Veliko Tarnovo furniture cluster project aims to create an optimal and sustainable environment for the production of furniture. Access to local materials enables Kronospan to produce raw and melaminefaced particleboard at competitive cost and to guarantee a secure and timely delivery of goods. Benefit from the location Close to the supply of materials Low transport costs Less working capital Just in time delivery Low operating costs possibilities Competitive tax environment Young and educated staff 28 29
17 Kronospan support We would like to share our location and extend our premises in order to provide our partners with built area to install furniture production facilities. The required infrastructure is already in place: Our location is equipped with high voltage power supply, gas supply, adequate water supply and waste water treatment facilities. Separate meters will be provided for the furniture factory. Property tax and local fees are administrated by Kronospan. Close proximity between the two manufacturing sites results in near zero transportation costs. Just in time delivery of raw and melamine-faced particleboard will result in no stock which eliminates the burden on cash flow. Kronospan will keep the agreed minimum stock levels. We would provide you with access to our extensive product portfolio. You could benefit from technical support in material processing on site. Our engineers are experienced in both furniture production technology and equipment whether that s mechanical, electrical, automation software or robotics. Kronospan will support you with administrative issues, including registration of a legal entity and help to liaise with tax authorities, the local register and banks. We could also provide support with accounting, tax and payroll regulations as well as reconciliation of local accounting with internal reporting. We will assist you with your recruitment process with our HR specialists and database. You could receive support from the on-site Kronospan design and marketing department
18 We look forward to welcoming you to the Veliko Tarnovo Furniture Cluster, Bulgaria and to the many future successes we will share! For further information please contact: Nikolay Bankov Commercial Director T M nbankov@kronospan.bg Kronospan Bulgaria EOOD Severozapadna Promishlena Zona 8000 Burgas Bulgaria furniture-cluster.com Subject to modifications and errors
19 furniture-cluster.com kronospan-worldwide.com kronospan-express.com krono-original.com Kronospan Bulgaria EOOD Severozapadna Promishlena Zona 8000 Burgas Bulgaria T F sales@kronospan.bg KD110 FCVT EN 03/2017
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