Franco Del Fabbro, CEO of Kraft Foods Bulgaria: There is Never a Dull Moment in Bulgaria!
Interview with Franco Del Fabbro, CEO of Kraft Foods Bulgaria
Kraft Foods Bulgaria opened recently its expanded chocolate factory in the Bulgarian town of Svoge. What is the amount of the investment there and what is its significance?
Kraft Foods invеsted BGN 40 million into the enlarging of the production capacities in the chocolate factory in Svoge, thus confirming its strategic interest in Bulgaria. With the investment, which is the largest investment of this type in Southeast Europe for the company, we are strongly positioned to become a manufacturing hub of the company for the Balkans. The new technological lines and solution will provide opportunity for production of a wide range of chocolate articles from Bulgarians and for Bulgarians, among which are favorite brands as Milka, Suchard, and the traditional Bulgarian Svoge, Sezoni and Moreni. The two new production lines are already in operation, third one will start operations in December and they will increase the production of chocolate to 1 000 000 pieces per day, supplying the demand on the Bulgarian market and Balkan countries.
With the recent enlargement we have created approximately 120 new jobs in our premises and we estimate that another 200 jobs more will be created in the circle of business that services our factories. These investments give us the capacity to meet the increase in demand that is projected in the future years and will allow us to introduce new products and flavors to strengthen our brands position among the most loved products by Bulgarian consumers.
The decision for the investment was made after the closure of a Kraft Foods plant in the Romanian town of Brasov. Is this a hopeful sign that Bulgaria has certain advantages to its northern neighbor in terms of business environment?
I think it would be improper to take one decision from one company and generalize it to the whole business. Our decision was made taking into account a number of factors related both to the region, but also to our internal needs, plans and businesses. So a number of very specific elements have certainly influenced our decision in one way. Another company with different needs might have taken a different direction. Countries in this area have similar advantages (high growth potential, low labour costs, low taxation, etc), and similar challenges (absorption of EU funds, rule of law, infrastructure), so the difference in the long run will be made by how successful they are in addressing these issues. It is important to start immediately and decisively, as the results will take time to show up. If this happens, then Bulgaria may end up with an even bigger advantage over other countries.
Do you plan more investments? How will they change the portfolio of the company? Will it be export-oriented?
At the moment we are focused in finalizing the current, big investment and ensuring that the start up goes as per plan. We have sufficient capacity to cover a substantial increase in demand, so for the moment we do not plan any further big investment, other than regular maintenance and upgrade.
Where does Bulgaria’s greatest potential lie for a company such as Kraft Foods?
Bulgaria is a EU member state, it has comparably low labour costs and at the same time it is geographically conveniently located in equal distance from a lot of countries in the region. This combination gives the country certain advantages which in my opinion have not been fully exploited yet.
You were the only foreigner among the finalists in the Manager of the Year contest this year. What does it take to be a good manager? What does it take to be a successful investor in Bulgaria?
A trainer is as good as the team he has. It’s the team that plays and wins the match, not the coach. I consider myself as a young manager that has still a lot to learn and I have to thank my team for keeping up with me in my journey. I hope I am helping them to grow as much as they helped me.
How doing business in Bulgaria is different from that in the older European Union member states?
I would say it is very different: if things go up, they go up big time, if they go down, they go down big time as well, never a dull moment! I would say it is much more exciting and rewarding to work in emerging economies vs the old EU. Things can move much faster and results are much more visible. People are eager to learn and ready to take up challenges vs defending the status quo.
Did the company you head feel the impact of the global crisis? What is your forecast for the business environment in Bulgaria for the rest of this year and 2010?
A slight decrease in consumption is detected in the first months of 2009 considering the tough economic times for consumers in Bulgaria. I would not speak about a dramatic change as Kraft Foods Bulgaria is a company with strong financial position, a portfolio of brands well connected to the hearts of consumers and a great team of people and distributors that have made this company what it is over the past years. Our management team started early to get ready, so no panic decisions had to be made. Sooner or later the crisis will pass, we will have learned a lesson or two and will be able to enjoy what we have planted during the tough times. As for 2010, I personally do not foresee a quick rebound. The economy has been hit hard and a lot of the speculation that was boosting the economy in the past years has come to a dramatic halt. People and companies have debt that needs to be paid back and personal income has been declining. A lot will depend on the actions that the government is taking to sustain the economy and provide new stimulus, but also on the willingness of banks to support their customers and continue to provide credit to consumers and companies to keep the economy going and get ready for the recovery.
Which are the major obstacles that impede Bulgaria's economic progress?
As I mentioned earlier, basic infrastructure is a key requirement for any successful economy: modern motorways to allow fast movement of goods, educated workforce to entice value added investors, reduction of bureaucracy to make doing business easy and efficient, a clear and reliable judicial system that guarantees companies and individuals about the proper application of the rule of law and so on. I do not think I am saying anything special or new. The current government seems to have taken some decisive actions in certain areas, I can only wish them to continue along this path and turn all their good intentions into swift action.
Is the judicial system a hindrance for foreign investors?
I would not define it a hindrance, but it is certainly an area where uncertainty about the consistent application of the rule of law can scare off some investors or make life more difficult and more expensive than it should be.
Would more authority at the local level mean making the environment friendlier towards small and medium entrepreneurs and enterprises?
I am not so sure. Too much autonomy at local level could mean ending up in hundreds of different regulations and interpretations of the same law and make life even more difficult. Bulgaria is a relatively small and uniform country, so it should not be particularly hard to have simple but common rules that can be applied in the same way across the whole country.
What do you like best in Bulgaria?
Its people, their passion and willingness to learn. There is no match in the old EU.
Can you describe Bulgaria in three words?
A vineyard, needing both some harsh work and a lot of tender care so that it can produce top quality wine.
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