Czech Business and Trade 2/2011

http://www.floowie.com/cs/cti/cbt-1-web/

1-2 2011 PUBLIC CONTRACTS INTHE CZECH REPUBLIC CZECH ECONOMY LEAVES RECESSION BEHIND THE REGION OF SOUTH BOHEMIA CHOOSETHE BEST PRINTING SHOP PERFECT PACKAGING:ATTRACTIVE AND ENVIRONMENTALLY FRIENDLY 1-2 2011 METALLURGY,FOUNDRYINDUSTRY, ANDSTEELCONSTRUCTIONS SupplementofCzechBusinessandTrade

http://www.floowie.com/cs/cti/cbt-1-web/

www.mip.cz Check in your dreams with us attractive environment • prestigious presentation forms • international impact

http://www.floowie.com/cs/cti/cbt-1-web/

http://www.floowie.com/cs/cti/cbt-1-web/

| 4 I N T R O D U C T I O N During 2010, the Czech National Bank upgraded its forecast for the Czech economy over the original es- timates. In 2011, on the other hand, the Czech economic performance is assumed to be worse. How, then, will the Czech economy eventually develop and what can we expect? These were some of the questions we put to the Governor of the Czech National Bank, Miroslav Singer. What economic development can we thus expect in the Czech Republic? As we have said, experts expect a slow- down.What are the reasons for their assumptions and when can growth be expected to recover again? Miroslav Singer Questions of the Month for Miroslav Singer, Governor of the Czech National Bank Could you present the development of the Czech economy to foreign read- ers in greater detail, and say why the economy will slow down and when can a recovery of growth be expected? The growth in 2010 was somewhat faster than we originally expected. In 2010 as a whole, real GDP rose by 2. 3% according to the flash estimate, whereas one year ago we had expected just 1.4%. Investment in inventories was the biggest contributor to annual GDP growth in recent quarters. Net exports and household consumption (frankly speaking: the latter one for us quite surprisingly) made some positive contribu- tion to the economic growth as well. Turning to the future, the GDP growth rate will likely slow to 1.6% in 2011, due mainly to fiscal consolidation, which will manifest itself in an expected decline in govern- ment consumption and a slowdown in household consumption. However, the deceleration of GDP growth will also be caused by the fading effect of restocking and current high investments. A more ro- bust and durable recovery in GDP growth can be expected in 2012, when all expendi- ture components of GDP are expected to recover, above all household consumption and exports. For 2012 as a whole, real GDP growth will increase to 3%. At the moment the CNB wants to ensure cheap loans for firms and households through low rates, to get the economy rolling again. How do you expect the ba- sic interest rate to develop and to impact later, and when can a major change be expected? Using our “standard” central banking jar- gon, we describe the current outlook for interest rates as follows: Consistent with our new forecast is the stability of market interest rates close to their current levels initially, followed by a gradual rise in rates as from the end of 2011. The low interest rate level is a result of, among other things, the effects of the above-mentioned fiscal consolidation in 2011, the appreciated ex- change rate and the still low foreign inter- est rates over the forecast horizon. Given the stable outlook for monetary- policy interest rates, no dramatic changes in loan interest rates can be expected. Some modest downward trend could re- sult from a decline in the risk premium in the money market, as well as in the client risk premia charged by banks. How do you expect the exchange rate of the Czech crown to develop vis-à-vis the Euro and the Dollar, and what will its impact be on Czech exports? We expect that the exchange rate (CZK/EUR) will continue to appreciate gradually over the forecast horizon. This is due, above all, to a low outlook for foreign interest rates, which will result in a posi- tive interest rate differential over most of the forecast period. The appreciation of the Czech crown will also be affected by a positive outlook for the balance of pay- ments in 2011 and a resumed real conver- gence process as from 2012. The expected exchange rate path should not hurt export performance, which will be determined mainly by future foreign demand develop- ments. However, one should keep in mind that the exchange rate tends to fluctuate wildly over time. What do you think about the situation in general – is the crisis over, can we Photo:TheCzechNationalBankarchives

http://www.floowie.com/cs/cti/cbt-1-web/

5 | C Z E C H B U S I N E S S A N D T R A D E expect growth or perhaps a further downturn? Our baseline scenario is that the economy has bottomed out from the recession, and even though we forecast a slowdown of economic growth for 2011, this is not an outright double dip. Nevertheless, the uncertainties are still large, and recently increasing due to the actions of fiscal and monetary authorities. It is difficult to judge whether the global economy has already overcome all the underlying weaknesses accumulated before the crisis. It is also not clear how much foreign growth will be af- fected by fiscal consolidation. An issue related to the present develop- ment is the adoption of the Euro in the Czech Republic. Foreign exporters have recently exerted quite strong pressure for Euro adoption. What is your opinion? The Czech economy is not sufficiently prepared for Euro adoption. The main bar- rier lies in high budget deficits, and unless those are corrected in a sustainable way, a debate on Euro adoption is worthless. At the same time, our own independent cur- rency with its floating exchange rate has proved to be very useful during the crisis, as it has served as a (partial) buffer against shocks coming from abroad. Moreover, the Euro area is now facing its own problems, which need to be resolved before we de- cide to enter. How would you present the Czech banking system and its stability, as- sets, reserves? How will the opt-out from a bank tax, negotiated by Prime Minister Jan Fischer at the European Council in Brussels, impact on Czech banks? The Czech banking sector has been charac- terised in recent years by high stability and good profitability, driven mainly by interest income. Banking service providers in the Czech Republic are almost exclusively for- eign-owned. The large majority of them (in terms of balance sheet assets) are subsidi- aries of internationally active banks based in the EU. Activities in the field of interna- tional cooperation are therefore highly im- portant to the Czech National Bank, both in defining the competencies of home and host supervisory authorities and in harmo- nising regulations in the single European market. A high savings ratio is a crucial factor for the stability of domestic banks. It guaran- tees that banks have sufficient local re- sources of liquidity for their other activities. The Czech banking sector has an interna- tional net creditor – not debtor – position, so it is not dependent in any way on the funds of parent banking groups. In contrast to many other countries, it is not depend- ent on liquidity from the central bank either. On the contrary, the central bank has been constantly absorbing excess liquidity from the market through its operations. Domestic banks focus on providing tradi- tional banking services. This is one reason why the global financial crisis has had very limited direct effects on the local sector. Owing to the subsequent decline in eco- nomic activity, however, a second-round effect can be observed in a rise in non-per- forming loans (both corporate and house- hold). In the event of transmission of risks from the real economy, the banking sector might also be affected by risks arising from, for example, the concentration of indus- try into selected branches or by a more pronounced fall in property prices on the market. Nevertheless, domestic banks still have sufficient capital and their capital ad- equacy ratio has increased by several per- centage points despite the changeover to the new Basel II rules in recent years. We consider the introduction of a new bank tax at the European level inappro- priate, as it would negatively impact not only the banking sector but also lending to the real economy. As the relative size of the financial services sector and its main institutions is not very large, relative to the budget or GDP, we do not have the “too big to fail“ problem. Therefore, we see no need to constrain growth of financial services and the institutions providing them. In addition, such a tax would most probably be transferred to clients. The Czech National Bank would like to avoid this, using an opt-out negotiated by the Prime Minister. Financial stability and pre- vention of problems in the sector should be achieved through standard prudential requirements, appropriate risk manage- ment, and careful supervision by compe- tent national authorities. Facade of the Czech National Bank

http://www.floowie.com/cs/cti/cbt-1-web/

| 6| 6 E C O N O M I C P O L I C Y The strong recession affecting the economy at the close of 2008 and beginning of 2009 as a result of a sharp drop in foreign demand is now over. In the third quarter, the economy displayed an increase of 3%, attributable especially to the manufacturing industry. Czech Economy: Recession Blown Over, Return of Rapid Growth Still Far Off, However A period of gradual growth has en- sued, thanks to which the economy is slowly but surely diminishing the former drop. Even so, it will take two to three years before the economy reaches at least the levels attained in 2008. The main merit for restoring the growth of the Czech economy goes to the restored demand in Western Europe supported by large-scale stimulation packages in large EU coun- tries and the general stocking of supplies. It is probably not necessary to go into great detail on the positive impact of the German car scrap scheme on Czech au- tomobile industry production and the re- lated industry sectors. Most governmental stimulation measures have of course end- ed or are ending and Europe now faces a period of budgetary saving. The Czech economy is in fact copying the trend of the German economy, which in 2010 did surprisingly well. Exports to Germany and to other EU countries have enabled the Czech economy a return to growth and have helped a great deal of branches and sectors overcome the im- aginary rock bottom. The output of the entire industry has increased in the first three quarters by 9.4%; a strong increase has been displayed in particular by the electrical and automobile industry sectors, the production of which is growing by 28.5% and 19.8% respectively. A gradual return to pre-crisis levels is occurring in other important sectors of Czech industry, namely metal production and mechanical engineering, which suffered especially as a result of a rapid fall of investment activ- ity both at home and abroad. Certain serv- ice sectors are also returning to the path of growth, for instance transport (+7.5%) or IT (+15%). On the other hand, the con- struction industry continues to display a very meagre performance. It is reacting to the economic recession with a delay of roughly one year. Surface construc- tion is dropping in consequence of the strong downturn of the real-estate market (drop of 11% during the first 9 months of the year), the activity of the engineering construction sector is also waning (-6.1%) alongside the drop in public sector con- tracts due to cuts in public sector spend- ing. In spite of this, the economy has now overcome the worst. POSITIVE ECONOMIC DEVELOPMENT The revival of the economy has been directly transposed into foreign-trade results. During the first nine months of 2010, exports have already increased by more than 16% and the balance of trade surplus has reached almost CZK 100 bil- lion. Although this is less than in the same period of 2009, given the higher prices of energy commodities and the current mas- sive import of solar panels supported by a generous subsidy policy, these numbers are very positive. The credit for the posi- tive trend in exports goes especially to the export of passenger vehicles, which was fuelled by the car scrap scheme gradually introduced in several countries of Europe MAIN INDICATORS FOR THE CZECH REPUBLIC 2005 2006 2007 2008 2009 2010 (estimate) GDP year-on-year % 6.3 6.8 6.1 2.5 -4.1 1.7 Industrial production year-on-year % 3.9 8.3 10.6 -1.8 -13.6 6.5 Production in construction year-on-year % 5.2 6.0 7.1 0.0 -0.9 -4.5 Retail revenue year-on-year % 6.9 10.8 10.0 2.7 -4.7 0.9 Inflation rate average % 1.9 2.5 2.8 6.3 1.0 1.5 Unemployment rate end of period % 8.9 7.7 6.0 6.0 9.2 9.1 Average real wage year-on-year % 3.0 4.0 4.3 1.9 3.0 0.7 PRIBOR 3M average % 2.0 2.3 3.1 4.0 2.2 1.3 CZK/EUR average 29.8 28.3 27.8 24.9 26.4 25.3 Balance of payments current account deficit % GDP -1.3 -2.4 -3.2 -0.6 -1.0 -2.2 Public budget deficit % GDP -3.6 -2.6 -0.7 -2.7 -5.9 -5.5 Source: Czech Statistical Office. Czech National Bank. ČSOB estimate Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

7 | C Z E C H B U S I N E S S A N D T R A D E including Russia. Furthermore, the intro- duction of production by the Hyundai car maker undoubtedly played a role, too. The export of automobiles has been suc- cessful in recent months, despite falling car sales in Europe and despite the fact the car scrap scheme is at its end almost everywhere now. Contracts for car makers continue to increase, which is positive.The entire machine and transport means sec- tor with its traditionally dominant share in Czech exports is displaying for the time being an increase of almost 17%. FALLING UNEMPLOYMENT Restored economic growth is gradually beginning to impact upon the Czech la- bour market. At the time of the impending recession, domestic companies respond- ed very quickly by cutting back employee numbers in reaction to the fall in business. The first in line to be affected were foreign workers employed by agencies, although core employees were not spared either. This resulted in an unprecedented sharp increase in the unemployment rate to al- most 10% and a rapid vanishing of job va- cancies. If in 2008 there was an average of 140 thousand available vacancies on offer, in 2010 there are not even 40 thousand. In theory, there are up to 14 job seekers ap- plying for each open vacancy. Of course these are just average figures, so the situ- ation in individual regions varies largely. The situation on the labour market in 2010 has now stabilised and unemployment has in fact somewhat decreased thanks to new business. Taking into account the development on the Czech labour market over the last two years, it is clear how flex- ible the domestic labour market in fact is. This is confirmed not only by the devel- opment of employment, but also by the development of salaries, which (in median terms) were dropping at the time of the recession. CAUTIOUS DOMESTIC DEMAND Although the economy has returned to the path of growth, domestic demand remains subdued. There is a very gradual growth in household consumption with retail spending (at +1% over the first three quarters), significantly curbing any inflation pressures. Year-on-year inflation has returned to the level targeted by the Czech National Bank, the main credit for this, however, going to administrative measures, specifically the increase of re- gulated prices and indirect taxes and the prices of foodstuffs. Demand inflation is now a thing of the distant past and most probably a thing of the very distant future. Weak demand is thus holding back prices not only in shops, but also in the indus- try and in construction. In view of the low inflation, the Central Bank – similarly to the American Fed and the ECB – can thus maintain interest rates at a record low level for many months to come. On the other hand, monetary policy is only able to create favourable conditions for econ- omic growth, it cannot stimulate growth directly. WEAKENING OF CROWN The weakening of the Czech currency has also had a positive influence on the econ- omic crisis. The exchange rate at the be- ginning of 2009 crossed for the first time in a long period beyond the level of CZK 28 per EUR. The reason for the plummeting of the Crown was not so much the reces- sion, but first and foremost the dwindling interest of foreign investors in invest- ments in risk capital. Other currencies in the region faced a similar problem. How- ever, the Crown returned to the path of growth in a short time and since the sum- mer of 2010 it has remained below the 25 CZK per EUR level. Once again, the long- term strengthening of the Crown has pre- vailed. The Central Bank reckons with this trend and predicts the Crown will trade at around 24 CZK/EUR towards the end of 2011. UNBALANCED PUBLIC FINANCES Economic recession fully revealed the long-term problem of the Czech economy, which is unbalanced public finances. Pre- vious rapid economic growth had largely covered up structural budget deficits and there was thus no acute need to deal with them. The economic downturn, however, has brought with it a significant fallout in the strongest of taxes – in particular in- come taxes and so-called insurance pre- miums – and the deficit of the entire pub- lic budget has thus doubled only in 2009 to almost 6 % of GDP. Though in compar- ison with other EU countries this is not an exceptionally bad figure, the currently incorporated structural (not only cyclical) deficit has already warranted first steps towards stabilisation. This concerns both expenditure as well as income. In 2010, for instance, both VAT rates were raised by one percentage point. The remedy of public finances will continue in 2011.

http://www.floowie.com/cs/cti/cbt-1-web/

| 8 E C O N O M I C P O L I C Y Certain mandatory expenditures such as social security benefits and salaries in the public sector will be limited. However, fundamental reforms indispensable for the Czech Republic in the near future (es- pecially the pension system reform) are yet to come into being. UNSURE OUTLOOK FOR 2011 Cut-backs in public spending, however, will be one of the main factors to limit the growth of the Czech economy in 2011. Furthermore, we cannot really reckon with the growth of household consumption or with a restored investment boom. The cycle of stocking supplies in Europe will come to an end. The economic outlook for 2011 is thus marked by a high degree of uncertainty. The Central Bank has in its latest prognosis reduced the expected rate of growth of the Czech economy from the original 1.8% to the present 1.2% in the light of domestic and foreign fiscal cuts. Stimulation measures in Europe are almost at their end, also as a consequence of the persisting debt crisis in certain countries of the Euro zone, which calls for a more cautious fiscal policy. Europe is most prob- ably in store for a slowing of economic growth, especially since the performance of the Euro zone’s strongest economy in the year 2010 was in fact surprisingly bet- ter than originally expected. On the other hand, the risk of the W scenario, whether for the world economy or just for the Eu- ropean scene, is now undoubtedly lesser than half a year ago. FOREIGN DEVELOPMENTS INFLUENCE CZECH PERFORMANCE The outlook of the Czech economy for 2011 nonetheless remains relatively positive in spite of the fact that economic growth is not expected to breach the level of 2%. For this reason, a greater improvement on the domestic labour market is not expected either. The current unemployment rate is approximately 9%. Weak growth and very moderate demand will thus limit the rate of inflation in the coming year. Inflation tar- geted by the Central Bank will not wander far from the 2% limit fixed by the Czech Na- tional Bank. Although the rate of growth of consumer prices will somewhat increase, this will be primarily in consequence of administrative interventions (abolishing of regulated rent or increases in the prices of energy). The positive trend should also af- fect foreign trade, although it will obviously be impacted by a weakening of demand in the EU. The double-digit increase in exports may therefore not last for very long. In view of the overall surplus of the balance of trade, we must take into account a methodical change that will considerably reduce the positive balance of trade in favour of the bal- ance of services. This, however, should have virtually no affect on the current account of the balance of payments, which will remain at around - 2% of GDP. The influx of foreign direct investments is expected to continue, investments enticed by the favourable lo- cation in the region, qualified and relatively inexpensive labour force, and so on. The in- flux of money from EU funds is also expected to grow tangibly. These resources are most visible in infrastructure projects and invest- ments into the protection of the environ- ment. Nevertheless, in view of the significant export orientation of the country, develop- ments in the Czech economy will continue to be decided above all on foreign markets. And this is where the greatest risk lies for the future economic development of the country.The 2008/2009 recession was an im- ported problem. And the revival the Czech economy is undergoing at present is also the result of renewed growth abroad which is, unfortunately, only weak and vulnerable. Petr Dufek Československá obchodní banka, email: pdufek@csob.cz, www.csob.cz Photo:www.sxc.hu 10 Q12007 Q22007 Q32007 Q42007 Q12008 Q22008 Q32008 Q42008 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 8 6 4 2 0 -2 -4 -6 year-on-year quarter-on-quarter GROWTH OF CZECH ECONOMY (%) Source: Czech Statistical Office

http://www.floowie.com/cs/cti/cbt-1-web/

ACCREDITED WITH ISO 9001:2008 CERTIFICATE BULK CONTAINERS MANUFACTURES FIBC STANDARD CONTAINERS: 4-LOOP BAGS FOR THE TRANSPORT OF LOOSE MATERIALS Q-BAGS: WITH INTERNAL SUPPORTING BAFFELS FOR STABLE SHAPE CONDUCTIVE BAGS: FOR INFLAMMABLE AND EXPLOSIVE MATERIALS UN BAGS: DESIGNED FOR THE TRANSPORT OF HAZARDOUS SUBSTANCES MANUFACTURE OF HYGIENICALLY PURE BAGS: WHEN MANUFACTURED, THE FABRICS ARE CUT ON ULTRASOUND MELTING EQUIPMENT, THE FINISHED BAGS ARE VACUUMED AND CONTROLLED ON AN ILLUMINATED TABLE. CONTACT: PHONE: +420 515 227 967 +420 515 244 558 FAX.: +420 515 244 559 MOBILE: +420 602 725 373 E-MAIL: INFO@BOHEMIABAG.CZ WWW.BOHEMIABAG.CZ (BIG BAG)

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 0 A N A L Y S I S MappingWorld’sTrade Connections is a study offering a complete overview of international trade and conse- quences for European businesses as well as trends for the next 10 years. Czech Share in World Trade Growing Dynamically CHANGING ROLE FOR EUROPE According to research conducted by Del- ta Economics for HSBC, Europe will play quite a different role in the world econ- omy in the future. “It will be perceived as a smaller consumer market, but with a multi-fold larger innovation potential. In the coming ten years, its strength will lie in the management of top research projects, in biotechnologies, pharmaceu- ticals, high value-added manufacturing, design, and access to new ideas,“ stated Tomáš Nymburský, Director of Export Fi- nancial Services at HSBC plc – Prague branch, adding that the report ranks the Czech Republic among so-called estab- lished research bases alongside Germany, the UK, and the Netherlands. The role of Europe remains important and in future it may in fact strengthen, once the Chinese population ages and the costs of the Asian labour force increase. EUROPE IN FIRST PLACE IN MANY AREAS The report clearly implies that many Euro- pean businesses face the so-called paradox of choice between slow but permanent growth through trading on European mar- kets or rapid growth with greater possibil- ities and risks on developing markets. Rising stars include Africa, especially the South Af- rican Republic, Vietnam, or Eastern Europe. The EU27 naturally continues to dominate all key sectors of the economy with the ex- ception of integrated electronic circuits and the manufacture of telephones. It is, for in- stance, number one in the aircraft industry, in the pharmaceutical industry, petrochemi- cals, manufacture of passenger vehicles and trucks, the printing industry, or in the processing of information and data. The value of exported passenger vehicles almost doubles the figure for Japan, its clos- est rival. In the aircraft industry, it surpasses three-fold the volume of exports of its clos- est rival and even five-fold in the export of automobile components. Businesses in Europe will be forced to em- ploy various strategies for success, depend- ing on whom they are trading with. “China and India are becoming more like Europe and businesses should thus take advantage of this to establish closer partnerships. On the other hand, there is Brazil with its im- mense unused potential creating its own trading models,” stresses Nymburský. CZECH REPUBLIC EXPECTED TO GROW According to the study, the financial cri- sis has undoubtedly taken its toll on the demand for the financing of trade in the Czech Republic. Although the volume of trade with the European Union has de- creased, exports to the Commonwealth of Independent States have remained stable, whilst exports to Asia and to coun- tries of the European Free Trade Associ- ation, especially Norway, have increased. Overall foreign trade during the last two years has doubled. The Czech economy now fulfils all prerequisites for accom- plishing the expected 1.6% rate of GDP growth in 2010. According to HSBC, the Czech Republic is an innovative economy with growing com- petitive strength in the sector of transport equipment, capital goods, and consumer goods. Exports are also growing rapidly in the following sectors: electrical engineer- ing, printing machines, and automated data processing. Many small Czech businesses work together with transnational corpora- tions on developing global information sys- tems and are thus integrated within interna- tional research teams. HSBC Bank plc Praha, www.hsbc.cz Mapping World’s Trade Connections is the title of a study published by HSBC. It of- fers the first comprehensive overview of its kind of international trade for European businesses. It outlines the main changes, new markets, and sectors that may be crucial for the growth and development of European companies in the coming ten years. According to the HSBC, the Czech Republic has increased its share in world trade in the last decade by 111%, rank- ing it alongside Poland (increase by 92%) among developing European markets with the highest rate of growth. Photo:www.sxc.hu,ŠkodaAutoarchives

http://www.floowie.com/cs/cti/cbt-1-web/

1 1 | I N V E S T M E N T Even in the period of recession, the automotive industry confirmed that it is the main sector in the Czech Republic, having a significant share in the GDP and employment. The Czech economy would doubtlessly record a larger decline were it not for this industrial sector. In the present period of revival of some foreign economies, the automotive industry is helping the growth of Czech ex- ports and thus also the revival of the Czech economy. It supports innova- tion, development, the introduction of new technologies, and growth in productivity. Automotive Industry Remains Main Sector of Czech Economy pecially in West Europe and the USA. Accord- ing to the OICA correspondents survey, most automobiles, 73.3 million, were manufactured in2007,whereasonly61.6millionautomobiles were made in 2009, i.e. a decline of 16%. IDEAL FOR PRODUCERS TheautomotiveindustryintheCzechRepub- lic is represented by three main car producers – Škoda Auto (Volkswagen Group),TPCA, and Hyundai. An important role is also played by truck producers such asTatra and Avia Ashok Leyland, and the bus producers Irisbus Iveco, Sor Libchavy,TEDOM, and Ekobus. Important suppliers to the automotive industry are op- erating in this country. The Czech Republic has ideal conditions for housing the produc- tion and research and development sections of foreign automobile companies. The de- velopment trends were discussed at the 7th professional conference on the Expected De- velopment of the Automotive Industry in the Czech Republic and Slovakia, which was held in the Holiday Inn Hotel Congress Centre in Brno in October 2010. The participants in the conference included among others rep- resentatives of the Volkswagen Group, TPCA Czech, Hyundai Motor, KIA, and IVECO. The conferencebuiltonthepreviouseditionsand provided opportunity for the exchange of experience and a meeting of producers and suppliers with companies supporting the de- velopment of the automotive industry. Petr Mandelík e-mail: mandelik@konference.org www.konference.org The strengthening CZK, shortage of quali- fied employees, rising cost of labour, and increasing prices of feedstock and fuel have for long been regarded as the chief threats to growth in automobile manufacture in the Czech Republic. In 2011, more than 1 million cars are to be made in the Czech Republic. This planned record will bring this country to the peak of world automobile production in per capita terms. Automobile plants based in the Czech Re- public account for approximately 1.6% of the worldproduction.Therecenteconomicreces- sion hit the automotive industry severely es- 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0 1989404656 1990343391 1991244411 1992230130 1993248144 1994190651 1995223267 1996280173 1997374674 1998414778 1999380212 2000459357 2001470589 2002454968 2003443902 2004449891 2005603849 2006855832 2007939788 2008948128 2009983992 20101015000 MANUFACTURE OF MOTOR VEHICLES IN THE CZECH REPUBLIC SINCE 1989 10503525motorvehiclesweremanufacturedintheCRfrom1January1989to30June2010 SUMMARY OFVEHICLE MANUFACTURE INTHE CZECH REPUBLIC SINCE 2003 year cars utility trucks buses motorcycles trailers total 2003 436 297 1 308 2 327 1 785 2 185 1 685 445 587 2004 442 812 1 122 2 200 1 972 1 785 2 589 452 480 2005 596 774 1 220 2 050 2 198 1 607 2 445 606 294 2006 848 799 1 077 1 993 2 948 1 015 1 993 857 825 2007 925 060 6 238 3 168 3 182 2 140 2 330 942 118 2008 934 046 6 288 2 737 3 496 1 561 2 424 950 552 2009 976 435 2 650 1 091 3 067 749 761 984 753 TOTAL 8 310 241 224 817 69 108 31 200 86 829 27 044 8749239

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 2 E N T E R P R I S E The Confederation of Industry of the Czech Republic, which associates employers and entrepreneurs from the Czech Republic on a voluntary basis, has issued an important docu- ment under the above-mentioned title, in which it summarises the key directions of the further develop- ment of the economy and the whole of society and the requirements of this employer organisation repre- senting the interests of 32 member unions and 1600 firms. Agenda 2010 – 10 Priorities for the Future of the Czech Republic According to Jaroslav Míl, President of the Confederation of Industry of the Czech Republic (CI CR), the reasons for compil- ing this document were the accelerating changes brought about by the global re- cession. These have to be considered not only by the business sector, but also by the state administration and political represen- tation. This complex strategic material de- scribes the steps leading to the Czech Re- public’s greater competitiveness. The living standard of any country can increase only with the help of a functioning industry and services with high added value.“The world economy is gradually recovering from the repercussions of the crisis. The Czech Government has a unique opportunity to set the conditions in which Czech indus- try will develop dynamically,” said Martin Jahn, Vice-President of the CI CR, who is at the same time President of the Automo- tive Industry Association (a member union of the CI CR) and a General Director of the Volkswagen Group in Russia. Agenda 2010 – 10 priorities for the future of the Czech Republic 1. Balanced public finances 2. Effective public administration 3. Motivational and straightforward taxes 4. A modern educational system 5. Top-quality research, development, and innovation 6. A flexible labour market 7. Development of transport and infra- structure 8. Secure, reliable, and affordable energy 9. Effective export support 10. Sustainable care for the environment Item 1: Balanced public finances According to the CI CR, the problem is the unsatisfactory state of public finances. Alongside the economic recession, the growth of debt was also caused by an in- effective budgetary policy and the post- ponement of indispensable reforms. For the economic stability of the country and adoption of the EU currency, the CI CR considers it necessary to reduce the defi- cit of public finances to a level below 3% GDP in 2012. The document requests that the govern- ment adopt a programme which would seek to achieve a balanced public budget with a possible tolerance in connection with the economic cycle. Employers con- sider it necessary to increase state budget expenditure on research, education, ex- ports, and to implement reforms for bal- anced public budgets. Last but not least, it is necessary to conduct an audit of ex- penditure items and to lower the level of corruption and eliminate losses from the evasion of tax deductions. Changes in the receipts and expenditures of the state budget will have to be supported by the implementation of necessary reforms of public administration, health care, social policy, and changes in research and de- velopment, education and the pension system. Item 2: Effective public administration Employers also point to the fact that the effectiveness of the economy is in- fluenced by the level of effectiveness of public administration. “Public administra- tion should not limit business by regula- tion more than necessary and it must not be more expensive than necessary. We require reinforcement of transparency, applying the approach of public service, Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

1 3 | C Z E C H B U S I N E S S A N D T R A D E quality laws which do not need to be changed too often and which do not cre- ate excessive costs without appropriate effect,” states the document. Jaroslav Míl, President of the CI CR, says the following about legislation: “It is nec- essary to simplify legislative norms and make them transparent and ensure their cohesion. To carry out an inventory and re- vision of the existing norms also from the point of their usefulness. To do a revision of the legal system, to finish the codifica- tion of the Civil Code.” The Confederation of Industry of the Czech Republic also points out the fact that the state must quickly and vigorously deal with corruption. Item 3: Motivational and straightforward taxes The text points out that the consolidation of public budgets will require changes in taxation. These should not significantly lim- it economic growth. To fulfil the fiscal func- tion of the budgets, the CI CR proposes to increase taxation, narrowing the gap be- tween the standard and reduced VAT rates. The text proposes not to increase the taxa- tion of legal entities. To increase transpar- ency and lower administrative burden, it suggests reducing the number of deduct- ible items and reductions while continuing to stimulate economic priorities such as expenditures on education, science and research, and environmental investments. In relation to the tax system, the CI CR considers the frequent amendments of tax legislation as unjustifiable and desta- bilising to the business environment. Item 4: A modern educational system One of the most intensely discussed issues is modern education and its unquestionable importance to competitiveness. Unfortu- nately, the long discussion has not brought about any of the required significant changes for the employer.The barrier of a low number of graduates of not only secondary and terti- ary, but also vocational schools, is becoming more and more prominent. Employers sug- gest that, at this moment, when the popula- tion years for university education are lower and when university supply overhang is growing, a system of evaluation should be implemented so that it is clear which schools are successful in placing their graduates on the labour market. Item 5: Top-quality research, development, and innovations The key issue for employers is the support of research, development, and innovations, es- pecially those institutions and projects which reach extraordinary results on an interna- tional level. Employers request that the state meet its obligation in relation to financing research and development. A transformation of the research and development sector is necessary so that it can use these resources much more effectively. The text states that it is necessary to strengthen the position of research with extraordinary results, which co- operates with industry and whose effect will manifest itself in innovations and competi- tive efficiency.

http://www.floowie.com/cs/cti/cbt-1-web/

E N T E R P R I S E inzerce Item 6: A flexible labour market The importance of companies’ ability to adapt the number and structure of their employees in relation to the development ofcontractswasagainclearlyprovedduring the recession. A flexible labour legislation is a prerequisite for coping with structural changes. That is why the Confederation of Industry of the Czech Republic calls for the adoption of a comprehensive amendment of the Labour Code, so that it would sup- port the possibility of placing employees in new labour positions and not maintain existing, unnecessary positions. It requires making the labour market more flexible by lengthening the maximum extent of em- ployment on the basis of an agreement to perform work, to extend the settlement period for working hour accounts to two years, to diversify the level of redundancy payments based on the duration of em- ployment, to adjust the welfare system to restrict the misuse of welfare and sickness benefits and other measures. Item 7: Development of transport and infrastructure According to the Confederation of In- dustry of the Czech Republic, the current state of the transport infrastructure in the Czech Republic does not promote further rapid development of the economy. In the current situation, when it is necessary to deal with deficits of public finances, the necessary steps must be taken for the uti- lisation of other resources and the costs of the maintenance and construction of the transport infrastructure must be examined. Transport must change so that it reacts to the demand for lowering its environmen- tal impact. That is why the CI CR suggests state support of combined transport. We also consider it urgent to make a draft of a new and modern Railways Act, as well as the development of telecommunication networks. Item 8: Secure, reliable, and affordable energy Power industry development is very im- portant, also from the point of view of state security. That is why the Confed- eration of Industry of the Czech Republic suggests that it is also necessary to solve the level of dependence on supplies from high-risk zones and to increase the use of domestic energy resources.The employers fully support the current draft of the State Energy Conception and they support its adoption and development into indi- vidual realisation measures. The funding of the use of renewable energy resources which disproportionately increase costs is problematic. The most pressing issue at the moment is the state-guaranteed and excessively generous support of renew- able resources. Item 9: Effective export support Foreign demand and connectedness with foreign markets are and will be the basic source of economic growth. That is why it is necessary to pay attention to the sup- port of Czech business interests abroad. Under the EU common commercial policy it is necessary to support market liber- alisation, to combat protectionism, and at the same time protect Czech markets from unfair competition. These three tasks need to be fulfilled at the same time. One of the areas in which it is necessary to increase the effectiveness of results is the system of export support. As part of the forthcoming pro-export strategy, the CI CR suggests that the coordination of activities of state pro-export institutions should im- prove. One of the most significant tools for the increase of the support of export ca- pacities is the adoption of the EU common currency. In spite of the current problems in the Eurozone, the CI CR considers this step strategically important. Item 10: Sustainable care for the environment The CI CR draws attention to the “unset- tledness” of environmental protection policy in the overall system of state pol- icy. Isolated formulation of tasks in this field, without considering impacts on the economy and employment, is unaccept- able in the future. Business representation thus calls for improving the environment, but the fulfilment of this aim must be placed under realistic conditions. Employ- ers require a renewal of the “audit” of the current environmental norms so that it is clear where their requirements are not ad- equate and are above the EU requirements and do not bring about the required re- sults. The CI CR stresses a consistent use of the RIA system when assessing the im- plementation of policies and legislation concerning the environment. Elaborated using source material from the Confederation of Industry of the Czech Republic, www.spcr.cz

http://www.floowie.com/cs/cti/cbt-1-web/

inzerce VIEWINGS OF THE PREMISES CAN BE ARRANGED AT YOUR CONVENIENCE – CONTACT: +420 736 752 721 START YOUR BUSINESS IN A STYLISH OFFICE IN THE CENTRE OF PRAGUE PC NETWORK, BRANCH EXCHANGE, FIXED INTERNET LINE, CODED ENTRY SYSTEM, SAFETY SYSTEM – SEP- ARATE CIRCUIT WITH CONNECTION TO THE CENTRAL SAFETY SWITCHBOARD. IT IS POSSIBLE TO USE THE CONFERENCE ROOM, GARDEN AND CAFÉ ON THE GROUND FLOOR FOR BUSINESS TALKS. MYSLÍKOVA STREET, 500 M FROM NÁRODNÍ TŘÍDA STATION AND RIGHT BY A TRAM STOP. THE OFFICE SPACE IS SITUATED ON THE 3RD FLOOR, WITH LIFT AND CENTRAL HEATING: OFFICE 30 SQ. M FITTED WITH PERIOD FURNITURE (FIREPLACE, BUILT-IN SAFE, ART DECO-STYLE FURNITURE AND LIGHTS), SECRETARIAL OFFICE ROOM 45 SQ. M, SEPARATE OFFICE ROOM 13 SQ. M, KITCHENETTE, WC. 1450 EUR/MONTH EXCL. VAT + SERVICES, LONG-TERM CONTRACT IS POSSIBLE. IN PRAGUE 1 IS AVAILABLE AT 115 EUR/MONTH FOR MORE INFORMATION, CONTACT US AT THE TELEPHONE NO. HERE BELOW.

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 6| 1 6 Qualify for Tendered Public Contracts in the Czech Republic The act on public contracts in the Czech Republic saw some signifi- cant changes in 2010. The current version of the amendment entered into effect on 15 September 2010. This was the second of a number of important legal enactments pertaining to public investments that have been amended during that year. And it was not the last one. The fact that foreign suppliers are in the same position as their Czech counterparts in the tendering process means that these and any future amendments concern them directly. The first amendment of the act on public contracts from 2010 has been in ef- fect since 1 January 2010. This amendment brought significant changes, especially in the area of reviews of procedures used by contracting entities. Among other things, it introduced the oft-debated ban on per- forming public contracts and the related blacklist, i.e. a list of suppliers who were given this ban by a final order of the Office for the Protection of Competition. It is absolutely essential for all applicants for public contracts or PPP projects to meet qualification criteria. Only after that can the contracting authority evaluate the applicant‘s tender. In view of the fact that the amend- ment has instituted changes in many areas of public tenders, this article will focus primarily on news in the area of qualification; especially the ones that can be considered significant from the point of view of everyday practice. SUPPLIER QUALIFICATION Qualification criteria are intended to ensure that evaluation committees assess only ten- ders from such suppliers that are capable of fulfilling the objective of a given public con- tract. For this purpose, the contracting author- ities stipulate basic (e.g. clean criminal record), professional (relevant registrations, such as in the commercial register, or memberships in professional chambers), economic or financial (e.g. liability insurance) and technical (e.g. list of references/significant contracts realised) qualification prerequisites. Foreign suppliers have to demonstrate the fulfilment of qualifi- cation criteria based on the system of law in the country of their registered office. If a cer- tain document cannot be issued under a par- ticular system of law, foreign suppliers have to demonstrate their compliance with the given requirement by declaration. Foreign suppliers have to submit all documents in support of qualification in their original language accom- panied by officially certified translations into the Czech language. An allowance has been made for Slovakian suppliers (or any other suppliers submitting documents in Slovak) who no longer need to supply official Czech translations for submitted Slovak-language qualification documents. QUALIFICATION THROUGH SUBCONTRACTORS The act on public contracts used to allow suppliers to prove parts of their professional, economic/financial, and technical qualifica- tion through subcontractors without having to provide any proof of a given subcontrac- tor‘s compliance with the basic qualification criteria. The amended act requires suppliers to produce a contract with their subcon- tractor containing a commitment to par- take in the fulfilment of the public contract to the extent corresponding with the extent of documented qualification, and to submit a declaration by their subcontractor stating that the subcontractor is not banned from performing public contracts, i.e. that it is not on the blacklist, and also the subcontractor‘s certificate of incorporation. Photo:www.sxc.hu EXTRACT FROM THE PENAL REGISTER If a legal entity founded according to Czech law was to compete for a public contract in the Czech Republic, and a member of its statutory body was a citizen of an EU country, this member of the company‘s statutory body would submit only his/her extract from the Czech penal register. If a legal entity founded according to law of some other EU country was to compete for a public contract in the Czech Republic, and its agent was a citizen of that other country, he or she would submit penal register extracts from both the Czech Republic and the country of the company‘s registered office. A supplier must submit penal register extracts on behalf of all members of the legal entity‘s statutory body. L E G I S L A T I O N

http://www.floowie.com/cs/cti/cbt-1-web/

1 7 | NEW REQUIREMENTS FOR BASIC QUALIFICATION OF SUPPLIERS An even more important advance con- cerns the way suppliers prove their com- pliance with qualification criteria. There has been a change in the provision of the law that regulates the scope of basic quali- fication prerequisites. This scope has been extended by the amendment to include three brand-new requirements. To qualify, suppliers must now submit the following documents (besides the documents re- quired to date): list of partners or members (if the sup- plier is a corporate entity), list of employees or members of statu- tory bodies who worked for the contract- ing entity during the past three years and occupied positions with the authority to make decisions regarding public con- tracts (both of these prerequisites are to be satisfied by declarations), and in the case of a joint-stock company, the basic qualification prerequisite is that the company has issued nominative shares only, and provides a current list of share- holders. On 24 September 2010, the Chamber of Deputies approved an amendment that re- stores the right for joint-stock companies with bearer shares to apply for public con- tracts. If the amendment is passed by the Senate and is signed by the President, joint- stock companies will only have to inform contractingentitiesofshareholderswhoown more than ten per cent of their shares. This amendment does eliminate the most press- ing problem, which was the inability of joint- stock companies with bearer shares to apply for public contracts, but at the same time, it retains some restrictions and unsystematic elements; a more complex amendment of these provisions is therefore called for. LESS BUREAUCRACY A welcome change in the area of supplier qualification lowers the administrative load associated with the preparation of tenders or requests to participate: it is now suffi- cient for suppliers to submit just copies of the documents proving their compliance with qualification criteria unless the law says otherwise. Contracting authorities may require the original documents or officially INFORMATION SYSTEM ON PUBLIC CONTRACTS The information system gathers information about public contracts and PPP projects centrally. Suppliers may browse the system free of charge at www.isvz.cz. The website contains, among other things, information regarding current procurement and concession proceedings. Relevant legislation is available in English at www.portal-vz.cz. verified copies of the documents to be sub- mitted before the conclusion of a contract, but from the chosen supplier only. This en- sures that suppliers will not have to have officially verified copies made of all their documents; a process that could also prove quite costly in some cases. MANDATORY NOTARY PRESENCE AT DRAW Where the number of qualified suppliers asked to submit tenders is restricted using a draw, the contracting authority is obli- gated to ensure that a notary will be present at the draw. Candidates will be also allowed to inspect the apparatus and equipment used for the draw. OTHER CHANGES IN QUALIFICATION The amendment requires contracting au- thorities to produce a protocol about the assessment of suppliers. Contracting au- thorities will include, besides identification data of the suppliers whose qualification was assessed, a list of all suppliers who were in compliance with qualification require- ments and a list of those who were not (the protocol will also list the reasons for non- compliance). If a committee is used to as- sess a qualification, the protocol will include dissenting opinions of committee mem- bers. All suppliers whose qualification was assessed by the contracting authority may inspect the qualification assessment proto- col and make an abstract or copy. ECONOMIC IMPACTS Public contracts and PPP projects amount to more than 17% of the GDP of the Czech Republic. Being awarded a public contract or a PPP project may therefore prove very interesting for foreign suppliers, especially during a financial crisis. Lenka Krutáková WOLF THEISS advokáti s.r.o. e-mail: lenka.krutakova@wolftheiss.com C Z E C H B U S I N E S S A N D T R A D E

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 8| 1 8 A N N I V E R S A R Y Centenarian Screw Factory When Messrs Gerhart and Rahm founded a business in the town of Krupka on 3 September 1910, they could hardly guess that the“Manufac- ture of screws, shaped components and drawn steel”would survive all the hurdles put in the way of the new firm byWorldWar I, the crisis of the 1930s,WorldWar II, the changes in the Czechoslovak industry in the post-war period, and the transformation of the Czech economy in the 1990s, and live to be a hundred years old. Initially, the new business had 30 employ- ees. Production was growing steadily and the employees numbered 80 in World War I. In 1920-1922, the unsatisfactory conditions for the transportation of metallurgical mate- rial and goods dictated the need to move the firm to Krupka–Vrchoslav, where a siding could be built. Production soared in the new buildings. The range of lathed products was expanded with pressed screws and nuts, heat-treated screws, treaded rods, double- point rivets, and heat-treated flexible safety washers. The manufacture of threading in- struments for the company’s own use and for sale was introduced and a galvanising shop was put into operation. The products were exported to many countries, such as Denmark, Finland, Sweden, Switzerland, Germany, and Yugoslavia. The employees numbered 760 in 1938. WARTIME PRODUCTION After 1938, the Screw Factory switched to wartime production. Production was rising and another hall was added. Prisoners of war, mainly Russians, were taken on in 1943, and the plant had 1 050 employees in 1944. When World War II ended, the firm resumed the peace programme with 468 employ- ees. The specialisation of the production of screw factories was gradually narrowed and the programme of the Vrchoslav plant was set at the manufacture of lathed connecting components. PRODUCTION ON THE RISE The manufacture of piano tuning pegs was introduced in the 1950s and screws for the air industry were made temporarily. In the 1960s and 1970s, the range of products was expanded with strength bolts and nuts, pre- cise cap screws, and shaped components with prior orientation on the automotive industry. The production of screw items in- creased from 781 tonnes in 1955 to 2 827 tonnes in 1980 with the same number of 480 employees. There was busy construc- tion throughout the period. A new factory hall was put into operation, storage for met- allurgical and expandable materials, an ad- ministrative building and its superstructure were added, and 44 flats were put into use. NEW PERIOD OF SUCCESSFUL COMPANY Since its establishment, the Screw Factory has experienced a difficult and complicated period of various changes in organisation which were products of their time of social and political pressures. The transformation of the Czechoslovak economy in the early 1990s provided the impulse for the estab- lishment of ŠROUBY Krupka s.r.o., by entry in the Commercial Register at the Regional Court in Ústí nad Labem. The company opened manufacture and trading in 1994 by the privatisation of the former state en- terprise. At the very beginning the assignee declared the general principles of its oper- ations on the market: primarily business in accordance with valid laws and respect for obligations to employees and the state. In addition to the manufacture of the standard assortment of screws, the company gradu- ally launched the production of precise ma- chine components according to drawings provided by clients. In order to retain its position on the Czech and foreign markets, the company is ac- credited with quality management certifi- cate ISO 2001/2008 and the VDA 6.1/2003 certificate required in the automotive in- dustry. A boon to production was funding from the EU Structural Funds: subsidy from the Transfer-Phare 2000 programme to the purchase of modern technology in 2003, subsidy from the Operational Programme Industry and Enterprise in 2006, and subsidy from the Operational Programme Enterprise and Innovation in 2008. The factory got over the 2008-2009 sale crisis, which hit almost all segments of the Czech and foreign markets, and is now on the threshold of a new stage of its de- velopment. Its marketing strategy will be constantly adapted to the character of production and topical demands on the market with orientation on the investment policy to acquire new production capac- ity meeting the high demands of clients on the amount, quality, price, and delivery deadlines. Photo:www.sxc.hu,AŽDarchives

http://www.floowie.com/cs/cti/cbt-1-web/

1 9 | W E S U C C E E D Czech Company Safeguards Railway Level Crossing in the USA Specialists from AŽD Praha have completed safeguarding of a railway crossing in Nashville, where they installed a modern signalling system with barriers. It is a pilot project on which US authorities will assess whether the Czech technology is reliable in the operation and whether it meets all their requirements. If the trial operation proceeds smoothly, AŽD Praha, in co-operation with the Nashville & Eastern Railroad Corp., is planning to fit more crossings in the USA with its systems. AŽD Praha is the largest Czech producer of signalling, telecommunication, and in- formation technologies, mainly focused on rail and road transport. The largest part of its production consists of electronic signalling and control/command systems, especially designed for railways. In the Czech Republic, the company participates in the modernisation of the country’s national corridor mainlines, as well as of regional railway lines. During the last year AZD Praha started successfully its activi- ties on the US market by installing there its first electronic safeguarding railway- crossing system. PILOT LEVEL CROSSING IN NASHVILLE The Czech-made safeguarding equipment protects a crossing on the private Nashville & Eastern Railroad, which crosses a double- flow road. The project, worth USD 150 000, consisted of two parts: the core electronic system, including the barrier drive, was supplied by AŽD Praha, while the local part- ner provided the signal device, gate arms, block-signal box and traffic signs - so as to ensure that the crossing visually complies with American standards. The level cross- ing system is controlled automatically by the passage of trains and it is fully compat- ible with other track and station safeguard- ing equipment. “As this is a very important pilot project for our company, our electronic level cross- ing system was designed so that the cri- teria it meets are much more demanding than those set by the US Federal Railroad Administration,” states Mr Petr Žatecký, director of AŽD’s Foreign Marketing and Trade Department. AŽD PRAHA TARGETS FOR US MARKET The first installation of AŽD technology is opening the door to a completely new market for the Czech company. Therefore the new level crossing system will be intro- duced to a number of potential customers from US railway companies during its six- month trial operation. The Nashville & Eastern Railroad Corp. plays an important role in ensuring freight and passenger railway transportation be- tween Nashville and Monterey. It also par- ticipates in the renovation and reconstruc- tion of the mainlines and subsidiary lines in the area. www.azd.cz

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 0| 2 0 K A L E I D O S C O P E Czech Beekeepers to Expect EU Money The Czech Republic is one of the first countries with a confirmed support for apiculture, which will enable Czech bee- keepers to receive almost four million euro between 2011 and 2013. They are mostly interested in financing the purchase of devices and equipment, in the support of beekeepers starting their activity, and in contribution towards apiarian educa- tion. The Czech beekeeping programme for the years 2011–2013 is the third api- arian programme the European Commis- More People into Business sion has supported in the Czech Republic. Financing of better general conditions for the production of apiarian products including apiarian programmes of mem- ber states for 2011–2013 was confirmed by the EU Steering Committee on 22 July, 2010. The Czech Republic was one of the first countries that presented this plan at the beginning of April to the relevant EU authorities. The new programme enables to support even start-up beekeepers in the form of procuring new beehives. During the second half of 2010, 12 644 firms were established in the Czech Re- public and if this trend continues, it will represent the best result in eight years. At the moment the speed of establishing public limited and limited companies is the same as before the crisis in 2008. The speed of establishing new companies is ten per cent higher than in 2009. Six out of ten entrepreneurs were attracted by the wholesale market, realties, services, and construction industry. Almost half of the companies were established in Prague, entrepreneurial appetite is present also in South Moravia, in the South Moravia, Moravia-Silesia, and Central Bohemia Regions. On the contrary Karlovy Vary, Liberec, and Vysočina Regions were not too eager to start new businesses. Out of the established companies, 95.4% are limited companies, this being the favour- ite type of company for its simplicity and low capital demand. The rest are public limited companies. 89 500 foreigners did business on the basis of a trade licence (their number has grown by almost 1700 since the end of 2009). Despite that, the increase of foreigners with a trade licence was not as great as in the previous years, when there were around ten thousand new foreign entrepreneurs per year. The majority of business-making foreigners comes from Vietnam; at the end of June, 34 542 Vietnamese held a trade licence in the Czech Republic, closely followed by the Ukrainians with 27 977 licences. Photo:PhotoCombo,www.sxc.hu,ŠkodaAutoarchives Wages: Increase of Ten Thousand inTenYears According to the publication Labour Statistics: Time Series of Basic Indicators, published at the beginning of August 2010 by the Czech Statistical Office, the average gross monthly wage in the Czech Republic increased during the last ten years by CZK 10 269 (approx. EUR 410). In private companies the gross monthly wage rose from CZK 13 169 (approx. EUR 527) in 2000 to CZK 23 277 (approx. EUR 931) in 2009. Wages in the banking and insurance sector rose the most, to the average CZK 47 127 per month (approx. EUR 1885), followed by jobs in IT and telecommunications, where monthly wages rose to CZK 42 959 (approx. EUR 1718). At the other end, employees in hotels and restaurants witnessed the lowest increase; their wage rose to CZK 12 481 (ap- prox. EUR 500). However, part of the income in this sector comes from tips, which was not reflected in the statistics. Czech Holds One of Internet Keys Seven selected specialists who re- ceived the “keys to the Internet” in a secret bunker will ensure the se- curity of the world wide net. The new security standard is to ensure that the internet remains independ- ent, but also reliable. The Czech Re- public and Central Europe is repre- sented by Ondřej Surý, the head of CZ.NIC Laboratories, an association operating the domain name .cz. CZ.NIC has been promoting the DNSSC standard for several years. Internet safety programme is over- seen by the ICANN (Internet Cor- poration for Assigned Names and Numbers), a non-profit organisation which has an access to a security system designed to protect users from cyber fraud and cyber attacks. Part of ICANN’s security scheme is the Domain Name System Security (DNSSEC), a security protocol that ensures Web sites are registered and “signed” by a private and a pub- lic key. This protocol ensures that when you go to a URL, you arrive at a real site and not an identical pirate site.

http://www.floowie.com/cs/cti/cbt-1-web/

2 1 |2 1 | How Long Will the Export of Superfluous Automobiles Last? Significant changes are taking place in the automobile sector throughout the world, according to the latest study of the KPMG Global Automotive Executive Survey 2011, which polled 200 top managers of the au- tomotive industry. Automobile manufacturers must come to grips with the inevitable changes which are forming the future shape of the whole sec- tor. The main problem will continue to be superfluous output on both advanced and developing markets. Almost two-thirds of the questioned managers believe that most overloaded are the markets in the USA, Ja- pan, and Germany. China and India are ex- pected to be overloaded within five years. Most of the automobile producers are con- vinced that relief could come with increased exportstonewmarkets.Butmanyproducers are already building their factories in such areas and so possibilities of exports to these localities will lessen in the future. Czech Banking Sector is Healthy and Resistant to Risks The Czech banking sector is healthy and according to the results of stress tests it remains resistant to market, credit, and other risks. In neither of the stress scenar- ios does any sector as a whole fall under critical values of relevant capital solvency requirements. Nevertheless, as the Report on Financial Stability 2009/2010 issued in June 2010 indicates, the possible impact of a worse than expected development of the economy must not be underesti- mated. “The stability of the Czech finan- cial system is good and it is pleasing to see how financial institutions are coping with the crisis. The tough and compre- hensive tests reveal that even strongly adverse conditions should not threaten the stability of the financial sector,” said Zdeněk Tůma, former Governor of the Czech National Bank. The high resilience of the Czech financial system is based on the fact that financial institutions entered Position on the developing markets is also important for the growth of specific pro- ducers. Naturally, the biggest expectations are placed on Chinese marks. However, these are followed immediately by the Volkswagen and Hyundai/Kia groups. This is good news for the Czech Republic and the neighbouring Slova- kia, where the two groups have factories. the recession in good condition and were able to create a capital buffer during the recession. The Czech banking sector’s strong position is supported not only by sufficient profitability, but also by good funding liquidity, a high deposit-to-loan ratio, a low proportion of foreign currency loans, independence from external fi- nancing and in particular sufficient capital adequacy. However, the risks for financial stability remain high and strong. The main risk scenario for the Czech economy and thus its financial sector in the following two years is the return of recession for its largest business partners and the result- ing decrease of local economic activity. Economic regeneration which started in mid-2009 is fragile, because it ensues not only from a restored trust of the private sector, but also from strong support steps of economic policies. The second key risk is the worsening fiscal development in many countries including the Czech Re- public. What is considered to be a current danger in this respect is the spreading of fear related to the ability to finance a state debt in critically indebted countries to other countries whose public finances also demonstrate partial signs of potential unsustainability. C Z E C H B U S I N E S S A N D T R A D E

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 2 R E S E A R C H A N D D E V E L O P M E N T How to Obtain Methane from Biogas in a Cheaper Way? Czech Scientists Have an Idea Czech scientists from the Institute of Chemical Process Fundamentals (ICPF) of the Academy of Sci- ences have come up with an idea of a simple method of acquiring methane from biogas. Biogas forms in great quantities at sewage plants and researchers are now able to optimise its quality to match that of natural gas. We discussed the details of this project with Pavel Izák from the Institute of Chemical Process Fundamentals of the ASCR. Buses, private vehicles, as well as locomo- tives will no longer be forced to use just gas for their fuel. Scientists from your institute have discovered a method of refining biogas to methane. What is this all about? Yes, the Institute of Chemical Process Funda- mentals of the ASCR has taken one year, in collaboration with Česká hlava (Czech Head) Company, to work out a unique method of enriching biogas by methane. Water vapour condenses on a hydrophilic porous mem- brane, where it creates a thin permselective film.The separation principle is based on the differing solubility coefficients of methane and the other elements of biogas in water. It is the separation of biogas elements using a thin water film that appears to be an economically advantageous mechanism. How did the research proceed? Firstly, we used ionic liquids anchored in the porous membrane. These liquids worked well to separate the binary compound of methane/carbon dioxide but were too ex- pensive. We chose water instead, as biogas is in itself wet and water is used abroad for bi- ogas refining in pressure washing. However, the operation of pressure washing is also costly. Compression work in large amounts, when we need to separate millions of cubic metres every year, is expensive. Our method could have much lower operational costs, as is generally the case with all membrane processes. The method works well in labora- tory conditions, so we are now trying to raise money to build a semi-operational plant in which we would like to use the membrane modules. The collected process parameters will be used to determine whether the devel- oped process can be economically viable for refining biogas to natural gas quality. Development was uncommonly fast, as it did not take longer than 18 months. The new technology is protected by a patent application. Have you registered some interest from the commercial sector, and if so, who from? There are several parties interested in our method. Česká hlava, s. r. o., which owns 95% of the rights to the invention, is now in the process of selecting a suitable investor to build the semi-operation. Have you co-operated with other similar domestic or foreign institutions during the research? The research was initiated by Česká hlava, s. r. o., and has been carried out in the labo- ratories of the Institute of Chemical Process Fundamentals of the ASCR with financial aid from the Ministry of Industry and Trade of the Czech Republic. Could you mention some other interesting patent or research in which scientists from the Institute of Chemical Process Funda- mentals of the ASCR can take pride? Scientists from the Institute of Chemical Process Fundamentals do not only concern themselves with methane. Sewage plants also produce great amounts of carbon di- oxide, which can be used for cultivating seaweed. For that purpose, a new type of reactor has been developed that can be directed towards the sun. Carbon dioxide bubbles through the seaweed in that reac- tor. It should be capable of producing 20% more biomass than other types of reactors. Laboratories at our institute are also inves- tigating other interesting projects with ap- plication potential. Ecologically important projects can serve as an example – transfor- mation of used PET bottles into monomeric components, i.e. teraftal acid and ethylene glycol, isolation of europium and yttrium from the luminophore of old television screens and computer monitors, develop- ment of a photo-bioreactor for the cultiva- tion of fodder seaweed, liquidation of used tyres using microwave radiation, develop- ment of processes for carburation of waste biomass, or catalytic burning of volatile or- ganic matter from waste gases.These results are also protected by patents or invention registrations. Do you use EU finances to fund your projects? Of course.The Institute of Chemical Process Fundamentals of the ASCR is a responsible partner of several partnerships that inves- tigate EU Framework Programme projects, such as IMPULSE or F3 - Flexible, Fast, Fu- ture, etc. Jana Pike Photo:www.sxc.hu,Severotiskarchives

http://www.floowie.com/cs/cti/cbt-1-web/

2 3 | C Z E C H T O P of the Passau-based Euro-Druckservice GmbH concern. The company was established in 1992. The construction of the printing works took place in 1994 and 1995. The first ro- tary machine went into operation imme- diately. Soon it became apparent that one rotary machine was not enough, and the second one was added in 1997, opening the second stage of company develop- ment. The requirements of clients were met with the opening of the Finishing Centre in 2002. The thus far last develop- ment stage, largest in extent and impor- tance, was the purchase and installation of a new 48-page rotary machine, con- struction of the hall annex for the new printing machine, and an addition to the binding shop. This third stage significantly expanded the production capacity. Severotisk, s.r.o. has the latest printing equipment. It uses a rotary heat-set print- ing works specialised in the manufacture of full-colour magazines, catalogues, and leaflets in very many copies. It has three rotary offset printers for various qualities of paper. Being a proper large printing works, Severotisk provides binding. STRONG BACKING Severotisk has the backing of a large con- cern – its majority owner is Blue Finance Luxembourg SA. In the owner’s organi- sational framework, Severotisk is a part Experienced Printing Works on the Rise The managers of the Severotisk print- ing works in Ústí nad Labem, North Bohemia, are well aware that 2011 is opening new possibilities – the printing industry and printers have overcome the worst consequences of the economic crisis, and orders and opportunities are being restored. Severotisk is open to Czech and foreign clients. The experience of the printing works is best demonstrated by an example of clients, publishers from both the Czech Republic and abroad. The most impor- tant ones include (some of the printed titles are in brackets): BURDAVERLAG OSTEUROPA GmbH (Burda móda, Naše krásná zahrada, Lisa, Otdochni) BAYARD MEDIA GmbH & Co. KG (Frau im Leben, Living&More, G/Geschichte, Leben&Erziehen, Grün) MAFRA, a.s. (Magazín DNES +TV, Pátek Lidových novin) ASTROSAT, spol. s r.o. (Glanc, TV Star, Křížovkářský TV magazín,TV Mini,Moje rodina) PANINI VERLAGS GmbH (Mega Hiro, Card Master, BOB der Bau- meister, Dora, Sesamstrasse,Pokemon) PETIT PRESS a.s. (TV Oko, TV Svet, Sme ženy) GLOBUS ČR, k.s. (Katalog GLOBUS) BAUER MEDIA v.o.s. (TV Revue,TV Plus,Bravo,Bravo Girl, Pestrý svět, In Touch, Claudia) GRAND PRINC, a.s. (Grand Reality, Grand Bydlení, Grand Expres) An operation desk in Severotisk, s.r.o. Severotisk, s.r.o. premises

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 4 S E R V I C E S Printing Industry – Czech Tradition in Whirl of New Technologies The printing industry – on the one hand there is a rich tradition, on the other fast development full of change and competition. Cur- rently it is difficult to succeed in the field of information distributed in printed form, both at home and internationally. solutely essential nowadays. The modern printing industry of the present time is completely permeated with computer technology, which is an aid not only in creating the press content, but also in the control of the printing process. PAPER WHEREVER YOU LOOK However, the future belongs to the pa- per forms as well. We may not be aware of it, but printed matter accompanies us wherever we go, and it is not only books, newspapers, and magazines. In the clas- sification of economic activities by the NACE codes, the category of printing and related activities includes the printing of newspapers and other printing, pre-press and pre-media services, binding and re- lated activities. And it is the category of printed matter other than newspapers which brings, according to a 2009 analysis of the Association of Printing Industry En- trepreneurs, a full 75.2% of all revenue in the sector – which include besides maga- zines also commercial flyers and leaflets, business cards, wrappings, but also spe- cial printed matter with security features – banknotes, stocks and securities, vari- ous tickets, motorway toll stickers, meal vouchers, and others. It is estimated that some 7 billion pieces of printed matter are annually produced in the Czech Republic, which is an amazing number indeed. RICH TRADITION OF PRINTING INDUSTRY The Czech printing industry has a rich tradition stemming from historical roots. A look at the past reveals that crucial inven- tions in the branch included some which were connected with Czech territory. To name an example, the list includes Alois Senefelder, the inventor of lithography and stone printing the principles of which are applied in offset printing, the most widely used technique at present. And another Czech, Kašpar Hermann, is considered an inventor of offset printing. Czech printers can be rightly proud of their history. There are not many branches where the Czech Republic can say nowadays that it has really cutting-edge technology keeping abreast of the best level in the world, but the Czech printing industry can say so. Photo:www.sxc.hu As a manufacturing sector, the printing in- dustry processes and reproduces texts and images in print. A definition of the differ- ent operations in the sector can distinguish three phases: prepress – the preparation of printing, press – the printing proper, and postpress – completion tasks. In other words, there is the phase of making print- ing forms, the phase of press, the finishing production, and last but not least, the as- sociated specialised activities. In brief, press does not mean by far only the printing pro- cess nowadays. CROSSMEDIA – STANDARD OF TIME A new term – crossmedia – has emerged in the last few years. In effect, it means that forms are being prepared not only for printing, but also for modern elec- tronic media. Publishing on the internet, intranet, web-presentations that we meet every day, CD-ROM and the like are ab- Other printing than newspapers (75.2%) Binding and related services (7.1%) Printing of newspapers (13.8%) Pre-press and pre-media services (3.9%) REVENUES STRUCTURE IN THE NACE 18 DIVISION – PRINTING AND REPRODUCTION OF RECORDED MEDIA (2010)

http://www.floowie.com/cs/cti/cbt-1-web/

=YccY_^_V@bY^dY^WX_ecU4YT_dYcd_]QdUbYQ\YjUXe]Q^ÂcYTUQc QddYdeTUc_b`YSdebUcDXU]QdUbYQ\V_becYc`Q`UbY^fU^dUTRUV_bU ]_bUdXQ^$ iUQbcdXUd__\Yc`bY^dY^WQ\bUQTi[^_g^V_b% iUQbcGUQbU`b_eT\i\__[Y^WY^d_dXUVedebUgYdX[^_g\UTWU_V_eb RbQ^SXRQS[Wb_e^TGUQbUcUQbSXY^WQ^TecY^WdXU^UgUcdd__\cQ^T QSdY_^cgUQbUdQ[Y^WSQbU_V_ebSecd_]UbcQ^TgUQbUU^fYb_]U^dQ\ VbYU^T\i?ebg_b[Yc\UQTRidXUVQYbSbQVd]_dd_ ¸VQYbSbQVd 1^TRUi_^TUQSXSbQVdYcQ]Q^ gggdYc[Qb^QTYT_dSj 9^]_TUb^6bU^SX di`_WbQ`XiYcdXU^Q]U 4YT_dbUQ\\iVQ]_ec DXQ^[cd_dXU]U]RUbc_V dXYc]_bUdXQ^" iUQbc _\TVQ]Y\i_bYWY^Q\\iVb_] <_bbQY^UgQcUcdQR\YcXUT di`UgXYSXYcQRQcU_V S_^dU]`_bQbidi`_WbQ`Xi DXUVYbcddi`_WbQ`XUb _VdXYc^Q]UgQc6bQ^ç_Yc 4YT_d!&()¾!\'%\'VYbcd _VQ\\R__[RY^TUbY^ !\'!)\QdUbdi`_WbQ`XUb Y^!\'%$g_b[cd_WUdXUb gYdX1RR}TU2Ub^YcgX_ gQcXYc`b__VbUQTUbQVdUb WUddY^W_VVdXUcU]Y^Qbi 8UXQT!"SXY\TbU^ 6YbcdVQ]Y\i]UdQ\]Q[Ub 6bQ^ç_Yc1]Rb_YcU4YT_d !\'# ¾!( $+QedX_b_VdXU di`UVQSUgXYSXGeUV\Qbd WbQfUQ^TV_e^T8Yc c_^6Yb]Y^d__[`QbdY^ U^WbQfY^Wc\Y`cY^!\'(# FYRUbdgQcXYccSX_\Qb DXUcUQbUdXUdi`UcgXYSX RUSQ]UVQ]_ecQ^TgXYSX QbUceR]YddUT_^dXU U^S\_cUT`YSdebUDXUcU di`UcgUbUY^!( ecUTRi 6Yb]Y^4YT_dY^!#"TU`dX `_Y^dcV_bÀ3_^cdYdedY_^ _VbU`eR\YSÁdi`UcX_e\T RUS_]UdXURQcU]U^d_V b_]Q^\UddUbcV_b]_TUb^ di`_WbQ`Xi¸ François Didot

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 6 S E R V I C E S Printers\' Hands Are Not Smeared with Dyes Any More The past and present of the Czech printing industry, its prospects, and the effort of the Association of Print- ing Industry Entrepreneurs (Svaz polygrafických podnikatelů) to assist Czech vocational training and the branch as a whole were the topics we discussed with Jan Sochůrek, the President of the Association. Let us begin with a question which is almost essential nowadays – has the printing industry been affected by the crisis? Naturally, we have been hit by the crisis as well, it may be fading away already, and al- though I am almost afraid to say so, I feel guardedly optimistic. Our print shops now have quite enough work, not only because materials for the elections have been pro- duced recently. The amount of printed matter depends to a great extent on the amount of investment in advertising. In the Czech Republic, this investment is worth about CZK 16 to 18 billion annually, and by this I mean the total in television, radio, and the print media. Naturally, businesses are investing less in advertising because of the crisis, and the amount of print produc- tion is declining as a result as well, basically this is in direct proportion. Traditionally competition in your sector has been strong in this country… Yes, you are right. It had been so even be- fore the 1989 revolution, thanks to huge investment in the printing industry. Actu- ally, supply has highly exceeded demand here since then, and the crisis has natu- rally intensified this at present. Of course, this is not just a Czech problem, a similar situation involving production cuts ex- ists all over the world. The trend is highly prominent in Germany, where our sector has been hit much more than in the Czech Republic. Germany is the largest partner for our exporters – 30% of Czech exports go to Germany. Imports have become even more important – the three largest export- ers of printing technologies are our histori- cal partners. A significant part of printing our technologies come from Germany, but Japanese suppliers are beginning to score points here as well. Your sector is experiencing extremely quick changes in technology, isn’t it? Indeed, the printing industry is developing sometimes at breakneck speed, as a branch influenced mostly by precise new techno- logies – the most prominent being the use of digital technology, which is no surprise to anyone nowadays. Formerly, the common material was lead, and the method was ty- pographic printing. Nowadays we use mod- ern media for everything, all data, texts, and images are on digital media. Thanks to this, the printing process has significantly sped up. Some historical printing professions have been dead for a long time – you can no longer meet a compositor or lithogra- pher nowadays. Digital gear now dominates printing technologies, some processes have been discontinued entirely, others have been compressed, the speed and quality Winners of the Most Beautiful Czech Book of the Year 2010 competition will be announced in April 2011, in the categories of graphics, il- lustrations, and print qualities of the titles. ASSOCIATION OF PRINTING INDUSTRY ENTREPRENEURS The Association was established on 10 October 1990, and it has thus recently marked twenty years of its activities, even though it is considered as successor to a pre-World War II institution known as the Printing Industry Panel. Currently it has 90 members and is the only printing business association in the Czech Republic. Its members include print shops, suppliers of printing technology, suppliers of materials for production, from dyes to chemical products and other materials, authorised experts in the printing sector, and others. Vocational printing schools are represented on the association by their teachers and headmasters.The Statutes emphasise that the Association promotes the interests of the sector in relation to the authorities, arranges publicity, and also exerts efforts to foster the cultivation of the business environment in the sector. Its interest is primarily in supporting a fair communication between members. Photo:NationalLiteraturyArchives

http://www.floowie.com/cs/cti/cbt-1-web/

2 7 | of everything are increasing. This is a world- wide trend. The Czechs are successfully keeping abreast of the front-runners in the world. They are raising their qualifications and acquiring the know-how. To be a little metaphoric, I could say that we want to point out to young people interested in the study in our branch that printers‘ hands are no longer smeared with dyes. You mentioned education - what pre- cisely is the situation like in the printing branch in the Czech Republic? Since its establishment, the Association has undertaken to help to solve the prob- lems of vocational training, from 1992 we can speak about an integrated system of education in the printing sector. There are seven vocational printing schools in the Czech Republic. In our opinion, the icing on the cake is the Department of Graphic Arts and Photophysics at the University of Pardubice, which was established almost fifteen years ago. For four years, the Print Media Academy, the institute for life-long education, has been in existence. Life-long education is supported by various funds within the EU framework, there are sec- tor councils, which are teams of experts in various branches that identify the needs of the labour market, study the trends in the different industrial sectors, and propose how to adapt the education systems and skills to them. Could you present some of the events where the Association of Printing Industry Entrepreneurs participates as a professional group? We are co-organisers of the international conference on printing and current trends called Print Forum, its 17th edition will be held next year. We also organise seminars and conferences for specialists. We main- tain close contacts with related organisa- tions, such as the Flex Printers Association, the Association of Paper Wholesalers, the Association of Publishers of Periodical Press and others. The Association also co-organ- ises the Most Beautiful Czech Book of the Year competition and its members form the technical jury which judges the quality of the books entered for it. We also award our own prize for printing quality. Šárka Kratochvílová C Z E C H B U S I N E S S A N D T R A D E

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 8 S E R V I C E S Steer Through the Maze of Printing Companies The choice of a printing company for the placement of your order is some- times a hard nut to crack. The list of suppliers is long, without exception their offers are embellished with attributes such as cutting-edge, the fastest, the cheapest, of the highest quality. How to choose the really best printer and what to watch in a contract? If you do not need a print shop every month, you probably do not have a company with whichyouworkpermanently.Inyour search, make sure you pay attention to what orders the company has fulfilled, the references of other clients, whether it has worked with sub-contractors or fulfils orders with its own capacities, and what the offered price actu- ally includes. Before the execution of a con- tract it is also necessary to consider who will supply the graphic design for your job. Does the chosen printing company have experi- ence also in this area? CONTRACT BETTER THAN GOLD It is best for a client to sign a contract for work with a printing company in com- pliance with the Czech Commercial Code. A contract for work does not have to be con- cluded in a written form. The basic essen- tials of such a contract are the specification, price, and completion date and delivery of the work. It should be remembered that the price of the work depends not only on the number of copies, but also on many other factors, such as the type of paper, number of colours, press technology, or enclosures. If a contract is concluded in writing, it can be changed verbally or through electronic correspondence. In that event, it should be noted that a normal e-mail message, which does not include a secure electronic signa- ture pursuant to Act No. 227/2000 Coll. on Electronic Signature, is not a legal act done in a written form. PRINTING COMPANY’S RESPONSIBILITY A printing company assumes responsibility for the completion of a contracted work on time, in an agreed quantity and quality, or in usual quality where no agreement has been made on quality. A printing com- pany is also responsible for defects caused by sub-contractors, i.e. businesses which fulfilled a part of the order, such as typeset- ting or bookbinding. A printing company is not responsible for defects in a work if they have been caused by the use of concepts EXAMPLE OF CONCEPTS FOR THE CALCULATION OF A BOOKLET Form of concepts – whether films are prepared or complete pre-press is requested Size of booklet (e.g. A4 size) Number of pages (divisible by 4 – e.g. 128 pages) Colours Print run Paper (coated, offset, grams per square metre) Type of binding (in booklets, books) Additional requested binding works (varnishing, lamination, die-cutting, perforating, numbering, etc.) provided by the client, where the inappro- priateness of the concepts could not be dis- covered even with specialist care, or where the client insisted on them despite being warned of their inappropriateness. Similarly, a printing company is not responsible for defects caused by compliance with inap- propriate instructions supplied by the client, if it has warned of the inappropriateness of the instructions but the client has insisted on compliance with them. MOST FREQUENT DISPUTES The most frequent disputes in the Czech Re- public concern the payment of a price. The causes of disputes are the quality of work, the time of completion, or damage suffered by clients because of fault or late delivery. In many cases such disputes can be avoided with high quality contracts, monitoring and documentation of the course of the con- tracts, and checks on the execution of the work. The liability of a printing company for damage, and the amount of damage, must be proved by the client. Clients must also supply proof in cases of the violation of le- gal duty, damage suffered, and the causal- ity between the violation of legal duty and damage. SETTLEMENT OF DISPUTES If a dispute is not settled by an agreement, it is sent to court or, where agreed in writing between the client and the printing com- pany, to an arbitrator or a permanent court of arbitration. Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

2 9 | Social Media in Printing Industry The notion of social media, or social services or networks, as part of in- ternet publishing and information sharing is one of the most discussed notions today. Services such as Facebook, Twitter, or YouTube have managed to attract the widest community of the Internet users worldwide and in the future we can expect their further and in some cases probably still very steep growth. What is, however, the real potential for their use by printing enterprises, especially publishers, as well as printing works, advertis- ing agencies, or pre-press studios? THE CONCEPT OF SOCIAL MEDIA Social media can be characterised as on- line media that allow their uses to actively share and create or co-create the content. Participation of users is thus much higher in comparison with older conception of the web as a medium primarily intended for passive reception of its content. They can thus be a new promising tool for bi- lateral communication with current or po- tential customers or business partners, or readers in the case of publishing. The pos- sibilities of their primary use for promotion and advertising in comparison with tradi- tional web are probably more limited; on the other hand, bilateral communication can support marketing, contact develop- ment, and the building of user communi- ties. It enables more direct targeting of the community related to the area of pub- lishing activities, printing production, ad- vertising and marketing, or other services. Social media can be used in a given way both in the B2C (Business-to-Costumer) area, as well as B2B (Business-to-Business) communication. For a really effective utilisation, social media require an effort referred to as SMO – Social Media Optimisation. The basic task such as setting up an account on Facebook or Twitter or establishing a company blog can be done very quickly. Subsequently, though, it is necessary to take care of regu- lar update of the content and communica- tion of the given channel, analysis of social interaction results and much more. Other ways of making one’s activities visible on the web must be taken into account, too (on-line advertising, web presentation pro- motion related to search engine optimi- sation or SEO, direct mail etc.), and in the case of publishing also linking with other publishing channels. The central element from which social media activities ensue must be an excellent web presentation of the user. THE FACEBOOK PHENOMENON Facebook has become a synonym for social networks, or social media as such today. Since its establishment in 2004 it has ex- panded into a social interaction platform used by millions of users (approx. 1.7 mil- lion in the Czech Republic, over 350 million worldwide). Its basic principles – informa- tion sharing in a community of so-called friends, or fans in the case of company pro- files – suggest that Facebook is intended for friendly interaction rather than profes- sional communication. However, it is pos- sible to make oneself visible in the form of a company profile to which it is necessary to draw the attention of “fans”. The first step is usually the placement of a link on the company’s own web page and a message via direct-mail; another form of promotion is advertising. A company can post information about its activities (press releases, new articles, in- PRINTING COMPANY since 1990 ÀÅÇÉ¼ÊÊØ¥ê¥àêØåæÝÝêÜëçéàåëàåÞÚæäçØåðØåÛÙàåÛÜéð êçÜÚàØãàñàåÞ àå ÚæäçãÜëÜ çéàåë çéæÛìÚëàæå¥ Âèå ÖèæçâàØåæ ÜáÖßè×Ø Ô×éØåçÜæÜáÚ ÔÚØáÖÜØæ ÚåÔãÛÜÖÔß æçè×Üâæ ãèÕßÜæÛÜáÚÛâèæØæ×âàØæçÜÖÔæêØßßÔæÙâåØÜÚáÖâàãÔáÜØæāÕÔáÞæ ÜáæèåÔáÖØÖâàãÔáÜØæãåâ×èÖçÜâáãßÔáçæ¡ ÊØ Øëãâåç çâ Ôßß ÖâèáçåÜØæ âÙ ¸èåâãØ ¶Í Æ¾ Ã¿ ¹Å ·¸ »È´ÇÆ¶»¡¡¡¡ ¼ÁÃÅ¸ÆÆ Ùèßßì àÔáèÙÔÖçèåØ Ôá× ×ØßÜéØå ā ÖÔçÔßâÚèØæ ÙßìØåæ ÕåâÖÛèåØæÖÔßØá×ÔåæàÔÚÔíÜáØæàÔáèÔßæÔááèÔßåØãâåçæÕââÞæ ãâæçØåæÖèçÃÂÆàÔçØåÜÔßæÕèæÜáØææãåÜáçæÔá×âçÛØå¡ www.inpress.cz UØåâçkáâéÔ¨ ¦ª££§"ØæÞbµè×cÝâéÜÖØ ¶íØÖÛåØãèÕßÜÖ çØß¡§¥£¦«¨¤£¥¤¤¤ ÙÔë§¥£¦«¨¦§£ª¨¬ Ø àÔÜßÜáÙâ³ÜáãåØææ¡Öí ÕèæÜáØææÖâáçÔÖç µÖ¡ÉßÔ×ÜæßÔéÁÔ×ÕØåØá àâÕÜßØ§¥£©£¥§¦¦«¦¦ Ø àÔÜßéßÔ×Ô³ÜáãåØææ¡Öí 33

http://www.floowie.com/cs/cti/cbt-1-web/

| 3 0 S E R V I C E S Photo:www.sxc.hu stallation of equipment, successes, bargains etc.), it can share videos or photographs with its fans (from various events, meetings with partners, accompanying certain arti- cles etc.) and so on. LINKEDIN AS A COUNTERPART From the point of view of focus, the other pole of the spectrum, i.e. the area of net- works focusing at professionally minded communities, is the LinkedIn network. Its typical users are specialists from various ar- eas, managers, consultants etc. The network enables to establish individual connections as well as groups of users. With its help one can build professional contacts, search for potential employees or employers etc., all that also in the field of printing industry. A similar network is Xing. BLOGS AND MICROBLOGS Other tools include blogs (web logs), i.e. pages with regularly written articles on a certain topic. In the case of a printing enterprise a blog can inform about events either related to the activities of a plant or to news in the field. Tools usually allow includ- ing the blog into the framework of a web presentation. Rather than classic blogs, the so-called mi- cro-blogging attracts more attention now- adays. It is represented especially by Twitter (world-wide approx. 45 million users). Its aim is to provide its users with a platform for communication via short messages. The Twitter message limit of 140 charac- ters results in a much more matter-of-fact communication. MULTIMEDIA NETWORKS (YOUTUBE ETC.) Probably the best example of a successful project in this field today isYouTube, owned by Google. Individuals and firms can share videos with other visitors via the so-called channels. After uploading the video on YouTube, it can (together with the relevant browser) be imbedded in a web present- ation by simply copying a certain part of the HTML code. Despite all the media attention which to- day accompanies the spread of social net- works, it is important to stress that using their potential requires time, concentrated effort, and appropriate skills. Richard Krejčí Svět tisku (World of the Press) Magazine e-mail: redakce@svettisku.cz

http://www.floowie.com/cs/cti/cbt-1-web/

3 1 | C Z E C H B U S I N E S S A N D T R A D E If the packaging has all the required charac- teristics, the never-ending process of its en- hancement, fine-tuning and improvement begins – as well as its protection, because a good brand combined with good packag- ing is a temptation for copying. The roots of counterfeit brands go back to the time of sea discoveries, when the interconnection of the trade network we now call “world- wide”first took place. PACKAGING AS OWNERSHIP Together with the global character of trade, problems related to copyright protection also arose. The basic and, in fact, only protec- tion is the packaging. The industry dedicated to packaging technologies provides many protective elements at the moment, so that the overall majority of products can be distin- guished from fakes. With slight exaggeration, it can be said that, thanks to packaging, we can distinguish a product from its fake in the same way as with banknotes. Ideal Packaging: It Sells and Protects the Environment Packaging originally served only as protection. Scooped-out pump- kins or leaves, ceramic or tin ves- sels were replaced by plastic. The modern age requires increasingly more from packaging. Packaging must sell the product, provide information about its contents, be environmentally friendly, provide the customer with maximum consumer convenience... in short, it must be HIP. There are simple as well as more complex – we can say sophisticated – possibilities or combinations of possibilities for distinguish- ing a product from its counterfeit. The sim- pler technologies are of course more afford- able. They include UV fluorescent protection (ultraviolet light changes the colour on the packaging), Pen Ink technology (this is basi- callyinvisibleinkwhichchangescolourwhen a special chemical substance is applied to the correct spot on the packaging), or what is known as numbering (i.e. the marking of the outer packaging with a unique numeri- cal series), to name but a few. A separate section belongs to trade- marks that obviously represent the most precious asset acompany can boast of. This is the company’s treasure. It is the trademark that can distinguish products made by the competition, even if they are of a similar kind. It can be a word, a logo, a specific combination of type and graph- ics, or the unique shape of the product or its packaging. It is not necessary to add that a success- ful brand is a temptation for counterfeit- ing. Its protection is stipulated by Czech legislation in Act No. 441/2003 Coll., on Trademarks. This Act defines a trademark as “any sign capable of being represented graphically, particularly in words, includ- ing personal names, colours, designs, let- ters, numerals, the shape of goods or their packaging, provided that such a sign is ca- pable of distinguishing goods or services of one undertaking from those of another undertaking.” THE“DEMON”OF ENVIRONMENTAL PROTECTION Another protection, this time environ- mental protection, is also represented by many legal stipulations. According to the packaging expert Vlado Volek of the SYBA Packaging Institute, environmentalism in the packaging industry in the Czech Re- public as a phenomenon of recent years is just a mere bubble. The demands that the ecological lobby have introduced often prove impossible in practice, or even counterproductive. “As a result of the directive on packaging and packag- ing waste or our Law on Packaging, you have to prove that any packaging which you place on the market, or which you sell, does not harm the environment,” says Volek about the basic legal requirements. The level of recycling and use of packaging waste in the Czech Republic in 2009 paper 94% glass 73% plastics 59% metals 50% others 24% total 71% source: EKO-KOM

http://www.floowie.com/cs/cti/cbt-1-web/

| 3 2 S E R V I C E S His words are illustrated by the fact that, when applying for financial support from European funds, one of the main demands is a confirmation that the applicant separates waste and behaves in an environmentally friendly manner and uses environmentally safe technologies (next to the section about gender equality at work). “Of course no one says‘no’, otherwise they needn’t even submit an application,”saysVolek. So we end up with ecology for the sake of appearances only. The only argument which can induce pro- ducers to be more eco-friendly is – what else? – money! Management will adapt production to environmental demands if they calculate that it is economical as well; whether this means production costs or just the fact that the customer prefers environ- mentally-friendly packaging. FINANCIAL CRISIS UNSETTLED WASTE SEPARATION The system of separation and recycling was greatly affected by the crisis which de- creased the demand for secondary raw ma- terial resources. Besides, their redemption price fell rapidly. Not even the difficulties on the secondary raw material market induced the European Union to lower the annual quotas for separated waste in individual countries. The prospects of improved days in the field of secondary raw material prices are not much better so far. In comparison with 2009, there is a gradual increase of de- mand for secondary raw material resources, but the balance of prices remains approxi- mately at half when compared to the past. The crisis has shown that the system of separation and utilisation of waste in the Czech Republic is well and effectively in tune and that it is able to function, even under very unfavourable conditions, on the market of secondary raw materials. The Czechs have grown accustomed to waste separation in containers distinguished by colours and this habit is being maintained, despite economic fluctuations. PROCRASTINATING NANOPARTICLES Apart from the trend of protection of the en- vironment and customer, the packaging in- dustry also watches the constantly develop- ing technological and material progress. The packaging industry is capable of absorbing the latest scientific findings with an obvious effort to use them for better quality services. According to experts, the rocket start of sci- entific novelty in the packaging sphere is now being followed by uncertain procrastination. And the reason for this? No one can be sure what undesirable effects – and whether any at all – the use of nanoparticles could have on the packaging industry. Let us remind our- selves that nano-materials consist of particles the size of 10-9 m (i.e. one billionth of a metre), a thousand times smaller than the breadth of a human hair. The insecurity reigns mainly in the sphere of food packaging. IS THE PACKAGING ACT RELEVANT TO YOU, TOO? The Packaging Act of 2002 places rather high demands on some entrepreneurs. In the field of waste management, a very good system was introduced which annu- ally places the Czech Republic among the most successful European countries. And it also means further administrative burdens for businessmen. A part of the system is the Packaging Act 477/2001 Coll., which came into force on January 2002. Legally it was an answer to the demand for harmonis- ation of the EU countries’legislation. Its aim is to protect the environment. The Law stipulates the following: It determines the obligations of producers, importers, and distributors of packaging. It determines the obligation to provide for packaging retrieval and to utilise packaging waste. It defines the so-called authorised pack- aging company and its rights and obliga- tions. It determines the obligation to apply for the registration in a list of persons who launch packaging or packaged goods on the market or into circulation. It defines the structure and mode of pack- aging registration and notification duty. It describes the operation of state ad- ministration in the field of packaging and packaging waste treatment and it deter- mines the administrator in this sphere. It describes the sanction proceedings and stipulates protective measures, re- medial measures and fines. TO WHOM DO THE OBLIGATIONS OF THE PACKAGING ACT APPLY? The Act applies to entrepreneurs; that is, not to individual consumers – citizens and households. If your entrepreneurial activ- ity launches packaging, packaged goods or packaging goods on the Czech market or into circulation (the definition of these terms is to be found in Art. 4 of the Act), you have to follow the rules stipulated by this Act. These rules state that it is almost al- ways the producer and importer, but often also the distributor and final retail vendor of the packaging, to whom this Act applies (by packaging we mean both separate packag- ing, i.e. empty packaging, as well as packag- ing with packaged goods inside). Structure of non-reusable packaging in the Czech Republic in 2009 paper 38% plastics 24% glass 22% others 11% metals 5% source: EKO-KOM Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

3 3 | C Z E C H B U S I N E S S A N D T R A D E Paper and the environment – two terms which are closely connected. Several in- teresting views of them can be found at present. WELCOME TO RECYCLED MATERIALS An example of large paper consumption is that by modern corporate marketing com- munications. If they are to be sustainable, they should include all suitable media in sensible quantities. Where printed products are manufactured, the numbers have to be chosen carefully to avoid waste. For printed matter of up to 300 pieces, digital printing is more appropriate than classical products. In addition, individual pieces can be personal- ised by various introductions or information adapted to different addressees. Recycled paper can be used for all print- ed materials. The existing options are un- coated (offset) paper, and coated (chalk) paper, where the whiteness is close to normal paper. Some types of printer and copier paper from recycled fibre do not pose any additional requirements on printers and copiers and their whiteness is suitable for most printing tasks. Be- sides recycled paper, there are a number of ecological certificates for various types Paper Is Part and Parcel of Sustainable Development Despite its long history, paper is one of the symbols of the modern age, it is part of our everyday life. There is all the more reason to use it in accordance with the principles of sustainable development. This applies especially to the business sphere. of paper. The best known of these are FSC, PEFC, EU flower, Nordic Swan, and others. By buying paper with one of these certificates, companies have the assurance that the paper has been made from eco-friendly managed forest wood and the use of raw materials from illegal timber felling in developing countries is absolutely ruled out. ONLY A MYTH … The big innovation of recent years has been electronic communication in which written messages are entrusted to com- puters instead of to paper. But … “Elec- tronic communication has no effect on the environment. The view that it saves the costs of paper production and con- sumption is only a myth”, says Marek Juda, Chairman of the Civic Association for Re- sponsible Development. The fact is that companies try to save costs by sending their mail electronically, but in reality they only shift the costs onto their business partners and customers. Data of Sweden’s Royal Institute of Tech- nology show that 30 minutes of on-line news reading consumes 20% more energy than that needed to produce a classical newspaper. Sending an e-mail with a 400 kB attachment to 20 people consumes, ac- cording to BBC research, the same amount of energy as light from a 100-Watt bulb in 30 minutes. What is more - the computers used to transfer in- formation have to be pro- duced, and liquidated after completing their service life, that is a process in which a large quan- tity of heavy met- als and plastics is released. Experts say that there is another ingrained myth: whenever print- ing, one is harming Nature and caus- ing deforestation. However, the reality is different. Since 1950, Europe’s forests have expanded by 30%, and this increase is primarily de- signed for construction, the fur- niture industry and, precisely, paper produc- tion. In their own interest, the owners take care of forest renewal. And, if there was not a demand for wood, these forests would not exist.Thus, from a different viewpoint, paper consumption aids afforestation. In addition, in paper and cardboard production, scrap paper accounts for more than 50%. BOGEY NAMED CARBON DIOXIDE Old printed paper releases CO2 , which cau- ses global warming. How many times have we heard this sentence, or rather another myth? The fact is that paper contains CO2 absorbed by a tree during its growth. If the paper did not exist, the tree planted for its production would not exist either and the CO2 would remain free in the atmosphere. For comparison – the average paper con- sumption per inhabitant is approximately 120 kg per year in the Czech Republic and it is not increasing. According to the ATS Consulting company research, the amount of CO2 formed during the production of this quantity is the same as in a car driven over a distance of 610 kilometres. And finally – 54 % of the energy in European paper mills is generated from biomass originating as a paper by-product, which is much more than in any other sector.

http://www.floowie.com/cs/cti/cbt-1-web/

| 3 4 R E G I O N The South Bohemia Region is a harmonic area which attracts tourists with its numerous cul- tural and technical monuments, natural beauties and wholesome environment. Historically, it is an agricultural region with developed fish farming and forestry. Industry, focused on manufacturing, devel- oped as late as the last century. The modern infrastructure is in harmony with the rich cultural and historic heritage. South Bohemia Region Liberec Praha České Budějovice Jihlava Brno Zlín Ostrava Olomouc Pardubice Hradec Králové Ústí n/L Karlovy Vary Plzeň SLOVAKIA POLAND AUSTRIA GERMANY České Budějovice Český Krumlov Prachatice Strakonice Písek Tábor Jindřichův Hradec REGIONAL CAPITAL, ČESKÉ BUDĚJOVICE České Budějovice, the capital of the South Bohemia Region, is situated at the conflu- ence of the Vltava and the Malše Rivers amid picturesque countryside. The core of České Budějovice has been declared an Urban Monument Reserve, due to its ground plan and many architectural and artistic monu- ments.The town is a centre of transport. Ap- proximately 50% of the tourists coming to České Budějovice are foreign visitors. TOURISM South Bohemia boasts the Šumava-Bohe- mian Forest National Park, three Protected Landscape areas, 24 national Nature Re- serves and National Natural Monuments, and more than 250 Nature Reserves and Natural Monuments. The Region has many historically valuable monuments and Urban Monument Reserves. Two monuments are on the UNESCO World Cultural Heritage List – the village of Holašovice with its preserved typical South Bohemian rural architecture, known as Rustic Baroque, and the town of Český Krumlov (see further). Memories of the remote past are evoked by monumen- tal Romanesque buildings (the monas- tery in Milevsko) and, in particular, Gothic structures (monasteries in Vyšší Brod and Zlatá Koruna, many castles and strongholds, and town centres). Imposing monuments date from the Renaissance period and the Rožmberk and Lords of Hradec eras. DISTRICTS České Budějovice District The influence of České Budějovice as the ad- ministrativecentreoftheRegionisapparent, mainly in the economic area.The District has 47 000 registered economic entities, which is almost one-third of the number registered in the whole Region. The České Budějovice District differs greatly from other districts in the structure of its sectors, particularly in the prevalent market services. TheDistricthasmanyforests,waterexpanses, and numerous cultural monuments which at- tract countless Czech and foreign tourists.The NUTS Area (in sq.km) Population Number of municipalities Population density (persons/sq. km) LAU 1 - České Budějovice 1 638 185 584 109 113 LAU 1 - Český Krumlov 1 615 61 516 46 38 LAU 1 - Jindřichův Hradec 1 944 93 298 106 48 LAU 1 - Písek 1 127 70 550 75 63 LAU 1 - Prachatice 1 375 51 548 65 37 LAU 1 - Strakonice 1 032 71 054 112 69 LAU 1 - Tábor 1 326 102 054 110 78 NUTS 3 – South Bohemia Region 10 057 636 328 623 63 NUTS 1 – Czech Republic 78 867 10 515 818 6 249 133 Source: Czech Statistical Office (as of 1 January 2010), NUTS – territorial units according to the EU classification, LAU 1 = district) Photo:CzechTourism Latest Data: South Bohemia Region Population as of 30 June 2010 637 723 Gross Wages 1st – 2nd quarter 2010 CZK 20 053 Unemployment as of 31 Oct 2010 6.76 %

http://www.floowie.com/cs/cti/cbt-1-web/

3 5 | C Z E C H B U S I N E S S A N D T R A D E best known and most visited monuments include the pseudo-Gothic Hluboká nad Vlta- vou Chateau and the former Ohrada hunting lodge nearby. The characteristic rural archi- tecture, known as Rustic Baroque, has been preserved in many villages. Some 300 ponds were constructed on waterlogged areas in the past. The Vltava River crosses the District from the south to the north. Český Krumlov District TheČeskýKrumlovDistrictisa typicalborder area in the southernmost part of the Czech Republic. Almost all of its territory is part of the Šumava Mountains. There is a network of protected areas and more than 40 Nature Reserves and monuments, as well as archi- tectural monuments. The greatest treasure of the Region is the unique architectural and urban entity – the town of Český Krum- lov, which was entered on the UNESCO World Cultural Heritage List in 1992. The re- volving auditorium in the Chateau gardens is unique. The town is a centre of tourism, cultural and social events. The artistic and historical value of the monasteries in Zlatá Koruna and Vyšší Brod is extraordinary. Jindřichův Hradec District This is the largest district in the Czech Re- public. Its climate is influenced by vast water expanses, which accumulate heat and regu- late the amount of precipitation.The District has more than 2 500 fish-farming ponds on approximately 6% of its area. Agriculture is the sector with the biggest share in em- ployment. Jindřichův Hradec is the smallest university town in the Czech Republic, con- sisting of only the Faculty of Management of the University of Economics in Prague. The environment is improved by the estab- lishment of protected territories, the most important one being the Protected Land- scape Area around Třeboň, which is on the UNESCO List. Písek District This District has an old fish-farming tradition and angling is possible on many ponds. The attraction of the whole region is increased by the Orlík Dam with Orlík Chateau and Zvíkov Castle, the town of Protivín with the old Schwarzenberg Brewery, cultural monuments and Nature Reserves. The town of Písek has the oldest surviving bridge in Bohemia, built before the end of the 13th century. In the structure of employment in sectors (according to the number of employees in enterprises based in the District), industry has the largest share (38%), which is slightly above the average of the Region. The share of non-market services is also above-aver- age. On the contrary, the share of market services is slightly below average, particu- larly transport, which has one of the lowest shares of employees in the Region. Prachatice District The District has a share of 27% of employees in non-market services, which is the highest in the Region. The position of the District, in INTERESTING FACTS ABOUT THE REGION: The first ponds in the South Bohemia Region originated in the 14th century. Their present number exceeds 7 000, with a total area of more than 23 000 hectares. The best known and largest pond is Rožmberk with an area of 490 hectares. This is also the largest pond in the Czech Republic. The sugar cube, now used around the globe, originated in the sugar refinery in the South Bohemian town of Dačice. Sugar in this form saw the light there in the second half of the 19th century. The Žofínský and Hojnovodský Virgin Forests, the oldest protected areas worldwide, are in the Novohradské Mountains in South Bohemia. The biennial International Bagpiper Festival – the largest meeting of bagpipers in Europe – has been taking place in the town of Strakonice since 1967. Budvar is the trademark of the Czech beer produced by the Budějovický Budvar brewery in České Budějovice. Beer has been brewed in this town for more than 800 years. The horse-drawn railway České Budějovice – Linz, the first of its kind in Europe, was put into operation between 1827 and 1836. It served mainly for the transportation of salt from the Upper Austrian Salzkammergut to Bohemia. Night life in České Budějovice main square

http://www.floowie.com/cs/cti/cbt-1-web/

| 3 6 KRAJSKÝ ÚŘAD (REGIONAL OFFICE) U Zimního stadionu 1952/2 370 76 České Budějovice Czech Republic Telephone: +420 386720111 e-mail: posta@kraj-jihocesky.cz www.kraj-jihocesky.cz CELNÍ ŘEDITELSTVÍ ČESKÉ BUDĚJOVICE (ČESKÉ BUDĚJOVICE CUSTOMS DIRECTORATE) Kasárenská 6/1473, 370 21 České Budějovice Czech Republic Telephone: +420 386 714 111 e-mail: posta0301@cs.mfcr.cz FINANČNÍ ŘEDITELSTVÍ V ČESKÝCH BUDĚJOVICÍCH (ČESKÉ BUDĚJOVICE FINANCE DIRECTORATE) Mánesova 3a, 371 87 České Budějovice Czech Republic Telephone: +420 387 722 111 e-mail: podatelna@cb.ds.mfcr.cz JIHOČESKÁ HOSPODÁŘSKÁ KOMORA (SOUTH BOHEMIAN CHAMBER OF COMMERCE) Husova 9, 370 01 České Budějovice Czech Republic Telephone: +420 387 318 437 e-mail: jhk@jhk.cz, www: www.jhk.cz R E G I O N Photo:CzechTourism foothills and mountainous terrain, the fairly pure atmosphere, large areas under forest, and the peaceful environment provide fa- vourable conditions for recreation. The Dis- trict lies partly in the Šumava-Bohemian For- est National Park and the Šumava Protected Landscape Area. Some sections of rivers are suitable for water tourism. The Schwarzen- berg Canal is a remarkable technical monu- ment, which used to serve for the floating of timber as far as Vienna. Strakonice District Of the total area of the District, 65% is farm- land, 23% is under forest, and 4% consist of water expanses. Industry has the largest share in the structure of sectors, but agri- culture is not negligible. The District has a dense network of roads. Many archaeo- logical finds testify to settlement in the ter- ritory in the BC period. The town of Stra- konice, renowned as a town of bagpipers, hosts the regular International Bagpipe Festivals, which are attended by musicians and ethnographic ensembles from many parts of Europe. Tábor District The District offers many natural sights, ponds for recreation, and rivers suitable for water sports, in addition to ancient towns and historic monuments. Archaeological finds do not exclude the possibility of set- tlement in the historic core of the town of Tábor in primeval times. The Hussite period was most important for the Region. Master Jan Hus lived and preached at Kozí hrádek Castle near Sezimovo Ústí in 1412. ECONOMIC POTENTIAL The Region has a share of 5.3% in the GDP of the Czech Republic but, in per capita terms, accounts for 86.9% of the country’s average, and holds the fifth position among regions. The main crops are cereals, oil plants and fodder, followed by potatoes. Cattle- and pig-breeding are dominant in animal pro- duction. Fish farming has a long tradition in the Region. Ponds are also important in water economy, as they regulate water flow. They are a boon to tourism. Industrial production is concentrated mainly in the České Budějovice agglomer- ation, while the Districts of Tábor and Stra- konice also have a significant share. How- ever, the Region does not rank among the crucial industrial areas in the Czech Repub- lic. The main sector is the manufacturing in- dustry and, within it, the production of food and beverages, and means of transport and equipment. TRANSPORT The Region has an increasing intensity of transport, particularly road transport. South Bohemia is easily accessible from the north- ern and eastern areas of the Czech Republic and from neighbouring Austria via the E 55 road (Prague - České Budějovice - Linz) to which local transport is connected. Regular bus routes are operated by several trans- porters. Regular long-distance bus lines run from Prague and other distant centres. Inter- national trains operate via České Budějovice, with Veselí nad Lužnicí being an important railway junction. České Budějovice Interna- tional Airport, situated 6 km from the town, is the only airport in South Bohemia that can be used for flights to international des- tinations. The thorough modernisation and reconstruction which the airport is now un- dergoing will rank it among standard inter- national airports. From the Šumava Mountains MORE INFORMATION ABOUT THE SOUTH BOHEMIA REGION IS AVAILABLE AT: www.kraj-jihocesky.cz http://mesta.obce.cz http://www.cbudejovice.czso.cz/ http://www.risy.cz www.southbohemia.eu www.jiznicechy.cz

http://www.floowie.com/cs/cti/cbt-1-web/

http://www.floowie.com/cs/cti/cbt-1-web/

| 3 8 R E G I O N Eight Reasons for Investment in the South Bohemia Region 1. Qualified and Flexible Labour Force The South Bohemia Region is an entity with noticeable advantages in comparison with other regions in the Czech Republic and the whole of Europe. Historically taken, most in- habitants of the Region have changed their professions and working habits accord- ing to topical needs, even several times in a lifetime, which is not at all usual in other regions of Europe. Investors can easily find professionally and morally efficient em- ployees for any job in agriculture and the manufacturing industry. In case of specific requirements, the staff of local labour ex- change offices and the South Bohemia Regional Office can provide qualified assist- ance and facilitate orientation to incoming entrepreneurs on the labour market. 2. Large Potential in Science and Research The South Bohemia Region has a number of educational and scientific research institu- tions. The most important of these include the University of South Bohemia in České Budějovice, a public university with seven faculties and two institutes. Also based in the Region is the Biology Centre of the Academy of Sciences of the Czech Republic, the Institute of Microbiology, the Institute of Botany, the Institute of Systems Biology and Ecology, the Research Institute of Fish Cul- ture and Hydrobiology, the Faculty of Man- agement in Jindřichův Hradec, and newly established facilities of education and scien- tific research in technical branches. 3. Hesitation to Strike andWillingness towards Collective Negotiations Employees in the South Bohemia Region have always been inclined towards a ration- al approach to problems with employers and the specific features of the market en- vironment. Among other reasons, this is due to their high degree of education and mo- rality. Almost all issues between employers and employees or their trade unions can be resolved by negotiations, without the use of means such as strikes. The viewpoint of the present economic situation by the employer and the Region is realistic, and discussions are pragmatic with employees, as well as with investors from other countries. 4. Support from Local Institutions Investors who come to the Region can expect full support for their plans from re- gional and municipal officials, who are ready to satisfy all their rational requirements. The support begins with service to new or per- spective investors. On the basis of briefly de- fined requirements, the most suitable loca- tion is found with respect to all criteria, such as transport accessibility, sufficient labour, background for management, satisfactory infrastructure, and the possibilities of future development. 5. Transport Just like the whole of the Czech Republic, the South Bohemia Region has the densest railway network in Europe. Combined with the network of first- and second-class roads, it provides quality and rapid transportation throughout the Region, which also has an international airport licensed for public transport, and several airfields serving dom- estic flights. There are many border cross- ings into Austria and Germany. 6. Power Industry The Region also supplies electricity to neighbouring regions, due to the Lipno Water Power Plant and the Temelín Nuclear Power Plant. With minimum adaptations of the distribution network, any amount of en- ergy can be supplied to enterprises. 7. Water Economy Infrastructure The Region has a network of public water mains, with drinking water of good qual- ity. In view of the abundance of drinking water, it is also used for industrial purposes and this allows production of higher qual- ity at lower costs, but a sufficient supply of service water is possible in case of need. All towns and some large villages have their own waste water treatment plants and sew- erage systems, which are connected and allow a large amount of sewage to be di- vided between several treatment plants to prevent the overburdening of local equip- ment. Additional sewers can be built to suit the capacity needs of enterprises. 8. Telecommunications All municipalities in the Region are linked by a network of fixed telephone lines and the whole Region, with the exception of a part of the Šumava-Bohemian Forest National Park, is covered by the signals of all mobile phone operators in the Czech Republic. All towns have capacity data lines, and systems of optical and wireless transmission of data are being intensively constructed and im- proved. http://invest.kraj-jihocesky.cz/ Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

3 9 | C Z E C H B U S I N E S S A N D T R A D E Subsidies for Novice Innovative Firms Better effectiveness of placing innovations on the market at the regional level is an issue tackled by the European Commission at its sessions in 2010. An event along this line was the 2010 Conference on Ways of Stimulating Innovation. The Conference was attended on the Czech side in the name of the RAPIDE project (Regional Action Plans for Innova- tion Development and Enterprise) by rep- resentatives of the South Bohemian As- sociation of Innovation Entrepreneurship (JAIP) and of the South Bohemia Region. In competition and comparison with the other 12 partners from 11 EU coun- tries, JAIP had made the biggest progress in facilitating the placing of innovations on the market, and was justly declared the leader at the Conference. On the ba- sis of experience gained from the RAPIDE project, JAIP decided to help young innovative firms to obtain easier access to investment. One of the crite- ria of financial institutions for granting subsidies, credit guarantee and credits as such, is the financial history of the applicant. This is a frequent problem for young novices, complicating their access to finance for innovation, which carries the highest risk. CZECH BLUES PROGRAMME JAIP took the approach of other incuba- tors and technology parks towards an as- sessment of the prospects and quality of the growth of novice firms according to non-financial aspects. JAIP used the absolutely unique BLUES Programme and, in co-operation with the South Bohemia Region, strove for the incorporation and use of this instrument of assessment in support programmes of the Region. This resulted in the use of BLUES for the assessment of the eli- gibility for credit of applicants from the ranks of novice entrepreneurs. The South Bohemia Region decided to test BLUES within the programme of advantageous regional credits for small entrepreneurs. “We suggested a change in the Direc- tives of this grant programme and the South Bohemia Region approved the use of the BLUES system. Another suggestion was the use of the BLUES method in the Grant Programme of the Development of Young Entrepreneurs in selected regions. The suggestions were made in an effort by the Region to support the prepara- tions and realisation of innovative busi- ness projects of small and medium-sized enterprises,” said Luboš Průcha, Head of the Regional Development Department. In 2010 and 2011, the South Bohemian Association of Innovation Entrepreneur- ship, in co-operation with the South Bohemia Region, will conduct a market- ing campaign, including a pilot project to verify the functioning of the BLUES Programme.

http://www.floowie.com/cs/cti/cbt-1-web/

| 4 0 R E G I O N South Bohemia Region Bets on Originality and Production Hundreds of companies are based and thousands of small entrepre- neurs have their places of business in the South Bohemia Region. Every year, they have the opportunity to compete for the titles of“Company of the Year”and“Entrepreneur of the Year”. The results of the fifth year of the competition in the South Bohemia Region were announced in the Regional capital, České Budějovice. The Company of theYear is GS Technik from Orlov, producer of stainless gastronomic equip- ment, and the Entrepreneur of the Year is Ms Miloslava Laiblová from Strakonice, manufacturer of ceramic buttons.The jury appreciated the very good financial situation of GS Technik and its socially responsible activities, and Miloslava Laiblová’s ability to hold her ground against strong competition. ORIGINAL BUTTON MAKER South Bohemians are attracted to forgotten crafts, and so it was not by chance that the title of“Entrepreneur of the Year of the South Bohemia Region” was awarded to Miloslava Laiblová, who has restored the manufacture of traditional Czech ceramic buttons. Her suc- cess goes beyond the Region, as her works have been on display at exhibitions in West- ern Europe, America, and Japan. This is evi- dence that the South Bohemia Region is not only a region of fish and Budweiser beer, but has conditions for success in forgotten crafts. QUALITY GASTRONOMIC PRODUCTS GS Technik won the 2010 title of“Company of the Year of the South Bohemia Region”in the competition entered by 174 companies. GS Technikwasestablishedin1992andnowranks among the leading manufacturers of stainless gastronomic equipment.The jury appreciated the purely Czech ownership of the company and the overall development of its business plan. GSTechnik was initially a locksmith com- pany, focusing on the food industry 15 years ago. At present, it has 143 employees and is a significant employer in the Region. The title was also awarded for high-quality production and excellent care of employees. RESPONSIBLE COMPANY OF THE YEAR Thetitleof“ResponsibleCompanyoftheYear of the South Bohemia Region”was awarded for the first time in 2010, the winner being G-Project from Hluboká nad Vltavou. ”We are doing our best to have responsible busi- ness conduct, and to be the best neighbour in our area. G-Project was awarded for its well-devised system of motivation of em- ployees who, in addition to remuneration, receive benefits in the form of free tickets to theatres and sporting events. The jury was impressed by the introduction of working from home. Moreover, the company divides a part of its annual profit between non-prof- it organisations suggested by the employ- ees themselves. The company uses hybrid cars and environmentally-friendly products in its offices.” 2010 WINNERS: 2010 COMPANY OF THE YEAR OF THE SOUTH BOHEMIA REGION 1st place: GS Technik Orlov, manufacture and sales of stainless equipment for gastronomy and other services. 2nd place: PCV Computers České Budějovice, import of computer components. 3rd place: Grafiko Print Tábor, custom printed labels. 2010 ENTREPRENEUR OF THE YEAR OF THE SOUTH BOHEMIA REGION 1st place: Miloslava Laiblová Strakonice, manufacture of ceramic buttons. 2nd place: František Jakubec Český Krumlov, guesthouse operator. 3rd place: Lubomír Cába České Budějovice, manufacture of sliding door wings. Photo:GSTechnikarchives,NovéHradyCBTarchives An example of GS Technik production design

http://www.floowie.com/cs/cti/cbt-1-web/

4 1 | C Z E C H B U S I N E S S A N D T R A D E Science and Research on the Rise The South Bohemia Region is helping to secure conditions for the development of knowledge throughout its society and thus remove obstacles to the economic growth and development of the Region. The business environment should become more oriented towards support for Research and Development and the con- nected innovation, and backing for regional institutions of scientific research and education. South Bohemian Science and Technology Park in České Budějovice This Park is creating conditions for the trans- fer of technologies, and providing scope for the co-operation of public Research and Development facilities and commercial en- tities in technologically oriented business projects and intentions. The sector orienta- tion of the Park as a whole is multi-purpose with prevalent focus on biotechnological processes. This orientation comes close to the activities of the University of South Bo- hemia and the Biology Centre of the Czech Academy of Sciences. www.jaip.cz Třeboň Innovation Centre The orientation of the Science and Tech- nology Park in Třeboň was chosen to allow the use of the business tradition and ex- perience of its founder, ENVI, s.r.o., and the research of ENKI, o.p.s., the collaborator, to facilitate new activities. The Třeboň Innovation Centre includes: The Centre for Applied Research Business Innovation (including a busi- ness incubator) The Centre for Applied Research is operated by the ENKI Public Benefit Company, with significant participation by the Institute of Systems Biology and Ecology of the Czech Academy of Sciences. A special contract has been concluded with the University of South Bohemia and the Mechanical Engi- neering Faculty of the Technical University in Prague. The business incubator is an integral part of the Centre. Its purpose is the launch of new activities or new firms, trades and enterprises, primarily focused on technological innovations or the transfer of technologies. The founder of the Science and Technology Park will be providing its apparatus and office furnishings. www.tic.trebon.cz Nové Hrady Centre of Biological Technologies The Institute of Physical Biology of the University of South Bohemia is orienting its activities in Science and Research on applied research and support to tech- nologies. The Institute operates a Science and Technology Park with a business incu- bator, the Nové Hrady Centre of Biological Technologies. http://www.greentech.cz/cbt/ Centre for Innovation and Applied Economic Research The purpose of the Centre is to connect research and education at the Faculty of Economics of the University of South Bo- hemia with business. It arranges specific events sponsored by different commer- cial entities. Talented students, who go for practical experience to co-operating firms, are also involved. The Centre was set up in October 2007 and since then has established collaboration with 20 firms and arranged 12 study stays for students, in addition to presentations at the Faculty by collaborating firms. www.ef.jcu.cz Grant Agency of the University of South Bohemia The Grant Agency has been operating since 2001 as an instrument for the devel- opment of quality research work by stu- dents in doctoral degree programmes of the University of South Bohemia. Accord- ing to a 2006 decision, approximately 10% of the annual funding will be subsidies to specific research. www.jcu.cz Regional Networks of Science and Research and Other Research Organisations Their own sections of the Science and Research infrastructure (public research institutions, non-profit organisations and detached facilities) are most important in the regional networks. The following enti- ties can serve as examples: ENKI, o.p.s., a non-profit organisation which operates the Třeboň Innovation Centre CASTITECH, a Nové Hrady company for the development of technologies Czech Biogas Association – National Technology Platform Nové Hrady Academic and University Centre An innovation is the establishment of what is known as technology platforms. The establishment of the Natural Gas Vehicles Association, analogous to the Czech Biogas Association, is being pre- pared as the NGV national technology platform. Nové Hrady Centre of Biological Technlogies

http://www.floowie.com/cs/cti/cbt-1-web/

| 4 2| 4 2 Inthelessthan20yearsofitsexistence, thepurelyCzechManeHoldinginČeské Budějovicehascapturedaplaceamongthe largestbuildingcompaniesintheRegion. South Bohemia Open to Investors R E G I O N Best for Business – South Bohemian Písek TheSouthBohemiantownofPísekhas thebestconditionsforbusinessamong the205townscomparedinanation- wide“TownforBusiness”poll.Písekwas placedfirstduetoitsfavourablecondi- tionsonthelabourmarketandasthe resultofapollamongentrepreneurs. Assistance towards reaching the top of the ratings came from the Municipality, which has been very successful in gaining European subsidies and was one of the best in the as- sessmentofelectroniccommunications.Inthe nationwide comparison, Písek did well with its low percentage of long-term unemployment, and its dynamic housing construction. BUSINESS CRITERIA The comparative research involved 205 mu- nicipalities with extended powers in 13 re- gions. Prague and its districts were assessed separately. The towns were judged on the basis of 50 criteria divided into 6 sections: the present business environment quality of the locality approach of the public administration conditions on the labour market prices poll of more than 10 000 entrepreneurs Positions in the Nationwide Rankings (average of 50 criteria) 1. Písek 2. Nová Paka 3. Prostějov 4. Slavkov u Brna 5. Vimperk 6. Vyškov 7. Tachov 8. Třeboň 9. Mariánské Lázně 10. Pelhřimov Other towns in the South Bohemia Re- gion which were placed among the top 50 were Vimperk (5th), Třeboň (8th), and Prachatice (39th). Further information about the rankings and business conditions is available at www.mestoprobyznys.cz. Photo:CzechTourism,ManeHoldingarchives It is now operating mainly as a de- veloper, and a large part of its funds is in- vested in the purchase of sites for future building. In the last few years, it has built and sold more than 1 500 family houses and sites in the South Bohemia Region, and is expand- ing its activities to other Czech regions, Germany, and Austria. As the company representatives say – by the construction of every flat, family house, school or swim- ming pool, we create an area for people to live in, and their satisfaction is the chief criterion of our work. OUT OF 68 LOCALITIES 17 SELECTED Mane Holding is participating in many de- veloping and building projects chosen by the Region and other partners – of the 68 complexes and localities in the South Bo- hemia Region, the choice fell on the 16 which were best prepared and had the best chance of gaining investors. The selected sites already have territorial plans and utili- ties, and their owners or villages are inter- ested in co-operation with investors. Town Locality Borek Borek Sever industrial zone České Budějovice Čtyři Dvory development locality České Budějovice South Bohemia Airport České Budějovice Borovany ZTV Východ (East) Horní Stropnice Šejby sports complex + company Nové Hrady ZTV Jižní město (Southern Town) Ostrolovský Újezd brownfield, former granary and brewery Trhové Sviny industrial zone Lomnice nad Lužnicí industrial zone + sports and relaxation park Nová Bystřice complex of former barracks – business zone Nová Ves nad Lužnicí industrial zone Suchdol nad Lužncí ZTV for family residence and amenities Třeboň industrial zone Lipno Kovářov locality + recreation and residential zone Velešín industrial zone Tábor Tábor-Dvorce development locality ZTV – basic technical amenities WHICH PLACES IN SOUTH BOHEMIA ARE SEEKING INVESTORS?

http://www.floowie.com/cs/cti/cbt-1-web/

Specialist in high-volume printing for 16 years MAGAZINES CATALOGUES LEAFLETS OTHER PRINTED MATTER Severotisk s.r.o. – is a modern, rotary printing house with dry- ing equipment (Heatset) specialising in the manufacture of colour magazines, catalogues, leaflets, and other printed matter in a high print run. Severotisk s.r.o is majority-owned by Blue Finance Luxem- bourg SA. In its ownership structure, Severotisk s.r.o. is a part of the Passau-based trust Euro-Druckservice GmbH (EDS). SEVEROTISK s.r.o. Mezní 3312/7 400 11 Ústí nad Labem Phone: +420 472 767 362 www.severotisk.cz Czech Republic

http://www.floowie.com/cs/cti/cbt-1-web/

New recreational and sports resort at the largest lake in Czech Repbulic close to the bor- der with Austria. www.mane-reality.cz new holiday apartments total area of 220 000 m2 land for sale Kovářov peninsula New industrial zone close to the international higway E55 right by the entrance to Ceske Budejovice (Budweiss) city. www.mane-reality.cz Hosin Industrial zone total area of 283 000 m2 Reconstruction of a former brewery into an appartment house and a library. www.standortaktiv.cz Ostrolovský újezd JIHOČESKÁ HOSPODÁŘSKÁ KOMORA

http://www.floowie.com/cs/cti/cbt-1-web/

1-2 2011 METALLURGY,FOUNDRYINDUSTRY, ANDSTEELCONSTRUCTIONS SupplementofCzechBusinessandTrade

http://www.floowie.com/cs/cti/cbt-1-web/

AGADOS s.r.o. • PRŮMYSLOVÁ 2081 • 594 01 VELKÉ MEZIŘÍČÍ • CZECH REPUBLIC • PHONE: +420 566 653 301 • FAX: +420 566 653 368 • E-MAIL: OSTRY@AGADOS.CZ • WWW.AGADOS.CZ AGADOS s.r.o., the traditional Czech producer of trailers of total weight between 300 and 3500 kg, some of which can achieve speeds of 100 km per hour. TRADITION AND PROGRESS

http://www.floowie.com/cs/cti/cbt-1-web/

3 | M E TA L LU R G Y, F O U N D R Y I N D U S T RY, A N D S T E E L CO N S T R U C T I O N S Metallurgy, Foundry Industry, and Steel Constructions Supplement of Czech Business and Trade 1-2/2011 CONTENTS Editorial 4 ANALYSIS Current Development in the Czech Metallurgical Industry 4 Steel Industry on the Rise Again 8 RESEARCH & DEVELOPMENT Steel and Potential Innovations in Production 10 INVESTMENT Steelmakers Must Invest in Ecology and New Technologies 12 INFORMATION Prospects of the Foundry Industry and Metallurgy in the Czech Republic 13 ENTERPRISE Association of Foundries Helping Exporters and Investors for 20 Years 15 CZECH TOP ArcellorMittal Ostrava to Stregthen its Position Thanks to New Investment Projects 16 EDUCATION What do Foundry Workers and Metallurgy Students Want? 18 WE INTRODUCE International Award for Czech Steel Construction Specialists 20 SURVEY Poll of Successful Companies Operating in Metallurgy, the Foundry Industry, and Steel Constructions 21 PRESENTATION OF FIRMS: AGADOS, spol. s r.o.; ArcelorMittal Ostrava a.s.; Český metrologický institut; Lichtgitter CZ spol. s r. o.; MOTOR JIKOV Group a.s.; Slévárna HEUNISCH Brno, s.r.o.; UNITHERM, s.r.o.; Vítkovické slévárny, spol. s r.o. MK ČR E 6379 This magazine is published as a supplement of the Czech Business and Trade economic quarterly. Managing Editor: Šárka Kratochvílová Graphic Design: Art Director: Nina Nováková Graphic Designer: Jiří Hetfleisch Production: Anežka Zvěřinová Address: PP Agency s.r.o., Myslíkova 25, 110 00 Praha 1 Czech Republic, Phone: +420 221 406 622 Fax: +420 224 930 016, e-mail: journal@ppagency.cz www.ppagency.cz Deadline: 10/1/2011 Attitudes expressed by the authors of articles in this magazine are not necessarily consistent with the viewpoint of the Publisher. © PP Agency, Company with the ISO 9001 certified quality management system for publishing services Coverphoto:www.sxc.hu;page3photo:www.sxc.hu IN THE NEXT SUPPLEMENT TO CZECH BUSINESS AND TRADE Even though we can expect a more dynamic economic growth as late as in 2012, many in- dustrial sectors, including machinery and equipment manufacturing industry, are already registering economic regeneration and new orders. The development is even more positive due to the fact that this sector is one of the fields with higher added value. More about Czech machine industry in the next Supplement to Czech Business andTrade.

http://www.floowie.com/cs/cti/cbt-1-web/

| 4 A N A LYS I S Dear Readers, Followingtheeconomicallyuncertainyears, itnowseemsthatthemetallurgical,foundry, and steel businesses can look to the future with slightly more optimism. For example, the Czech metallurgical industry continues its gradual recovery from the economic crisis, and the year-on-year growth of pro- duction in the steel industry reached 25% for the period between January and De- cember 2010. Revenues of the Czech met- allurgicalbusinessesgrewby12.32%during this period. This is according to information fromThe Steel Federation, which associates leading Czech metallurgical companies. The rapidly increasing prices of metal- lurgical raw materials remain the main risk factor. The demand is mainly fuelled by engineering companies linked to the automotive industry. The year-on-year growth in the production of steel amount- ed to 20% for the third quarter of 2010.The number of orders has been increasing as well, even though it has yet to reach the pre-crisis level of 2008. Nevertheless, the largest Czech foundry, ArcellorMittal, has already reached its peak capacity. The educational system in the Czech Re- public is suffering from a long-term prob- lem closely related to the topic at hand: there is a shortage of graduates from tech- nical schools. This does not concern only metallurgy and foundry, but also the auto- motive, engineering, electrical engineer- ing, and chemical industries. The global recession has only temporarily obscured this problem, while the Czech educational system is trying to resolve it. Šárka Kratochvílová The impact of the economic crisis on the metallurgical industry was fully felt in 2009. Theslowerrateofgrowthandlowerdemand in the decisive consumer branches, which were already seen in the 4th quarter of 2008, continued with even greater intensity. The volume of new orders declined by nearly 40% on a year-on-year basis. A problem for exporters throughout the whole period un- der review was the considerable volatility of the Czech crown in relation to the Euro and the Dollar. All these factors taken together resulted in a record 68% year-on-year de- cline in added value and marked reduction of the overall cost-effectiveness of produc- increase in demand for steel was only to be expected in 2011. GROWTH EXPECTED For reasons of high stocks on the part of traders and consumers, the decline in con- sumption manifested itself much more dis- tinctly in apparent consumption (supplies + imports – exports), where the year-on-year decline in 2009 was 30.8%, than in real con- sumption (-20.8%). In the following period, i.e. in 2010 and especially 2011, a reverse trend is expected as a result of the replen- ishment of stocks, and the same growth rate could be achieved in the course of 2012. Considering the high proportion of Czech exports, the country’s export possibilities are closely linked with the economic re- vival or recession in the world, in particular the European Union. EU industrial produc- tion in 2010 is expected to grow by 6.8% (following a 14% decline in 2009), mainly thanks to the revival in engineering, in- cluding car production and metalworking. Photo:PhotoCombo Current Development in the Czech Metallurgical Industry Miroslav Svoboda, Hutnictví železa a.s., e-mail: miroslav.svoboda@hz.cz, www.hz.cz tion. A turn occurred in 2010. While in the 1st quarter of 2010 the volume of new or- ders grew by +2.2% year-on-year, in the 2nd quarter it rose by 58.7%, nearly reaching the level of the 1st quarter of 2009. In 2009, the industrial production index (IPI) in the sector declined by 24% year-on- year on an average (total industry -13.1%). In the first half of 2010 the sector resumed its upward trend with IPI in the first quarter ris- ing by 25% and in the second quarter by as much as 42.4%. For comparison, total IPI in that period rose by 7.5% and 12.3% respec- tively, year-on-year. A similar trend was shown by final metal- lurgical production, which in the 1st quarter of 2010 rose by 36.4% year-on-year, of which rolled material by 34.6% and steel tubes by 38.4%.Finalproductiondeliveriestothedom- estic and foreign markets in the 1st half of 2010 rose by 37% on a year-on-year basis. A survey of traders and buyers revealed that stocks of previous years would be ex- hausted by the end of 2010 and a marked

http://www.floowie.com/cs/cti/cbt-1-web/

5 | M E TA L LU R G Y, F O U N D R Y I N D U S T RY, A N D S T E E L CO N S T R U C T I O N S In the building industry, the decline is ex- pected to continue (-1.4%). SLIGHT REVIVAL ON THE PART OF BUYERS The situation is quite favourable in the steel- using industries (SWIP), too. In 2009, the year- on-year decline in the sector amounted to 18.9%,butin2010a moderategrowthof3.7% is expected. A marked growth was recorded by the automotive industry, mainly owing to the extremely low 2009 level, but also a mas- sive growth in orders from third countries (China, India, Japan, and other states). The situation on the EU internal market continues tobeunfavourable.This,togetherwiththeex- pected slower growth in third countries and their lower imports in the 2nd half of the year, will not allow the estimated growth of SWIP in 2010 to exceed 3.7%. This trend is expect- ed to continue with only a very moderate growth being anticipated for 2011 (+3.4%). The economic slowdown is also responsible for the massive decline in the real consump- tion of steel products in Europe. While in the whole of 2008 real consumption dropped by 7% year-on-year on an average, the decline in 2009 was nearly 23%. The decline acceler- ated especially in the 1st half of 2009 in con- nection with a rapid drop in demand on the part of the main buyers and high stocks in the entire production chain. The estimated growth of real consumption in Europe will be only very moderate in 2010 and in 2011 the real consumption level, too, will be still below the values recorded at the beginning of the millennium. LINKING UP TO EU MARKETS In comparison with the old EU member states, the impact of the recession was more strongly felt in the Czech Republic in year-on-year comparisons, mainly due to the size of the Czech domestic market and the rate of involvement of the Czech econ- omy in the international division of labour. This manifested itself by cuts in orders in the manufacturing industry, which in turn caused a decline in steel production. CUTBACK ON PRICES The decline in steel production in 2009 was accompanied by a year-on-year decline in the prices of steel products. This was due to cuts in demand in a situation where manu- facturers drew on their excessive stocks in the entire steel-using industries complex. The decline in steel product prices was also made possible by the lower prices of raw material inputs. In comparison with 2008, in 2009 world scrap metal prices dropped by 37% year-on-year, with thermal coal prices also declining massively (-44%) and the prices of natural gas falling by 33% and iron ore by 28%. Electricity prices were stagnant. A different development could be ob- served in 2010, when rising raw material prices put pressure to bear on steel product prices. In the 1st half, thermal coal prices rose by 40.4% year-on-year, the price of iron ore by 32.7%, and that of scrap metal by 60.6%. Only natural gas prices declined, by 30% year-on-year, in the period under review. REVENUES ARE GOING UP In 2009, revenues in current prices in the steel companies under review declined by 38.7% year-on-year. In the 1st half of 2010 the trend was more favourable, with revenues rising by 10.8%, yet staying distinctly below the level of the 1st half of 2008 (by nearly 40%), despite massive growth of the physical amounts of production in 2010. There are two reasons for this situation: the above-mentioned Metallurgical production since 2007 with estimates until 2012 Production (thous.tonnes) 2007 2008 2009 2010 Estimate 2011 Estimate 2012 Estimate Change 09/08 (%) Change 10/09 (%) Change 11/10 (%) Change 12/11(%) Pig iron 5 287.2 4 737.2 3 482.6 4 030 4 730 5 250 -26.5 15.7 17.4 11.0 Raw steel 7 058.9 6 387.2 4 593.6 5 300 6 250 6 950 -28.1 15.4 17.9 11.2 Rolled material 6 122.7 5 800.7 4 300.2 5 010 5 780 6 390 -25.9 16.5 15.4 10.6 Steel tubes 777.2 718.8 469.1 560 650 720 -34.7 19.4 16.1 10.8 Development of raw material and energy prices 600 $/ton 0 100 200 300 400 500 2006M1 2006M4 2006M7 2006M10 2007M1 2007M4 2007M7 2007M10 2008M1 2008M4 2008M7 2008M10 2009M1 2009M4 2009M7 2009M10 2010M1 2010M4 Thermal Coal Steel Scrap Coking Coal Electricity Iron Ore Natural Gas $/1000 cu. m

http://www.floowie.com/cs/cti/cbt-1-web/

| 6 A N A LYS I S year-on-year decline in prices (-10%) and the strengthening of the Czech crown (in rela- tion to the Euro by approximately CZK 2/EUR year-on-year on average) with a much higher proportion of deliveries to foreign markets. The faster growth of revenues in comparison with the growth of consumption from op- eration was mainly due to the development in the 2nd quarter of the year, when added value grew by 37.6%. PROFITABILITY HAS ALSO REVERSED ITS TREND The gradual growth of added value also be- came projected into profitability indicators. The profit and loss result before tax was CZK +972 million as against CZK -2.4 billion in the comparable period of 2009. Profitability of revenue in the period under review amount- ed to 2.4% as against -5.9% in the first half of 2009. Own capital profitability indicators showed positive values in comparison with 2009.The successful economic development of most companies in past years also added to the growth of the share of the companies’ own capital to the average value of 69% of total assets. While total liabilities, including credits (total credits declined by 42% year- on-year), were growing year-on-year, overall credit indebtedness, too, declined (also by 42%).Thiscanbepartlyexplainedbyreduced credit availability and lesser need for operat- ing financing. From the point of view of the companies’capability of meeting their short- term liabilities, the situation worsened in terms of year-on-year comparisons, with cur- rent liquidity declining by 45% year-on-year. While production showed a revival in com- parison with the 1st half of 2009, stocks grew by 20% year-on-year. This, together with the more moderate growth of revenues, resulted in the prolongation of stock rotation by 7%. The shortening of repayment terms and as- set rotation periods is valued positively. DELIVERIES AND ORDERS GROWING Despite the considerably different econom- ic situation of companies, the development in the 1st half of 2010 can be valued rather positively. Deliveries are growing and so is the volume of orders, although neither has as yet reached the 2008 pre-crisis level. The development is showing a favourable trend especially in Germany, while on the other hand the budgetary problems of the EU southern wing and the austerity measures that have been adopted may slow down the economic revival process in Europe (to a lesser extent also in the CR). Thanks to the previous development, the financial situ- ation of most companies is on a level ensur- ing their functioning. Companies continue to be in a position to meet their obligations. Their cash-flow is growing, while the repay- ment periods of their debts are shortening. The shortage of orders in the past period ne- cessitated the closing down of production facilities and making wage cuts, whether by way of shortening the working week or by decreasing the number of workers. Capacity utilisation in the entire technological chain and the productivity of labour continue to be low, despite the year-on-year growth. In spite of this, most of the indicators under re- view are showing an improvement in com- parison with the results from 2009. EMPLOYMENT REDUCTION The decline in revenues and orders, which accelerated especially in the first half of 2009, also had an impact on the productiv- ity of labour and necessitated a correspond- ing reduction in the area of employment. During the 1st half of 2010, the average registered number of workers (excluding agency workers) declined by 10.1% year-on- year and practically remained on that level. Cuts in employment prompted by the lower volume of confirmed orders also resulted in greater wage savings. In the 1st half of 2010, wage payments dropped by 6.5% year- on-year. The result was a year-on-year 4% growth of average earnings, which followed a decline in average earnings in 2009. In the 1st half of 2010, productivity of labour de- rived from revenues rose by 24.3% year-on- year, which corresponds to the growth of revenues (orders), and is the consequence of labour cuts. In absolute terms, however, productivity is far below the 2008 level. The level of the productivity of labour also limits the growth of earnings in companies. So, live labour substitution (wage saving) is becoming an important instrument of at- taining the price competitiveness of prod- ucts of comparable quality and use value. Aware of this fact, companies have resorted to major labour cuts, even at the cost of high payoffs. The chart on p. 7 shows that beginning with 2002, the growth of the productivity of labour exceeded the growth of average earnings, with the greatest difference be- ing achieved in 2004, when, however, the record revenues were due, to a considerable extent, to high year-on-year price rises. It should be noted that since 2007 the growth of productivity and revenues has SELECTED EXHIBITION AND FAIRS METALFORM Mexico, Monterrey, May 11 – 13, 2011 Surfacetreatmentofmetalsandothermaterials www.komora.cz/veletrhy ALUMOTIVE Italy, Brescia, May 19 – 21, 2011 Foundrytradefair www.komora.cz/veletrhy SCHWEISSEN & SCHNEIDEN Russia, Moscow, May 23 – 26, 2011 InternationalTradeFairforJoining,CuttingandSurfacing sus.messe-essen.de EUROWELDING Slovakia, Nitra, May 24 – 27, 2011 17thinternationalexhibitionforweldingandwelding technologies www.agrokomplex.sk GIFA Germany, Düsseldorf, June 28 – July 2, 2011 Internationalfoundrytradefair www.komora.cz/veletrhy METEC Germany, Düsseldorf, June 28 – July 2, 2011 Internationaltradefairformetallurgicaltechnology www.metec.de Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

7 | not been exclusively a matter of labour cuts, but has been increasingly due to rationalis- ation measures and a changed structure of workers in favour of the higher qualifica- tion of the labour force. This manifests it- self by greater differentiation between the wage and productivity of labour rates of growth/decline. In the 1st half of 2010, production and or- ders grew at a faster rate in comparison with the same period in the previous year. Never- theless, the pre-crisis level of production, and especially revenues, was not attained, and its attainment cannot be expected in the latter part of the year either. In particular, demand from domestic manufacturers remains low. Most important for further development will be a revival, especially in Europe, to which the decisive proportion of the output is di- rected. This may be negatively affected by the austerity programmes of other countries, provoked by previous massive investments to stimulate economic growth. From the glo- bal point of view, the most important thing for finding outlets for metallurgical materials is the economic development in China and consolidation of the US economy. OTHER REQUIREMENTS AND FINANCING POSSIBILITIES The development of the steel industry in Europe and the CR is closely linked with the development of the countries’ business en- vironment and their legislation. Countries use important legislative measures in the area of ecology and the environment, where certain laws and regulations that are being adopted may some time in future lead to the loss of competitiveness among Europe- an manufacturers. Examples of this are the proposed emission permit trading systems, environmental legislation for the atmos- phere, etc. It is unacceptable for environ- mental legislation not to affect all pollution sources (industry, local, and mobile sources) evenly and to discriminate against industry. The central point for the steel industry in fu- ture is to realise specific actions eliminating unfavourable impacts on the environment. These investments (prepared projects) can- not be realised exclusively with the indus- trial enterprises’ own resources; they will need money from the State Environmental Fund created with revenues from permit trading, from the Environment Operational Programme, and from EU structural funds. An indispensable condition of development of the metallurgical industry is also the re- alisation of research, development, and in- novation projects. The use of resources from Operational Programmes and co-financing with support from European funds is a way to sustainable living conditions. Productivity of labour and average earning growth rate Average nominal earnings 2001 2002 2003 2004 2005 2006 2007 2008 2009 1/22010 Productivity of labour 160 140 120 100 80 60

http://www.floowie.com/cs/cti/cbt-1-web/

| 8 A N A LYS I S Steel Industry on the Rise Again Jan Linhart, KPMG Česká republika, www.kpmg.cz In 2010, the steel industry witnessed a marked growth after two years of massive decline. Despite a certain slowdown in the new trend in the latter half of 2010, steel consumption in 2011 is expected to rise worldwide. In the Czech Republic, too, the steel industry seems to have good prospects, with forecasts of a two-digit steel consumption growth in 2011. In 2008 and 2009, global recession affected world steel production, which declined by a massive margin. In the situation of falling production in the last quarter of 2008, the output of the branch plummeted to a record low, when the capacity of steel facilities was used at a mere 71.6%. In 2009, world crude steel production dropped by 8%1) in com- parison with the previous year. The first signs of improvement appeared in the first quarter of 2009, with the World Steel Association (WSA, associating steel and iron manufacturers) anticipating a nearly 11% growth of steel consumption in 2010 and a more than 5% growth in 2011. These expectations are voiced despite a massive decline in steel demand in the last quarter of 2010. While the car industry is showing a cer- tain revival, which is pulling demand forward, a drawback is the exhaustion of the effect of government stimulation packages and the continuing unfavourable situation in the building industry. Following their maximum in April 2010 (82%), the crude steel manufac- turing plants’ capacity utilisation in Septem- ber 2010 was at 74%, which corresponds to the August 2009 level. Therefore, despite the revival of the steel industry in EU countries in 2010 and the expected growth in 2011, it must be recalled that steel demand in EU countries will only be at 75% of the year 2007, when the steel industry was at its highest. As regards the Czech Republic, WSA ex- pects steel consumption in 2011 to grow by nearly 18%, following single-digit growth in 2010. Already now, the Czech steel industry is showing signs of revival, which is com- ing after a relatively dramatic fall in 2009. On the other hand, it has to be taken into account that in addition to raw material im- ports, manufacturers are also dependent on the export of their products, as only a part of the output finds outlets in the Czech Re- public. An additional complication is the close intertwining of the supplier-customer chain in the branch, which often provokes disputes concerning delivery terms. DELICATE BALANCE: SUPPLY AND DEMAND Inadequate stocks and a growing demand for steel products faces manufacturers with a demanding task: getting access to raw ma- terials and ensuring production so as to fulfil their clients’orders in time. In this situation, it is important more than ever before to have a flexible and compliant supplier chain that will support the company and help it meet its growth targets. Together with the gradual revival of steel-using branches, this require- ment will be essential for the success of the steel industry itself. HOW TO MAKE PROFIT: INPUT COSTS AND THEIR IMPACT ON PRICES Perhaps the greatest problem for steel manu- facturers and distributors is the rapidly rising iron ore and coal prices, which as yet has not been reflected in the prices charged to cus- tomers.Onthecontrary,a turninthepricesitu- ation occurred in mid-2009, when world steel prices showed a growth, for the first time in 11 months.2) Since then, the price level has been relatively stable, including the first quarter of 2010. It is to be expected, however, that when manufacturers begin to run out of stocks, al- ready now in short supply, and will have to react to growing input costs, the prices will probably rise.3) Standing behind the growth of input costs is growing worldwide demand for commodities, investments needed to obtain the required commodities and other factors, such as growing energy prices. GROWTH PROSPECTS: MERGERS AND ACQUISITIONS The economic revival, growth of demand and higher productivity of labour in the steel industry will necessarily call for mergers and acquisitions. Most of these transactions are taking place in the Central Asia and Pa- cific regions, the main acquirer today being China.4) Its leading position is a reflection of the fact that in the domestic metalworking industry the prevailing force are old, inef- ficient companies controlled by provincial administrations. The national government therefore supports their consolidation that will help raise efficiency and satisfy China’s huge demand for steel products. In 2009, China imported 627.8 million tonnes of iron ore and raised its dependence on imported ore to 63.9 of its needs.5) Trying to lessen this dependence Chinese companies are seek- ing acquisitions overseas that will secure for them more reliable raw material supplies. NEW STRATEGIES FOR A NEW ECONOMY Steel companies wishing to take the best advantage of today’s opportunities and strengthen their position in case the process of revival slows down or stops completely, have several ways of coping with the situa- tion. For example, they can make analyses of their prognostication systems and improve their efficiency. This will enable them to bet- ter forecast demand for products or the need for raw materials, and assess what products and what quantities to manufacture, and when and where to make them, without hav- ing to maintain high stocks. The development in the past eighteen months has shown that one thing which is certain to be expected is uncertainty. Sup- pliers and manufacturers can soften the im- pacts of high oil prices, sudden exchange rate fluctuations and lay-offs due to econ- omic, political, or environmental legislation changes by creating joint ventures that will bring greater stability to both sides. In the steel industry, business continuity depends primarily on the availability of raw materials. Today, steel manufacturers can once again obtain easier financing for the acquisition of key suppliers and ensure better access to raw material sources. They can also make their raw material consumption, purchase, and re- plenishing planning more efficient. 1) Worldcrudesteeloutputdecreasesby-8.0%in2009,WorldSteel AssociationNews,22January2010. 2) WorldcarbonsteelpricesincreaseagaininJuly,SteelGrips, 3August2009. 3) SteelpricestoGainonLowInventories,Costs,BaoshanSaysBloomb- ergBusinessWeek,25March2010. 4) Raceforraremetal–andChinaiswinning,CommodityOnline.com, 17July2009. 5) Chinanear-termsteeldemandhigh,growthlow,ChinaDaily,25 March2010.

http://www.floowie.com/cs/cti/cbt-1-web/

M E TA L LU R G Y, F O U N D R Y I N D U S T RY, A N D S T E E L CO N S T R U C T I O N S MANUFACTURE OF FLOOR GRATINGS, STAIR TREADS, SPIRAL STAIRCASES AND PERFORATED METAL PLANKS Lichtgitter CZ spol. s r.o. U Lékárny 1 735 35 Horní Suchá Czech Republic Phone: +420 596 496 511 Fax: +420 596 496 538 E-mail: obchod@lichtgitter.cz www.lichtgitter.cz PRODUCTION ACCORDING TO DIN 24 537 AND DIN 24 531 DESIGN ACCORDING TO CUSTOMER’S REQUIREMENTS MANUFACTURE, DELIVERY TECHNICAL CONSULTING APPLICATION: WALKING SURFACES STAIRCASES STORAGE SYSTEMS FACADES AND SUN SHADING SYSTEMS, ARCHITECTURE HELIPORT - GRATINGS AT THE EDGE OF THE LANDING PAD DETAILOFPIPEGRATINGGRATESASBALCONYRAILING FOOTBRIDGE GRATING

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 0 R E S E A R C H & D E V E LO P M E N T Steel and Potential Innovations in Production Steel is the leader among metals – indeed the most widely used metal worldwide. It is modern and highly recyclable. This widely- used material is actually an alloy of iron, car- bon, and other alloyable elements. In prac- tice, the name steel denotes alloys the main component of which is iron, which can be transformed into other compounds. There are more than 1500 different kinds of steel, one-third of which has been de- veloped during the past fifteen years. As the importance of steel grew, the efficiency of its manufacture increased – during the past forty years steel output grew by more than 330%. The principal benefits of steel as a material are its firmness, toughness, elas- ticity, corrosion and heat resistance, wear resistance and other properties, which are a guarantee that steel is not likely to loose its primacy of use for quite some time. STEEL MANUFACTURERS The basic steel production technology is oxygen-converter production, which ac- counts for approximately two-thirds of total world production. Currently, the world steel powers are China, followed by Japan and the USA. The fourth position is held by Rus- sia, with India, South Korea, Germany, the Ukraine, and Brazil following suit. The Czech Republic is also an important actor in this sector, as ArcelorMittal, the world’s largest steel manufacturer, has one of its manufac- turing plants in this country. PRODUCTION INNOVATION In steel production, specialists recommend manufacturers to focus on innovation, in- tensification of preparation, and the realis- ation of research, development and inno- vation projects. An advantage of the Czech Republic in the area of financing is that it can use resources from EU Operational Pro- grammes and co-finance innovation efforts from European funds. Experts from the University of Mining in Ostrava, as well as other specialists, recom- mend the following specific innovations of the oxygen-converter process: intensification of forging processes combined blasting, dynamic melting con- trol, optimisation of batch materials, raising the service life of the refractory ma- terials used shortening the time needed for batch ma- terials to stay in the converter, improving thequalityoflining,introducingnew-wear monitoring technologies and targeted lin- ing repairs. RECOMMENDATIONS FOR ARC FURNACES Oxygen converter production is not the only way of steel making. Steel is also made in electric arc furnaces. This method accounts for nearly one-third of world steel produc- tion (only 8-10% in the Czech Republic). As regards arc furnaces, specialists recommend the following technology innovations: intensification of forging processes sophisticated control of smelting pro- cesses using different energy sources (oxygen-fuel burners, combustion jets, special admixture agent blowing pro- cesses), hybrid and flexible processes, better-quality electrode material, batch material pre-heating increasing the service life of refractory materials shortening the time needed for the charged materials to stay in the furnace, better-quality lining, new-wear monitor- ing technologies and targeted lining re- pairs, optimisation of furnace lid cooling, use of slag foaming. CASTING AND FORMING The input raw material used in steel mak- ing must be refined. In modern steel mak- ing, most of the steel-refining processes are transferred outside to the furnace second- ary metallurgy facilities. In secondary met- allurgy, the following main improvements are used: the reduced or increased pressure effect, the refining slag effect, use of special refining admixtures, optimisation of the character of circula- tion in metallurgical sets Continuous steel casting increases the yield of metal, raises productivity of la- bour and improves the working environ- ment. An important trend in this area is the ever greater approximation of the profiles of conticastings to the resulting shapes of the required products. Another process besides continuous steel casting is die casting, which has become a spe- cific market segment with heavy forgings and special castings of large-size ma- chine parts. GLOBALISATION AND RESEARCH In the area of steel manufacture, cast- ing and forming and other uses for steel, growing pressure can be felt for the con- tinuous raising of productivity, quality and production variability in the steel industry. At the same time, conditions are being created for more intensive re- search and innovation activity. A realistic estimate is that up to CZK 1–1.5 billion can be used in the Czech Republic in the area of research, ecology, and human resources. Photo:www.sxc.hu,Vítkovickéslévárnyarchives

http://www.floowie.com/cs/cti/cbt-1-web/

1 1 | M E TA L LU R G Y, F O U N D R Y I N D U S T RY, A N D S T E E L CO N S T R U C T I O N S Vítkovické slévárny – Tradition and Dynamics Vítkovické slévárny, spol. s r.o. ranks among prominent European foundries due to its broad range of products. The manufacture of castings and rollers is based on tradition, craftsmanship, and long experience, the origin of which is connected to the develop- ment of Czech metallurgy. ThehistoryofVítkovickéslévárny,spol. s r. o. dates back to 1828, when metallurgical pro- duction began in Vítkovice. However, the manufacture of the first metallurgical rollers and heavy machinery components began in 1910. The foundry therefore commemorated a centenary of roller production in 2010. We discussed the present events in Vítko- vické slévárny, spol. s r.o. with Ladislav Slíva, Head of its“Machine Shop”. What has so far been your biggest order? From my point of view, this is the order of our largest customer, US Steel Košice. I can also mention the complete service of roller manufacture for the rolling stock ofTPT Evraz Vítkovice Steel. What has changed in the Machine Shop under your management? Many changes have taken place in my time. The establishment of the position of Pro- grammer and the transition to Unigraphic software programming, which allows five- axis programming, has significantly increased the productivity of labour and the quality of roller shaping. I must mention the most im- portant investment in the last four years – the purchase and installation of the CNC lathe GWD 1300/6000/20, which was supplied and put into operation by the GEORG firm in 2006.This markedly reduced machining time in roller shaping and increased productivity by almost 60%. Another major investment was the modernisation of both eight-tonne ACEC smelting furnaces. Can you give details of your technologies? Two-layer work rollers, designed for rolling mills of the preparatory and the final order of hot rolling mills, i.e. hot rolling of metal sheets, are done by centrifugal casting tech- nology. The working layer of rollers is formed by highly chromed cast iron or cast iron with an indeterminately hardened layer. The core and pins of the rollers are made of cast iron with modular graphite or a special alloyed casting with flake graphite. The high quality of the cast and hot worked rollers is further redoubled by mechanical treatment on the latest machine tools. The rollers have high utility properties and their performance is fully comparable to those of our rivals. What are the criteria of the quality of rollers? The foundry has its own Research and Devel- opmentsectionwhichdevelopsnewmaterials and innovates the usually supplied materials to achieve permanently higher utility proper- ties. The main criteria of roller quality, accord- ing to which customers choose suppliers, are the rolled kilometres or tonnes of rolled metal sheets before the roller is put out of opera- tion, and the price of the roller per one rolled tonne. The rollers have diameters of between 500 and 1 050 millimetres, and a weight of up to 37 tonnes, and are manufactured from fast-cutting and highly chromed steel which increases performance up to three-fold. What other products does your company offer in addition to rollers? Besides rollers, we produce shaped castings of steel and non-ferrous metals. The manu- facture of complicated shapes of castings of grey and nodular cast iron and carbon up to high-alloy steel are designed especially for engineering, metallurgy, and the shipping and mining industries. Typical are castings of fittings, flywheels, moving wheels, cool- ing plates, casings, and toothed wheels from 50 to 5 000 kilograms in gross weight (grey cast iron castings up to a maximum weight of 8 000 kg). The annual production of the foundry ex- ceeds 12 200 tonnes of castings. Vítkovické slévárny, spol. s r.o. is an important player on the Czech and international markets. The foundry supplies castings to Russia, Poland, Hungary, Germany, Serbia, Taiwan, Slovenia, Turkey, Finland, China, and Spain. The high standard of production is mainly due to the technology of the centrifugal casting of rollers, and the use of the Furan technology in the shaping of castings, which allow the company’s successful competition with other foundries in the quality of produc- tion. The quality of production is managed in accordance with the relevant ISO standards (EN ISO 9001:2000, RW TÜW certificate). The company production has been awarded a number of internationally recognised prod- uct certificates. The production programme also includes foundry models. DO YOU KNOW THAT ... ... since 1989, when the production of centrifugally cast rollers commenced according to the Gonter- mann Peipers licence, a total of 8 726 pieces have been manufactured? ... the volume of the production of centrifugally cast rollers has reached 63 775 tons since 1998? ... a total of 8 050 tonnes of statically cast rollers have been manufactured since 2000? .....a total of 979 rollers have been worked on theWaldrich Siegen grinder?

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 2 I N V E S T M E N T Steelmakers Must Invest in Ecology and New Technologies Pavel Vlček, Ministry of Industry and Trade, e-mail: pavel.vlcek@mpo.cz, www.mpo.cz In 2009, crude steel production in the Czech Republic dropped by nearly one- third. A turn only occurred at the end of the year, when in the last quarter the volume of steel output rose by 11% year- on-year. In the 2nd quarter of 2010, crude steel production continued its growth. According to Jiří Cienciala, President of the Branch Association of the Steel Indus- try, the way to a more massive revival of the Czech steel industry is investing in research and development, in new tech- nologies and ecology. “The entire branch already has in the pipeline ecologically- oriented projects for the next few years worth more than eight billion crowns,” Jiří Cienciala says. The European steel in- dustry, including Czech steel-making, is among the most environmentally friendly industries already now, he added. Euro- pean steel production accounts for 16% of global steel output. With its 12% share of greenhouse gas emissions, the EU, to- gether with Japan, globally boasts the cleanest level of steel production. LARGE-SCALE MODERNISATION The technological equipment of enter- prises in the branch has undergone mas- sive modernisation and ecologisation over the past 15 years, when much at- tention was also placed on the construc- tion of new emission and waste trapping and processing devices and modernisa- tion of old ones. A key area in which the Czech steel industry has competition advantages in comparison with manu- facturers in cheaper countries is modern technologies with research and develop- ment. In the framework of programmes controlled by the Ministry of Industry and Trade alone, the steel industry is re- sponsible for projects worth CZK 80-100 million a year. FINANCING FROM EU FUNDS A very important role for raising the com- petitiveness of Czech manufacturers on the global market is played by the pos- sibility of having projects co-financed with resources from EU funds, for example the EU Structural Funds and Operational Programmes, or the EU Research Fund for Coal and Steel. Besides the industrial enterprises’ own resources, the planned projects aimed at eliminating unfavour- able impacts on the environment will require drawing resources from the State Environmental Fund, the emission permit trading system, the Environment Oper- ational Programme and European Struc- tural Funds. SIMPLIFIED RULES “It is our aim to maintain simple legis- lation, reduce the number of new regu- lations, eliminate duplication and contra- dictory measures and eliminate excessive reporting. We’ll work in order to prevent EU regulations from reducing the com- petitiveness of industry in relation to the rest of the world, and domestic regul- ations from going beyond European legislation,” Martin Kocourek, Minister of Industry and Trade, added on the subject. Another key requirement is to harmonise ideas with the Ministry of the Environ- ment, he said. Surveys of the steel enterprises them- selves and figures from the European Union are an indication of a positive devel- opment, especially in certain ranges, and the results for April to July 2010, too, augur well for the economy and its revival. Photo:www.sxc.hu

http://www.floowie.com/cs/cti/cbt-1-web/

1 3 | I N F O R M AT I O N Prospects of the Foundry Industry and Metallurgy in the Czech Republic Jiří Braňka, National Observatory of Employment and Training, National Education Fund, e-mail: branka@nvf.cz, www.budoucnostprofesi.cz Metallurgy and the foundry industry were among the economic pillars of the former socialist Czechoslovakia. In the course of the country’s transformation, however, they lost mostoftheiroriginalfacilitiesandworkplaces. From the production and employment points of view, they are a branch strongly concentrated in the Moravia-Silesia Region. For example in 2009, the region accounted for 58% of jobs in the sector nation-wide. In the past, the main problem of the sector was its low productivity of labour combined with inadequate technological standards. In 2001, the productivity of labour in Czech enterprises was approximately 20% of the EU average. The arrival of foreign investors in the branch triggered off important changes, whichinsixyearsledtoa rapidgrowthinpro- duction (by 75%). Simultaneously, restructur- ing and technological investments made it possible to decrease the number of jobs by more than one-fifth. The sector’s develop- ment was pushed forward by high demand of the customer segments in the entire EU – metal-working, engineering, automotive industry, construction, etc. In spite of this, the Czech Republic, however, will also depend on the specific conditions for doing business (especially legislation, the situation on the labour market and availability of skilled work- ers) and the competitiveness of enterprises in the Czech Republic in comparison with other countries (also with regard to technological standards and productivity of labour). CONDITIONS FOR DOING BUSINESS The conditions for doing business will pose a great challenge in the next few years. The Moravia-Silesia Region, where the major part of production facilities is located, is suffering from long-term exposure to heavy air pollu- tion, and companies such as ArcelorMittal, Třinecké železárny, and Vítkovice Steel are under pressure to invest in costly equipment to decrease emissions. The continuous stiff- ening of environmental legislation, however, will affect all EU member states. A certain problem on the labour market is the avail- ability of skilled workers for metallurgical and foundry production, as young people are increasingly shunning this profession. In re- cent years, however, regional authorities and companies have been taking steps to attract more trainees. COMPETITIVENESS OF THE BRANCH The competitiveness potential of the branch can be measured by its innovative activity, technological standards, research and de- velopment promotion, and the qualification structure. Czech metallurgical and metal- casting enterprises will have to invest more in the next few years to maintain their lead over their rivals in cheaper countries. In view of the expected development of input prices, this will involve, for example, projects focus- ing on higher material and energy efficiency and technologically more demanding prod- ucts requiring higher skills. EXPECTATIONS IN THE BRANCH The development in customer branches is rather uncertain. Metallurgy and the foundry industry in the Czech Republic will continue Regional structure of the branch (according to the number of employees, 2010) Source: Selective manpower survey, 2nd quarter 2010 (Czech Statistical Office, the author’s calculations). Moravia-Silesia Region 58% South Moravia Region 9% Ústí Region 7% Other regions 26% share of the branch in overall manufactur- ing industry output between 1998 and 2008 dropped from 8.8% to 6.5%. After six years of continuous growth (2003- 2008), in 2009 Czech metallurgical and foun- dry industry production plummeted by more than one-quarter. In terms of the volume of production the branch returned to the 2004 level as a result of the economic crisis. The marked recovery in 2010 (e.g. the Ferrous Metallurgy Union forecasts up to 15-20% growth1) of commodity output year-on-year) will wipe off only a part of the sector’s loss, and it will take at least two years to raise the volume of output to the 2008 level, the high- est to be recorded so far. Today, the branch is profiting from the renewed demand of cus- tomer segments; long-term prospects in the

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 4 I N F O R M AT I O N to benefit from the concentration of custom- ers in the vicinity of the main production localities (e.g. the North Moravia – West/ North-West Slovakia automotive cluster). On the other hand, the production capacity of the car industry and engineering in Western Europe is often judged as excessive, as the growth potential of the West European mar- kets is very small. On the other hand, the de- veloping economies of Eastern Europe and Asia are offering great opportunities. Czech metallurgy and metal-casting, however, are not as yet in a position to take full advantage of it. Construction is recovering from the cri- sis only very slowly and the restoration of in- vestment confidence in this branch may take more than a year – especially in a situation of uncertainty as regards the further develop- ment of the European economy and concern provoked by the situation in the area of pub- lic financing in several eurozone countries. Demand in the construction sector, however, has had good prospects on a long-term ba- sis, and in Central and Eastern Europe this sector still has a great potential. In the next few years, metallurgy and the foundry industry will be facing new con- ditions that will strongly influence their long-term prospects in the Czech Repub- lic. As industrial and building production will continue to be among the pillars of the country’s economic growth, it is to be expected that the importance of metal- lurgy and metal-casting in the structure of the Czech manufacturing industry will de- cline only slowly. Production in the branch will continue to grow slightly despite the declining number of employees. This will be made possible by higher productivity of labour, so that Czech metallurgy and metal-casting will continue on their way to getting ever closer to the advanced West European countries. 1) “Prediction of the development of the steel industry”, Ferrous Metal- lurgy Union Projection of gross added value (GAV), productivity of labour, and employment in the branch (2010-2020) Source: Projection NVF NOZV, 2009. Note: 100 = value of the year 2010 GAV 102.2 113.9 Productivity of labour Employment 89.6 120.0 100.0 80.0 60.0 40.0 20.0 0.0

http://www.floowie.com/cs/cti/cbt-1-web/

1 5 | E N T E R P R I S E Association of Foundries Helping Exporters and Investors for 20 Years Foundry production has a long tradition in the Czech Republic. During its exist- ence, this sector has experienced both good and bad years, both ups and downs, and it had to cope with them one way or another. In recent years, the greatest fall in production was recorded in the period from the end of 2008 until 2009, when it stopped at its historic minimum. The first half of 2010, however, was already consid- ered a period of stabilisation and moder- ate revival, which could be felt in the first half of the year. In the second half of the year, the volume of production began to grow slowly. The conference of the Foun- dry Association held during the 2010 FOND-EX Fair reviewed the current devel- opment of the sector, which at the begin- ning of 2010 bounced off the bottom. The Association of Foundries of the Czech Republic brings together foun- dries, pattern shops, trading companies, research and design organisations, and foundry schools. It is an employer and professional organisation. While the foundry business has become an export- oriented sector, it can be seen that new investors coming to the Czech Republic, too, are looking for local good-quality castings for their final products. The As- sociation seeks out and mediates infor- mation for both domestic and foreign casting and pattern users, which it has been doing for twenty years. TURN FOR THE BETTER IN 2010 Current figures for 2010 have shown a 10% to 15% year-on-year growth of Czech foundry production, with an up to 20% growth of grey cast iron production. After a 25% decline in 2009, the situation in the foundry industry has become sta- bilised, and a number of foundries have orders for several months in advance. The industry benefited from the car scrap scheme, but the revival can be felt not only in the car industry. Demand for cast- ings is growing again also in engineering. The Foundry Association expects the 2010 output figures to have grown by 8% to 10%, with an approximately five-per cent expected growth in the following years. The industry might return to its 2007 and 2008 record levels in five or six years. THE CRISIS ALSO HAD ITS PROS Currently, Czech foundries are not only battling for orders, but have to deal with the customers’ frequent bad payment morale, growing raw material prices and the price pressure from buyers. They also fear a possible increase in the price of energy, one of the foundries’ key cost items. On the other hand, the crisis has also had some pros, making the produc- tion process in some foundries more ef- ficient. The need to adjust to demand has resulted in the launching of new types of production, for example for the electric drive manufacturing sector or biomass processing. Czech foundries are also seeking new outlets, through participation in consortia for compre- hensive infrastructure deliveries, for ex- ample to Romania and Bulgaria. Special types of castings have found outlets overseas (Brazil, South Africa). Neverthe- less, the main foreign outlets for Czech foundries are still in Europe, especially in Germany. Association of Foundries at the FOND-EX Fair Association of Foundries at the Swisstech Fair Photo:AssociationofFoundriesarchives Josef Hlavinka, Association of Foundries of the Czech Republic, e-mail: dir@svazslevaren.cz, www.svazslevaren.cz

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 6 C Z E C H TO P ArcelorMittal Ostrava to Strengthen its Position Thanks to New Investment Projects Věra Breiová, ArcelorMittal Ostrava a.s., www.arcelormittal.com/ostrava ArcelorMittal will build a new steel plant in Os- trava worth EUR 200 million, i.e. approximately CZK 5 billion. Thanks to this investment, AMO will become one of the key steel companies in the biggest steel group worldwide. The new steel plant with basic oxygen furnaces will have numerous advantages over competitors. “This investment project has already been approved. The construction of the new steel plant is a key investment for the future of AMO,” says Augustine Kochuparampil, CEO of ArcelorMittal Ostrava. “Thanks to the new steel plant, AMO will become one of the most cost-competitive metallurgical plants of Arce- lorMittal in the whole of Europe,”adds Gonzalo Urquijo, member of the GMB of ArcelorMittal. The preparation of the project has been running for several years because the present steel production technology is obsolete.“The existing technology of tandem furnaces will be put out of operation and we will build a brand-new hall with basic oxygen furnaces,” says Kochuparampil. According to him, AMO will have three big advantages after the new steel plant has been completed. BEST POSITION “Firstly, we are situated in a growing market. Secondly, we have the best team in the world possessing the required technical skills and knowledge, and thanks to this technology we will be able to produce any steel grade and will be highly cost competitive. I am sure that we will acquire a special position within the Group, a prominent one, I should say.”The investment will make the Company more en- vironmentallyfriendlyandwillfurtherimprove the working conditions for the employees. Gonzalo Urquijo has also confirmed that ArcelorMittal Ostrava has a huge competi- tive advantage. “It uses raw materials from the CIS, notably iron ore, which is purchased for a very attractive price. Further, it produces coke and has a captive power plant, which is a big advantage. It possesses an excellent team of managers and specialists, too. And we must not forget that ArcelorMittal Os- trava is very flexible,” says Urquijo. The new steel plant is not the only planned modernis- ation and investment project. All the planned projects show that there is no danger that ArcelorMittal would transfer production from Ostrava somewhere else. The planned construction of a new steel plant is certainly a confirmation that the Com- panyintendstoremaininbusinesshereaslong as necessary.“Our mother Group has a strate- gy for ArcelorMittal Ostrava and the strategy is for more than 5 or 10 years. Just have a look at what the Group has already done in this area. It has invested billions of crowns to become 100 % owner,”adds Augustine Kochuparampil, the CEO. According to him, it is in the Group’s interest for the business in Ostrava to conti- nue, of course on condition that all legislative requirements are met. ENVIRONMENT IS ONE OF THE PRIORITIES Environmentalinvestmentprojectsarevitalfor ArcelorMittal Ostrava. Since the privatisation in 2003, AMO has made investments of more than CZK 8 billion, of which more than CZK 2.5 billion was spent on environmental projects. “The most important and the most expen- sive environmental investment project is the de-dusting of Sinter Plant North. When we launchedtheproject,theplanneddeadlinefor completion was the end of 2011. Good news for the local region is that this priority project, the cost of which is approximately CZK 1 bil- lion, will be completed in Q3 of this year, i.e. several months ahead of the initial schedule,” says the CEO with satisfaction. “Besides this we plan other environmental projects. There- fore, we have set a 5-year plan and our goal is to follow it. We are aware of the fact that if we want to do business in Ostrava, we have to comply with all the environmental regula- tions,” adds Augustine Kochuparampil. In this respect, he says, the approval of the new steel plant project is really vital. “For this year, we plan investment projects worth CZK 1.8 billion. These will be the key projects of modernisation and reduction of our environmental footprint,” Kochupar- ampil adds. According to him, this will lay the basis for the long-term prosperity of ArcelorMittal Ostrava. SOME FACTS ABOUT THE COMPANY ArcelorMittal Ostrava a.s. is the biggest steel- maker in the Czech Republic and part of the world’s largest steel group, ArcelorMittal. Its yearly capacity is 3 million tonnes of steel. It exports approximately 54% of its output to more than 48 countries all over the world. The Company has about six thousand em- ployees; the total headcount including the subsidiaries is nearly 9 000. The sole share- holder is ArcelorMittal Holdings A.G. Photo:AMOarchives

http://www.floowie.com/cs/cti/cbt-1-web/

| 1 8 E D U C AT I O N What do Foundry Workers and Metallurgy Students Want? V. Plichta, www.technik.ihned.cz Frequently discussed issues in expert foundry industry circles are the require- ments placed on people coming to work in this sector and the criteria they should meet, not only with regard to current needs, but also the more demanding fu- ture tasks. MANUAL SKILLS ON THE DECLINE The world foundry industry has undergone massive modernisation in the past few de- cades, mainly thanks to intensive automa- tion and mechanisation. This development, however, has been accompanied by cer- tain negative phenomena: the role of the ordinary foundryman, apprenticed in the branch, has been considerably reduced, and this process is continuing, with artisan skills and manual production of complicated pieces declining dramatically. This also ap- plies to new foundries currently built in de- veloping countries, where the new facilities are already fitted with modern equipment, but where basic foundry skills and knowl- edge have no tradition. A positive feature, on the other hand, is that the role of technicians with secondary school and university education has greatly increased. This is a guarantee that the new technologies and the entire production process will meet expectations. The task this group of workers will have to accom- plish is to monitor and control the installed parameters of the technical equipment, from smelting aggregates to forming ma- chines to finishing operations. More difficult technical problems are being tackled with the suppliers of advanced technologies and equipment. As today’s foundries operate in a market environment, secondary school and tech- nical university graduates are required to also have some managerial and marketing skills. METAL CASTING – A SEPARATE SECTOR Metal casting, which has its roots in met- allurgy, has become a separate branch of industry. It is considered an independent technical discipline also in countries where metal casting is formally incorporated in general metallurgy or materials sciences at universities (e.g. in the USA or the UK). THE ADVENT OF COMPUTER TECHNOLOGY, QUALITY MANAGEMENT… A great change in both foundry practice and tuition was the arrival of computers, in particular computer simulation in the 1970s. The emergence of this technology is even referred to as the “second industrial revolu- tion in metal casting”. An important stage opened in the development of the foundry industry as an applied science when mod- ern quality control concepts and modern managerial methods found their way into the industry, such as “lean production”, which was practically applied to the “foun- dries of the year 2000”concept. …BROUGHT ABOUT THE UNDERESTIMATION OF FOUNDRY SCIENCE BASICS This resulted in an apparent paradox: the influence of the new technologies was so strong that many people, including techni- cal specialists, began to ask whether it had any sense to have schools teaching spe- cific foundry skills, whether it was not an unnecessary luxury at a time, when foun- dry processes could be simulated and fore- cast thanks to computers, when the entire production process can be programmed and controlled with the help of CAD, CAM, TQM, Kaizen, etc. Views even became widespread that technical management of foundries should be sufficient and that technicians with foundry work specialis- ation were not much needed in modern foundries. Another accepted idea was that school leavers seeking employment in foundries had no need to understand much about metallurgy and the basics of natural science, and instead should focus on informatics and process management, company economics and marketing, and organisation of production. SURVEY WHICH SILENCED DOUBTERS A survey was conducted in Germany a few years ago among school leavers and prac- tical workers to investigate what people working in foundries and metallurgy stu- dents needed and required, what they missed and what, on the contrary, was of Photo:www.sxc.hu,PhotoCombo

http://www.floowie.com/cs/cti/cbt-1-web/

1 9 | M E TA L LU R G Y, F O U N D R Y I N D U S T RY, A N D S T E E L CO N S T R U C T I O N S secondary importance. The result was sur- prising: out of ten highly valued subjects (“very important”), eight were the same in all groups. They concerned branches which are arranged here in order of priority: Metallurgy Construction and use of castings Forming mixtures and forming processes Production technique and foundry equipment Economic management and control Natural science basics Data processing and informatics Organisation and management. Surprisingly, the survey has revealed that the use of computers for production opti- misation and management and for quality control, which are without any doubt essen- tial for foundry technologies, figured rela- tively weakly in the evaluation of the fields of study, and that this area did not appear among the respondents’ preferred subjects. This means that those who expected sub- jects such as “Data processing, Informatics” or“Process simulation and management”, to get high ratings necessarily had to come to the conclusion that the established sciences still hold their value.That is why convention- al subjects such as natural science basics, metallurgy and materials science, forming processes and forming mixtures, casting construction, and production technologies are valued so highly. The purposeful use of computer simula- tion, for example in mould filling processes, melt solidification, transformation of metal structure in casting and other processes, requires profound primary and accurate knowledge of those processes. FUNDAMENTALS STILL IMPORT In Germany, and to some extent also elsewhere in Europe, the publication of the survey results caused a change in the views as to what knowledge metallurgy students and workers should achieve dur- ing their studies and in practical work. This shows that acquiring skills in automation, materials science, and IT must be accom- panied by knowledge in conventional fundamental foundry areas, such as metal- lurgy, mould designing, casting construc- tion, etc. The components of this essential basis are closely intertwined. Knowledge in metallurgy cannot be promoted with- out good natural science basics. This does not mean that the marketing view should be discarded. In market econ- omy conditions, foundries and their workers are required to know how their castings will serve in practice, how they will be used by the customers. This is connected with what is called simultaneous engineering: it is not enough to have good pattern casting skills, it is also necessary to know how to solve the casting users’potential problems – here, casting is part of a broader issue – optimum approach to the customer. REASONABLY WITH “LEAN MANAGEMENT” When applying advanced company man- agement methods, it is desirable to keep a cool head. Very often, critical remarks can be heard with respect to “lean manage- ment”, which in many cases eliminated the technical part of metal casting process man- agement. Prof. Gerhard Engels of Clausthal University of Technology says: “The application of lean management may result in a situation where a foundry company occupying a leading position in a particular area will for some time main- tain its leading position even with a small number of foundry technicians during “idle operation”. The warning is that if those who do not work on the problems of tomorrow already now will have problems in future.” LINKS WITH ENGINEERING This specialist points to another weak point in the current foundry education system, which the survey did not raise: neglect of the close relationship between the foundry industry and engineering. In both sectors, the materials science and product construc- tion are so closely linked together that they practically blend. Therefore, this linkage should be taken into account in the cur- ricula of secondary and higher-level techni- cal schools with foundry and engineering specialisation.

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 0 W E I N T R O D U C E Photo:CCSAarchives International Award for Czech Steel Construction Specialists Marek Janda, Czech Constructional Steelwork Association, e-mail: janda@caok.cz, www.caok.cz The construction of Střížkov Station on the prolonged C line of the Prague Metro has won an important international award in the area of steel structures. It emerged as one of the winning projects entered for the European Steel Design Awards competition, organised every other year by the European Convention for Constructional Steelwork (ECCS) based in Brussels.Thestructurewasenteredforcompe- tition by the Czech Constructional Steelwork Association, a regular ECCS member. The main mission of the competition is pro- motingsteelstructures.Theprincipalcriterion in assessing the projects is the contribution they make to the steel construction sector, disregarding their size, origin, quantity of the steel used and other such factors. Other win- ning structures for the year 2009, apart from the Střížkov Station, were for example the Concert Hall in Copenhagen, the European Court of Justice in Luxembourg, Terminal 2E at Charles de Gaulle airport in Paris, the Letzigrund Stadium in Zurich, the Wimble- don Centre Court and Swedbank Stadium in Malmö. UNIQUE METRO STATION The Střížkov Metro Station is unique in its concept within the entire Prague under- ground railway system. At this place the C line comes closest to the surface, its archi- tecture and general design making it part of the surrounding area. The open space of the Prosek housing estate is dominated by a glazed hall, which brings daylight into the station, while sending out glowing light into darkness at night. The most difficult task as regards the project design of the steel structure was to put to life the architect’s vision while observing the requirements of static analysis and feasibility. The basic di- mensions of the roof are 160x42 m at 20 m maximum height of the construction above ground. The load-bearing structure consists of two main arcs, which cross at both ends of the station, the result of which is a shape reminding of a whale. The arcs are linked by three connecting elements on which the whole roofing structure is suspended. In previous years, several Czech structures received awards at the European Steel De- sign competition, including Sazka Arena (now O2 Arena) in Prague, the Mariánský Bridge at Ústí nad Labem, the pedestrian foot bridge over the D8 motorway, called Cat’s Eyes, and the building of Jihomoravská plynárenská company in Brno. STŘÍŽKOV METRO STATION: Investor: Dopravní podnik hlavního města Prahy a.s. Architect: Ing.arch. Patrik Kotas – Atelier designu a architektury Chief Engineer: Metroprojekt Praha, a.s. Steel Construction Project: Excon a.s. Steelwork Contractors: Metrostav a.s., divize 7 (general contractor) Excon Steel a.s. Vítkovice Power Engineering a.s.

http://www.floowie.com/cs/cti/cbt-1-web/

2 1 | S U R V E Y Poll of Successful Companies Operating in Metallurgy, the Foundry Industry, and Steel Constructions Slévárna Heunisch Brno, s. r. o. www.heunisch-guss.com Turnover: approx. EUR 17.77 million Number of employees: 230 Export: 78% of total revenues Slévárna Heunisch Brno, s.r.o. is a modern foundry and one of the largest grey cast iron foundries in the Czech Republic. Its cur- rent annual production capacity is 30 000 tonnes of castings, but the foundry is mak- ing preparations to increase its capacity to 70 000 tonnes. Its products are intended primarily for the tractor industry and for farming, textile, and other machines. The core of its production programme is motor and engine castings (crank cases, cylinder heads), gearbox housing castings (gear cases and distributor housing, flywheels), clutch housing castings, axle castings (axle cases, portals). Other items include com- pressor, pump and cover castings. Its main customers are the companies ZF Passau, ZF Seyr, AGCO FENDT, John Deere, SEW, Claas, GKN Waltersheid, DANA, Zetor Tractors, and Lombardini. What has been your greatest pride recently? It cost us tremendous effort to overcome the crisis, but now we are once again stand- ing on our own feet. The interruption of production only lasted a short time. Produc- tivity of labour has increased, although the financial resources were very limited. Before the crisis we massively modernised and nearly completely renewed our technical equipment, so that now we can use the most advanced produc- tion technologies. How are you coping with the conse- quences of the crisis? Are you feeling it? We are still feeling the consequences of the crisis - the volume of orders we have is showing a great decline. The customers are raising their demands and their quality requirements are growing. Also, the de- livery terms are very strict in comparison with the time before the crisis. The result is that we must react to their requirements much more flexibly and shorten our deliv- ery terms.

http://www.floowie.com/cs/cti/cbt-1-web/

| 2 2 S U R V E Y MOTOR JIKOV Group a. s. www.motorjikov.cz Turnover: approx. EUR 50 million Number of employees: 830 Export: 50% of the company’s turnover, our biggest markets are in Germany, Italy, the United Kingdom, and the USA Motor Jikov Group a.s is a holding company combining the firms of Motor Jikov Fostron a.s. - manufacturing dies for aluminium pres- sure casting and single-purpose machines, Motor Jikov Slévárna a.s. - aluminium and zinc pressure casting and gray and ductile cast iron castings manufacture and Motor Jikov Strojírenská a.s. - focused on the ma- chining and assembly of final products. Due to the wide-ranging programmes of the individual enterprises, Motor Jikov Group a.s. can offer its customers comprehensive solutions to engineering projects. What has been your greatest pride recently? Our pride is especially the fact that we have survived the complicated period and that now we are prepared to continue develop- ing our firm and expand to world markets. We are carrying on the great tradition of our enterprise going back 112 years. How are you coping with the conse- quences of the crisis? Do you feel it? The world crisis has had a strong impact on us. In 2009, our revenues fell by 40%. As a result, we had to take very important measures to reduce our costs, both as re- gards labour costs and overhead expenses. In this way we managed to surmount the worst period, and when looking back at the economic results of Motor Jikov Group a.s. now, we can see that the productivity and profitability indicators are higher than they were before the crisis. Thanks to the optimisation measures we have applied, we managed to raise the added value lev- el. The crisis forced us to go back to evalu- ating our processes, costs and operations management, and this has had a positive impact on our firm. CHEMOTEX Děčín a. s. www.chemotex.cz Turnover: approx. EUR 10 million Number of employees: 46 Export: 60% of production – markets include Poland, Germany, Slovakia, the Ukraine, Serbia, and the Netherlands Chemotex Děčín a. s. manufactures industrial and auxiliary chemical products, at this time mainly surfactants and detergents, chemicals for the engineering, construction, textile and paper industries, functional liquids, corrosion inhibitors, and many other special agents. It thus follows up the long tradition. The com- pany offer includes more than 200 kinds of products. Chemotex has a team of highly experienced experts who carry out research and development and are ready to help en- terprises with the application of company products. They can formulate new products according to consumers’ requirements and modifytheexistingrangeofproductsaccord- ing to consumers’ requirements in harmony with the latest knowledge of development. What has been your pride lately? In the present turbulent markets, it is diffi- cult to point out any product or order. The company is expanding its portfolio of clients and products even at this dif- ficult time, which is a suc- cess. Chemotex products worth special mention are phenol sulphonic acid and a number of surfactants – sulphosuccinates. How are you coping with the conse- quences of the crisis? Are you feeling it? Czech companies are feeling the impacts of the crisis as foreign companies do, and Chemotex is no exception. The only pos- sibility is to take up the “challenge”, pull to- gether to form a strong team and use it for continued expansion. Unitherm, s.r.o. www.unitherm.cz Turnover: approx. EUR 10 million Number of employees: 108 Export: Europe, the USA Unitherm, s.r.o. was founded in 1991 and within a very short time became an impor- tant player in the aluminium casting and heat engineering areas. The foundry uses two technologies – sand mould casting and die casting, depending on the customer’s requirements, the quan- tity, complexity of the casting and, last but not least, the quality. The foundry has introduced and is using the ČSN EN IS0 9001:2009 quality manage- ment system and the ČSN EN ISO 14001:2005 environmental management system. At the same time it is certified by the Swiss compa- ny SVTI and the customers’ internal auditors. Whathasbeenyourgreatestpriderecently? We are certainly proud of the fact that, as confirmed by the feedback from our custom- ers, our price offers are competitive, even in comparison with China. We have an excel- lent relationship with our customers, both in Europe and the USA. As we are a commercial foundry, we make prod- ucts for different seg- ments of industry, and have recently set foot also in the food and en- ergy industries. How are you coping with the conse- quences of the crisis? Are you feeling it? I could answer with what I said in reply to your previous question: yes, our foundry did feel the impact of the crisis, and we are proud that we managed to cope with its consequences. We survived 2009 without having to reduce our staff. In 2010, the vol- ume of our output increased and in terms of turnover, we returned to 2008 figures.

http://www.floowie.com/cs/cti/cbt-1-web/

MOTOR JIKOV Group a.s. Kněžskodvorská 2277/26 370 04 České Budějovice, Czech Republic Phone: +420 389 016 111, Fax: +420 389 016 330 e-mail: motorjikov@mjgroup.cz www.motorjikov.cz

http://www.floowie.com/cs/cti/cbt-1-web/

Advantage Thanks to Knowledge PRODUCTS: engine blocks cylinder heads gear boxes clutch boxes compressor bodies axle housings Serial production of difficult grey iron castings, quality according to EN, DIN, and CSN. Unit weight 0.3 kg to 2 500 kg per casting. Complicated core sets produced by a Cold Box Amin procedure. Cores based on water glass hardened by CO2. Core injection machines with capacity from 12 up to 150 litres. Characteristics of foundries of Heunisch group: GIESSEREI HEUNISCH GMBH/BAD WINDSHEIM/GERMANY Dimensions of forming line frame: 1 300 x 1 060 x 420/420 mm 800 x 650 x 300/300 mm, 470 x 420 x 200/200 mm Unit weight from 0.3 kg up to 600 kg per casting Cast materials: EN GJL 200, 250, 300, EN GJS 400, 500, 600 Yearly production capacity of about 75 000 tons SLÉVÁRNA HEUNISCH BRNO, S.R.O./BRNO/CZECH REPUBLIC Dimensions of forming line frame: 1 400 x 850 x 400/400 mm Unit weight from 30 kg up to 400 kg per casting Cast materials: EN GJL 200, 250, 300 Yearly production capacity of about 30 000 tonnes GIESSEREI HEUNISCH GMBH/STEINACH/GERMANY Manual forming Unit weight up to 2 500 kg per casting Cast materials: EN GJL 200, 250, 300, EN GJS 400, 500, 600 Yearly production capacity of about 6 000 tonnes SLÉVÁRNA HEUNISCH, A.S./KRÁSNÁ U AŠE/CZECH REPUBLIC Gravitational and low-pressure chill casting of aluminum Unit weight from 0.1 up to 20 kg per casting Cast materials: – AlSi (Silumines) of various types Yearly production capacity of about 3 000 tons HEUNISCH Foundry Brno, Ltd. Zaoralova11, 628 00 Brno, Czech Republic Phone: +420 532 196 520, Fax: +420 532 196 521, E-mail: info@heunisch-brno.cz www.heunisch-guss.com REFERENCES: ZF Passau ZF Steyr Dana GKN Walterscheid SEW Eurodrive John Deere AGCO – Fendt Zetor CLAAS Kaeser Bitzer Bock Frascold Scania Siemens Caterpillar MAN Lombardini Modine Behr Rexroth Bosch Ixetic Sipos

http://www.floowie.com/cs/cti/cbt-1-web/