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The local economy in the Pardubice Region has traditionally been based on the chemical and electrical engineering industries. The manufacture of automobile components has seen a boom over the last few years. The metropolitan role of the city is supported by a large number of energy companies and a significant role is also played by the retail trade. A sample group of companies were divided into six subgroups: electrical engineering (5), chemical and petrochemical (9) and other industry (9), networks, transportation and construction (14), strategic services (7) and retail trade (10). These companies view the future with optimism and anticipate a growth in revenues, they are planning new investments and to retain or increase the numbers of their employees. New investors arriving to the city have helped to resolve problems associated with restructuring and the demise of production at several former large-scale state-owned companies. Within the sample group of companies 85 % of them have been newly created since 1990. On the other hand the history of the chemical industry and food-processing industry in the city reaches back as far as the end of the 19th century and beginning of the 20th century, respectively.
The share of individual types of ownership is also equal. 41 % of the companies are owned by Czech individuals and 35 % by Czech legal entities. 20 % are under foreign ownership, and owing to their size employ 41 % of the workforce in the sample group (whereas those companies owned by individuals are on average five times smaller and legal entities half the size). Nine of the sample group do not have their registered offices in the city. Owing to the fact that these companies employ approximately one third of the available employees this is actually an unfavourable phenomenon that impairs the ability of local managers to influence the future of companies in Pardubice.
Besides tradition, one of the reasons often cited for relocating to the city is the availability of qualified personnel – see graph No. 1. Customers are key for retail and energy companies. Those companies representing the chemical industry often cite research and development in the region. A qualified workforce was cited by 100 % of chemical and electrical engineering companies, and by 86 % of companies providing strategic services. The strategic location of the city is expressly indicated by practically all types of companies. Trade subsidiaries form the largest portion of the sample group. Although according to all objective criteria it is only really the chemical and petrochemical companies that can be described as forming a cluster the companies themselves don’t mention it.
Graph No. 1 – Reasons for Locating to Pardubice City
Barriers to Development of Business
The significance of individual factors negatively influencing the current and further development of companies has significantly changed since the last survey (graph No. 2, the latest answers in the left blue column, and answers from 1999 in the right orange column). In first place we see “local competition” (46 % of those interviewed, networks and construction 79 %, trade 50 %, whereas only 20 % in the case of electrical engineering). In second place we see “availability of a qualified workforce” (39 %, electrical engineering 80 % and strategic services 71 %, whereas trade only reported 10 % and the chemical industry 33 %). In this category we see the greatest growth since 1999. However, this is not an anomaly in Pardubice, but a phenomena seen in many other Czech towns. “Foreign competition” in third place is also cited by 39 % of respondents, mostly by the category of exporters (75 %), and in individual branches 80 % in the electrical engineering industry. However, on the contrary strategic services didn’t cite this as a problem at all.
Two factors follow which indicate that companies are having greater and greater problems retaining the benefits of low prices – “price of raw materials” and “wage costs” with a 33 %, and 28 % response respectively. These are more or less equally represented across individual categories of companies, with the exception of strategic services who again didn’t mention the price of raw materials at all, but most often (43 %) mention wage costs.
Factors in sixth and eighth place are typical external influences describing the situation across the whole of the Czech Republic. Whilst the “economic situation in the Czech Republic” has significantly improved over the last five years, in the opinion of representatives of surveyed companies, on the other hand a new problem has appeared, namely “political instability”, in particular for companies dependent on the local market. “Legislative restrictions” are most often reported by companies in the chemical industry.
Graph No. 2 – Barriers to Development of Business
The growing exchange rate of the Czech crown is in next place and has been indicated as a barrier to development by approximately a sixth of those in the survey (13 %). Logically this affects exporters. 9 % of companies cite “obsolete technology” – particularly those in the chemical industry. “Availability of funding” has also significantly improved in comparison with the last survey – now only mentioned by 5 small to medium sized enterprises.
On the other side of the spectrum there are “interest rates”, “access to local government” and distance to market, which were only cited once or twice.
Export
Large and medium sized industrial companies in branches such as electrical engineering or automobile components are largely export oriented in the Czech Republic, whilst small sized enterprises, construction and services generally tend to the needs of the city and region. New investors in Pardubice are the main exporters (mainly in electrical goods, which isn’t unusual since Foxconn is the second largest exporter in the Czech Republic), whilst other industrial companies supply both to the Czech market (also outside the region) as well as abroad. More than two thirds of the share of exports to the EU is above average even within Czech towns (with the exception of Mladá Boleslav); since 1999 there has been a growth in exporting to EU countries by 51 percentage points, however, this has understandably brought with it additional demands on transportation. Most definitely a positive factor is the growing share of local suppliers linked to large manufacturers and exporters, which in absolute terms mean that the overall export orientation (and also the dependence on the global economy) is even greater. The potential for further growth in exports is in the field of services (software, chemical research), where percentages are still in single digits at present.
Graph No.3 - Export
Sales revenues for 2005 were willingly provided by all companies and available data cites an above average 6.85 million CZK per employee. Sales organisations were not included (in their case average turnover exceeded 10 million) – here there was a significant growth from 1.24 million in 1999. This average is exceeded by companies with foreign owners and Czech companies with a significant share in R&D, which is positive news. Despite the fact that two companies stated that they anticipate a drop in sales this year an overall growth of 26 % should be achieved, of which 34 % in the electrical engineering industry and 59 % in services.
Workforce and Employment
There is an overall number of 13250 employees in the surveyed companies in comparison with last years figure of 12766 and an estimated 13949 for next year – this shows a constant growth which is very positive with respect to the fact that the former leading employers in the city have undergone downsizing since the last survey in 1999. Over the last 5 years there has been a lull in the chemical industry, but a significant growth in the electrical engineering industry thanks to foreign investors. The percentage of women in work is less than 40 %, and is considered below average owing to the industries prevalent in the local economy – the highest percentage is in the electrical engineering industry, where it is slightly above 50 %. However, in a number of industries, such as chemistry and networks, it is below 30 %. Like all regional cities Pardubice is a significant centre to which people travel to work. Although not everyone in the survey responded to the question we can estimate that at least 40 % of employees of local companies do not live in the city.
Most employers expect to maintain or slightly increase employment through next year. Only two companies are planning on downsizing by about 30 employees. The medium term outlook is for companies in the survey to create approximately 850 new positions.
The quality of the workforce was evaluated as good – see graph No. 4, nevertheless slightly worse than the average across the Czech Republic in 2005 (28 % excellent, 51 % good, 18 % satisfactory, 3 % poor employees) and worse than in Pardubice in 1999, when there were 5 and 3 percentage points more for excellent and good workers respectively. There are two significant differences between individual types of companies: the greatest satisfaction is shown in the chemical industry (45 % satisfactory and poor) and electrical engineering industry (33 % satisfactory), whereas on the contrary the greatest satisfaction with employees is in services and infrastructure companies (almost 90 % excellent and good).
Graph No. 4 – Quality of Workforce
In the future a serious problem for development could be the fact that 24, i.e. 44 % of the companies are short of workers with key skills and qualifications in various fields. Primarily this concerns the electrical engineering (80 %) and chemical engineering (67 %) industries. Besides specialists in specific fields this also concerns trades such as lathe operators, milling machine operators, and welders, however, there is also demand for engineers and managers with language skills. A further 12 (22 %) companies anticipate that they will also have to deal with the same issues in the near future.
The average gross monthly wage in the sample group of 19,701 CZK is around about the statistical average for the Czech Republic (and therefore above the regional average) and is showing a good dynamic (growth by 11.0 % over the last 2 years, by 3.5 % in the last year and by 75 % since the last survey in 1999). The highest average wage is seen in strategic services and the lowest in trade and other industry. Traditionally companies with foreign owners pay more than the going average, whereas exporters generally provide a wage of approximately 1000 CZK less than the average. Naturally this is linked to the high level of pay in the field of strategic services aimed at the Czech market.
Innovation, Research and Development
The potential for research and development in the sample group has been found to be positive. Eleven companies (most commonly in traditional fields – chemical and electrical engineering industries) have their own research and development departments which participate in the development of new products and technology, and two are planning to set up such departments. A further 8 companies responded that they outsource R&D to other institutions, most of which to local research institutions and universities. These companies generally stated that they have some R&D base in the region (67 % in the chemical and petrochemical engineering industry). In total there are 935 people working in these departments. This is partly thanks to the fact that two research institutions took part in the survey. 11 companies with R&D are in the lead when considering other statistics, i.e. they state that revenue per employee exceeds 8 million CZK and that 77 % of there products are exported. Companies in the survey employ a commendable number of university graduates (15 %), and in the field of strategic services this rises to almost 25 %. Generally, however, across the surveyed companies the average is 13.5 %, although this is higher than the figure in a number of other towns in the country. On the other hand it is poignant to note that all companies with an R&D department complain of a lack of qualified employees.
In their own opinion innovative activities are very significant for companies in the sample group, most commonly (63 %) because of the improvement in the quality of their products or services, and also as a means for expanding their range of products (54 %) and for expanding into the market (43 %). It is important to know the reasons which prevent companies from being more innovative – in first place there are “high costs” (52 %) and “excessive economic risk” (31 %). A lack of qualified employees able to be innovative is a problem for 28 % of companies, however, in the electronic engineering industry this percentage is as high as 80 % and signifies for the city where graduate qualifications are most in need. It is also worth mentioning the complaint about “inflexible organisational structures” within certain companies which in many cases means that decisions about research and development are made by foreign owners not based in Pardubice.
Information about Property and Investment Plans
In comparison with other towns results indicate an average level of availability of property. The survey (graph No. 5) shows the average percentage of companies that own their own buildings (61 %), and less than half of these (44 %) have sufficient space available for expansion (in the last survey the figures were 66 % and 50 % respectively). In the surveyed sample only five companies plan on selling or renting part of their property (a further six are considering this, whilst in 1999 there were 15 such companies), which may only slightly improve the situation on the property market.
Graph No. 5 – Information about Investments and Property
Only three companies have a significant problem with lack of space, but in light of the fact that the industrial zone is already full there is a topic for public intervention here.
Information about new investments are favourable from the point of view of the number of investing companies. 27 companies plan on investing into expanding production capabilities and modernising technology, and most of this is planned for this year or next year. A further 9 companies are considering this. Total investment is around the 4 billion CZK mark, however, in comparison with the overall revenues of the companies in the survey this is a relatively low amount (approximately 4.1 %), even though investment per employee is higher (approx. 280,000 CZK) than in other towns in the Czech Republic in 2005. In 1999 this amount in Pardubice was at the 88,000 CZK level. A significant share of the overall volume, however, is made up of investment into infrastructure co-financed from EU structural funds. Companies also stated that new investment is connected with the creation of 850 new jobs, and is also utilised to improve the efficiency of production and the quality of products. Besides the previously mentioned infrastructure companies investments are also planned by chemical companies, and to a lesser extent by companies in the electrical engineering industry and those involved in trading.
A positive indicator shows that six companies are expanding (opening branches elsewhere than Pardubice) and a further eleven are considering this. Generally, this is either because of lower taxes and wage costs (i.e. in Slovakia), or to be closer to customers (elsewhere in the Czech Republic). One company is also planning on expanding abroad (elsewhere than Slovakia). A great deal of activity is seen in relation to EU Structural funds where 14 companies are preparing projects and another 18 are considering this option. In addition to the aforementioned large investments into infrastructure the most common projects concern research and development (centres of excellence), the purchase of new technology and education of employees. In comparison with other towns the response to this question shows a high willingness of local companies to actively seek out solutions to problems, if we consider that a number of companies are excluded from participating in many of the programs owing to their size or ties to multinational monopolies. Out of the survey group only two small companies are planning on leaving the city, and this is primarily down to the high level of competition.
Services of Local Government
An evaluation of the services provided by local government was on average (2.75) worse than in other towns in the Czech Republic (where the average was 2.45 in 2005). Nevertheless there are differences both in the responses from trading (2.94) and electrical engineering (2.51) companies and for individual services – see graph No. 6. It is interesting to note that foreign companies (2.43) are significantly more satisfied than companies with Czech owners.
Graph No. 6 – Evaluation of Services
Road maintenance in the area around the companies in the survey is evaluated the worst with an average of 3.12 and 9 poor marks, namely by trading companies (3.40). However, in comparison with the previous survey (orange columns) there is a visible improvement. On the contrary the evaluation of public transport (average of 2.98, and 7 poor marks) has worsened significantly, again with the worst evaluations coming from companies involved in trading. It is interesting to note that really large industrial companies didn’t provide such a negative opinion. The offer of accommodation with an average of 2.95 shows that companies would welcome a solution being found in the city to the provision of first-time buyers flats for young graduates – in this case companies who have complained about a lack of experts for research and development work are most critical.
On the other hand the disposal of solid waste in the city is rated relatively highly (average 2.28 and two poor marks) and is one of the best rated services next to promotion of the city. The range of property on offer is rated relatively highly with an average of 2.5, however the marks show a relatively large difference of opinion. This particularly applies to services and trade companies based in rented space which require office buildings as opposed to “Greenfield” sites as they are significantly more critical.
Road maintenance, the offer of car parking spaces and a generally better transport infrastructure are the services which were marked as requiring the greatest improvement. Companies also requested greater initiative from the council in support available for businesses, more transparent tender proceedings and more frequent contact.
Services for Entrepreneurs
The next section of the questionnaire ascertained the opinion of the companies on which services should be provided by local government. Apart from typical generalities such as “not hindering business” and “not causing unnecessary hurdles to business” and “reducing red tape” companies expressed their opinions on 13 possible areas of public intervention. Graph No. 7 highlights the number of answers to individually offered options, showing us which forms of support there is the greatest demand for. Answers in this section need to be assessed in the context of segmentation of respondents. We can’t assume that a certain type of support is universally beneficial for all.
The sum of answers ‘definitely yes’ and ‘probably yes’ is practically in every case (and in the first nine is most significant) greater than the sum of ‘probably no’ and ‘definitely no’, with two exceptions. Respondents don’t have much confidence in the provision of guarantees for loans. A second “unsuccessful offer” is the organisation of clusters in a given branch of industry. This may be attributed in part to the massive campaign seen in the last year which tried to promote clusters. Subsidised loans and an incubator for start-up businesses are only seen as advantageous by slightly more than half of the companies questioned. Interest in financial tools for business support (besides guarantees for loans and credit this also includes subsidised rent) is most often requested by smaller companies, generally those with local owners and of a non-industrial nature (e.g. sales, services, infrastructure). The group of chemical and petrochemical companies expressed the greatest interest in an incubator inspite of the fact that the incubator wasn’t primarily targeted at them.
The greatest demand for support expressed by business owners is for the city to be involved in activities that don’t require a significant financial investment, such as the provision of information about development plans, joint advertising opportunities, or the participation of companies in the creation of development plans. Support for winning public tenders is highly desired by companies providing services, whilst support for exports is recommended by those companies who are not currently involved in exporting, and the building of industrial zones is most welcomed by suppliers of energy and services.
Graph No. 7 – Demand for Business Services
Other requests most commonly listed directly by those questioned include:
• commencing an active housing policy – companies are short of specialists and flats are required for these people, e.g. first-time buyer flats for young graduates;
• improve transportation infrastructure in the city, build a ring road, improve roundabouts with limited throughflow
• make tender proceedings more transparent, overturn the opinion that public tenders are awarded to a limited group of “chosen ones”
Overall Opinion
The overall evaluation of local government and institutions is again seen to be at an average level. Pardubice City Council was rated relatively well attaining a mark of 2.29 on a scale of 1 to 5. It received the best marks from companies in the chemical industry (1.89) and other services (1.75), and the worst marks from infrastructure companies (2.64) and strategic services (2.57). Nine companies rated it as excellent, whilst three companies assessed the operation of the council in relation to support for business as insufficient. Most of the marks were twos. The Regional office was assessed slightly worse with an average of 2.46, more or less only down to the lower number of ‘excellent’ marks.
Out of the other institutions the Job Centre received the worst mark (2.81; although strategic services with high demands on qualified personnel are very dissatisfied giving a mark of 3.57, whereas electrical engineering companies gave a mark of 2.40). The Regional chamber of commerce received a more positive assessment of its activities (2.52; although the services sector gave 2.83 and industrial companies below 2.35). CzechInvest ended with the best mark (2.20), which could be influenced by the fact that a given company is a member of the chamber of commerce, i.e. whether it came into contact with the agency or not.
The assessment of the city as a place for carrying out business is higher than average – seven companies consider Pardubice as “excellent”, twenty nine as “good”, and only three responses were negative (“poor” place for carrying out business).
Graph No. 8 – Overall Evaluation
The following were most commonly listed as positive elements of the local business environment:
• geographic position in the centre of the Czech Republic / Europe, relatively short distance to eastern markets, closeness to Prague and Hradec Králové; rail and airport access
• qualified workforce thanks to industrial tradition in the area and the general level of education of the local population (university and electro-technical secondary school);
• industrial zone, support for new investors by the city and region
Access to the city is considered as the most serious negative factor according to the number of answers, and this is primarily down to the absence of a motorway link.
Other negative features include:
• low-level mobility of the workforce, lack of available workforce, weakening vocational educational base (engineering, construction..);
• insufficient care for the environment (liquidation of grassy areas, increase in construction in the city centre);
• lack of support for local companies, strangely
• growing number of state offices and officials in the city (region, City Council, districts) – growing number of “paper shufflers” and red tape for entrepreneurs
Conclusion
The survey of the business environment is a resource on the opinions of businesses operating in Pardubice. The results of the survey cannot be considered to provide an absolutely perfect description of the business environment in the city, nevertheless besides factual data about more than fifty leading companies employing local residents it provides an insight into the thoughts and feelings of their top managers, including those who didn’t respond for whatever reason (most commonly down to a lack of trust in the City Council – city and willingness to communicate). In any case the fact that the survey was undertaken has sent a positive signal to the business sector: the public sector is interested in the conditions for carrying out business within the city and would like cooperate with businesses to improve those conditions.
In comparison with the same survey carried out in 1999 it is evident in a number of indicators how successful the city has been in attracting foreign investment and how these companies have enriched the local economy. In addition to this it is necessary to emphasise the continuing importance of the chemical and petrochemical industry for Pardubice.
In conclusion we would like to thank all managing directors and managers who so willingly participated in the survey and made available such important information.
Obsah stránky
Business Environmental Survey
General CharacteristicsThe local economy in the Pardubice Region has traditionally been based on the chemical and electrical engineering industries. The manufacture of automobile components has seen a boom over the last few years. The metropolitan role of the city is supported by a large number of energy companies and a significant role is also played by the retail trade. A sample group of companies were divided into six subgroups: electrical engineering (5), chemical and petrochemical (9) and other industry (9), networks, transportation and construction (14), strategic services (7) and retail trade (10). These companies view the future with optimism and anticipate a growth in revenues, they are planning new investments and to retain or increase the numbers of their employees. New investors arriving to the city have helped to resolve problems associated with restructuring and the demise of production at several former large-scale state-owned companies. Within the sample group of companies 85 % of them have been newly created since 1990. On the other hand the history of the chemical industry and food-processing industry in the city reaches back as far as the end of the 19th century and beginning of the 20th century, respectively.
The share of individual types of ownership is also equal. 41 % of the companies are owned by Czech individuals and 35 % by Czech legal entities. 20 % are under foreign ownership, and owing to their size employ 41 % of the workforce in the sample group (whereas those companies owned by individuals are on average five times smaller and legal entities half the size). Nine of the sample group do not have their registered offices in the city. Owing to the fact that these companies employ approximately one third of the available employees this is actually an unfavourable phenomenon that impairs the ability of local managers to influence the future of companies in Pardubice.
Besides tradition, one of the reasons often cited for relocating to the city is the availability of qualified personnel – see graph No. 1. Customers are key for retail and energy companies. Those companies representing the chemical industry often cite research and development in the region. A qualified workforce was cited by 100 % of chemical and electrical engineering companies, and by 86 % of companies providing strategic services. The strategic location of the city is expressly indicated by practically all types of companies. Trade subsidiaries form the largest portion of the sample group. Although according to all objective criteria it is only really the chemical and petrochemical companies that can be described as forming a cluster the companies themselves don’t mention it.
Graph No. 1 – Reasons for Locating to Pardubice City
| Czech | English |
|---|---|
| Zarodek klastru | Cluster |
| Dodavatele polotovaru | Semi-finished goods suppliers |
| Vyzkum a vyvoj | Research and development |
| Strategicka poloha | Strategic location |
| Dodavatele surovin | Raw materials suppliers |
| Odberatele | Customers |
| Kvalifikovana pracovni sila | Qualified workforce |
Barriers to Development of Business
The significance of individual factors negatively influencing the current and further development of companies has significantly changed since the last survey (graph No. 2, the latest answers in the left blue column, and answers from 1999 in the right orange column). In first place we see “local competition” (46 % of those interviewed, networks and construction 79 %, trade 50 %, whereas only 20 % in the case of electrical engineering). In second place we see “availability of a qualified workforce” (39 %, electrical engineering 80 % and strategic services 71 %, whereas trade only reported 10 % and the chemical industry 33 %). In this category we see the greatest growth since 1999. However, this is not an anomaly in Pardubice, but a phenomena seen in many other Czech towns. “Foreign competition” in third place is also cited by 39 % of respondents, mostly by the category of exporters (75 %), and in individual branches 80 % in the electrical engineering industry. However, on the contrary strategic services didn’t cite this as a problem at all.
Two factors follow which indicate that companies are having greater and greater problems retaining the benefits of low prices – “price of raw materials” and “wage costs” with a 33 %, and 28 % response respectively. These are more or less equally represented across individual categories of companies, with the exception of strategic services who again didn’t mention the price of raw materials at all, but most often (43 %) mention wage costs.
Factors in sixth and eighth place are typical external influences describing the situation across the whole of the Czech Republic. Whilst the “economic situation in the Czech Republic” has significantly improved over the last five years, in the opinion of representatives of surveyed companies, on the other hand a new problem has appeared, namely “political instability”, in particular for companies dependent on the local market. “Legislative restrictions” are most often reported by companies in the chemical industry.
Graph No. 2 – Barriers to Development of Business
| Czech | English |
|---|---|
| Domaci konkurence | Local competition |
| Dostupnost kvalifikovanych pracovniku | Availability of qualified personnel |
| Zahranicni konkurence | Foreign competition |
| Cena vstupu | Price of raw materials |
| Naklady na mzdy | Wage costs |
| Ekonomicka situace v CR | Economic situation in the Czech Republic |
| Legislativni omezeni | Legislative restrictions |
| Politicka nestabilita | Political instability |
| Kurs koruny | Currency exchange rate |
| Zastarala technicka zarizeni | Obsolete technology |
| Dostupnost financnich prostredku | Availability of funding |
The growing exchange rate of the Czech crown is in next place and has been indicated as a barrier to development by approximately a sixth of those in the survey (13 %). Logically this affects exporters. 9 % of companies cite “obsolete technology” – particularly those in the chemical industry. “Availability of funding” has also significantly improved in comparison with the last survey – now only mentioned by 5 small to medium sized enterprises.
On the other side of the spectrum there are “interest rates”, “access to local government” and distance to market, which were only cited once or twice.
Export
Large and medium sized industrial companies in branches such as electrical engineering or automobile components are largely export oriented in the Czech Republic, whilst small sized enterprises, construction and services generally tend to the needs of the city and region. New investors in Pardubice are the main exporters (mainly in electrical goods, which isn’t unusual since Foxconn is the second largest exporter in the Czech Republic), whilst other industrial companies supply both to the Czech market (also outside the region) as well as abroad. More than two thirds of the share of exports to the EU is above average even within Czech towns (with the exception of Mladá Boleslav); since 1999 there has been a growth in exporting to EU countries by 51 percentage points, however, this has understandably brought with it additional demands on transportation. Most definitely a positive factor is the growing share of local suppliers linked to large manufacturers and exporters, which in absolute terms mean that the overall export orientation (and also the dependence on the global economy) is even greater. The potential for further growth in exports is in the field of services (software, chemical research), where percentages are still in single digits at present.
Graph No.3 - Export
| Czech | English |
|---|---|
| EU | EU |
| Zbytek sveta | Rest of the world |
| PU kraj | Pardubice Region |
| CR | CR |
| Vych evropa | Eastern Europe |
Sales revenues for 2005 were willingly provided by all companies and available data cites an above average 6.85 million CZK per employee. Sales organisations were not included (in their case average turnover exceeded 10 million) – here there was a significant growth from 1.24 million in 1999. This average is exceeded by companies with foreign owners and Czech companies with a significant share in R&D, which is positive news. Despite the fact that two companies stated that they anticipate a drop in sales this year an overall growth of 26 % should be achieved, of which 34 % in the electrical engineering industry and 59 % in services.
Workforce and Employment
There is an overall number of 13250 employees in the surveyed companies in comparison with last years figure of 12766 and an estimated 13949 for next year – this shows a constant growth which is very positive with respect to the fact that the former leading employers in the city have undergone downsizing since the last survey in 1999. Over the last 5 years there has been a lull in the chemical industry, but a significant growth in the electrical engineering industry thanks to foreign investors. The percentage of women in work is less than 40 %, and is considered below average owing to the industries prevalent in the local economy – the highest percentage is in the electrical engineering industry, where it is slightly above 50 %. However, in a number of industries, such as chemistry and networks, it is below 30 %. Like all regional cities Pardubice is a significant centre to which people travel to work. Although not everyone in the survey responded to the question we can estimate that at least 40 % of employees of local companies do not live in the city.
Most employers expect to maintain or slightly increase employment through next year. Only two companies are planning on downsizing by about 30 employees. The medium term outlook is for companies in the survey to create approximately 850 new positions.
The quality of the workforce was evaluated as good – see graph No. 4, nevertheless slightly worse than the average across the Czech Republic in 2005 (28 % excellent, 51 % good, 18 % satisfactory, 3 % poor employees) and worse than in Pardubice in 1999, when there were 5 and 3 percentage points more for excellent and good workers respectively. There are two significant differences between individual types of companies: the greatest satisfaction is shown in the chemical industry (45 % satisfactory and poor) and electrical engineering industry (33 % satisfactory), whereas on the contrary the greatest satisfaction with employees is in services and infrastructure companies (almost 90 % excellent and good).
Graph No. 4 – Quality of Workforce
| English | Czech |
|---|---|
| satisfactory | dostatečná |
| bad | špatná |
| excellent | výborná |
| good | dobrá |
In the future a serious problem for development could be the fact that 24, i.e. 44 % of the companies are short of workers with key skills and qualifications in various fields. Primarily this concerns the electrical engineering (80 %) and chemical engineering (67 %) industries. Besides specialists in specific fields this also concerns trades such as lathe operators, milling machine operators, and welders, however, there is also demand for engineers and managers with language skills. A further 12 (22 %) companies anticipate that they will also have to deal with the same issues in the near future.
The average gross monthly wage in the sample group of 19,701 CZK is around about the statistical average for the Czech Republic (and therefore above the regional average) and is showing a good dynamic (growth by 11.0 % over the last 2 years, by 3.5 % in the last year and by 75 % since the last survey in 1999). The highest average wage is seen in strategic services and the lowest in trade and other industry. Traditionally companies with foreign owners pay more than the going average, whereas exporters generally provide a wage of approximately 1000 CZK less than the average. Naturally this is linked to the high level of pay in the field of strategic services aimed at the Czech market.
Innovation, Research and Development
The potential for research and development in the sample group has been found to be positive. Eleven companies (most commonly in traditional fields – chemical and electrical engineering industries) have their own research and development departments which participate in the development of new products and technology, and two are planning to set up such departments. A further 8 companies responded that they outsource R&D to other institutions, most of which to local research institutions and universities. These companies generally stated that they have some R&D base in the region (67 % in the chemical and petrochemical engineering industry). In total there are 935 people working in these departments. This is partly thanks to the fact that two research institutions took part in the survey. 11 companies with R&D are in the lead when considering other statistics, i.e. they state that revenue per employee exceeds 8 million CZK and that 77 % of there products are exported. Companies in the survey employ a commendable number of university graduates (15 %), and in the field of strategic services this rises to almost 25 %. Generally, however, across the surveyed companies the average is 13.5 %, although this is higher than the figure in a number of other towns in the country. On the other hand it is poignant to note that all companies with an R&D department complain of a lack of qualified employees.
In their own opinion innovative activities are very significant for companies in the sample group, most commonly (63 %) because of the improvement in the quality of their products or services, and also as a means for expanding their range of products (54 %) and for expanding into the market (43 %). It is important to know the reasons which prevent companies from being more innovative – in first place there are “high costs” (52 %) and “excessive economic risk” (31 %). A lack of qualified employees able to be innovative is a problem for 28 % of companies, however, in the electronic engineering industry this percentage is as high as 80 % and signifies for the city where graduate qualifications are most in need. It is also worth mentioning the complaint about “inflexible organisational structures” within certain companies which in many cases means that decisions about research and development are made by foreign owners not based in Pardubice.
Information about Property and Investment Plans
In comparison with other towns results indicate an average level of availability of property. The survey (graph No. 5) shows the average percentage of companies that own their own buildings (61 %), and less than half of these (44 %) have sufficient space available for expansion (in the last survey the figures were 66 % and 50 % respectively). In the surveyed sample only five companies plan on selling or renting part of their property (a further six are considering this, whilst in 1999 there were 15 such companies), which may only slightly improve the situation on the property market.
Graph No. 5 – Information about Investments and Property
| Czech | English |
|---|---|
| Hodlate v Pardubicich skoncit | Do you plan on winding up in Pardubice |
| Budete expandovat jinde | Will you expand elsewhere |
| Vyuzivate programu EU | Do you utilise EU grants |
| Planujete investice | Are you planning any investment |
| Prodate nebo pronajmete | Do you sell or rent |
| Mate pozemek k rozsireni | Do you have land for expansion |
| Jste vlastniky nebo najemci | Are you the owner or a lessee |
| Vlastnici | Owners |
| Najemci | Lessees |
| Oboji | Both |
| ano | Yes |
| Ne | No |
| Zvazujeme | Thinking about it |
Only three companies have a significant problem with lack of space, but in light of the fact that the industrial zone is already full there is a topic for public intervention here.
Information about new investments are favourable from the point of view of the number of investing companies. 27 companies plan on investing into expanding production capabilities and modernising technology, and most of this is planned for this year or next year. A further 9 companies are considering this. Total investment is around the 4 billion CZK mark, however, in comparison with the overall revenues of the companies in the survey this is a relatively low amount (approximately 4.1 %), even though investment per employee is higher (approx. 280,000 CZK) than in other towns in the Czech Republic in 2005. In 1999 this amount in Pardubice was at the 88,000 CZK level. A significant share of the overall volume, however, is made up of investment into infrastructure co-financed from EU structural funds. Companies also stated that new investment is connected with the creation of 850 new jobs, and is also utilised to improve the efficiency of production and the quality of products. Besides the previously mentioned infrastructure companies investments are also planned by chemical companies, and to a lesser extent by companies in the electrical engineering industry and those involved in trading.
A positive indicator shows that six companies are expanding (opening branches elsewhere than Pardubice) and a further eleven are considering this. Generally, this is either because of lower taxes and wage costs (i.e. in Slovakia), or to be closer to customers (elsewhere in the Czech Republic). One company is also planning on expanding abroad (elsewhere than Slovakia). A great deal of activity is seen in relation to EU Structural funds where 14 companies are preparing projects and another 18 are considering this option. In addition to the aforementioned large investments into infrastructure the most common projects concern research and development (centres of excellence), the purchase of new technology and education of employees. In comparison with other towns the response to this question shows a high willingness of local companies to actively seek out solutions to problems, if we consider that a number of companies are excluded from participating in many of the programs owing to their size or ties to multinational monopolies. Out of the survey group only two small companies are planning on leaving the city, and this is primarily down to the high level of competition.
Services of Local Government
An evaluation of the services provided by local government was on average (2.75) worse than in other towns in the Czech Republic (where the average was 2.45 in 2005). Nevertheless there are differences both in the responses from trading (2.94) and electrical engineering (2.51) companies and for individual services – see graph No. 6. It is interesting to note that foreign companies (2.43) are significantly more satisfied than companies with Czech owners.
Graph No. 6 – Evaluation of Services
| Czech | English |
|---|---|
| Udrzba silnic v okoli podniku | Road maintenance in the vicinity of premises |
| Verejna doprava | Public transport |
| Nabidka bydleni ve meste | Offer of housing in the city |
| Sluzby mestske policie | Services of municipal police force |
| Podpora podnikani a investic | Support for business and investment |
| Technicka infrastruktura ve meste | Technical infrastructure in the city |
| Spravni rizeni na MU | Administrative proceedings at municipal office |
| Nabidka pozemku k podnikani | Offer of land for business |
| Propagace mesta | City promotion |
| Likvidace tuhych odpady | Solid waste disposal |
Road maintenance in the area around the companies in the survey is evaluated the worst with an average of 3.12 and 9 poor marks, namely by trading companies (3.40). However, in comparison with the previous survey (orange columns) there is a visible improvement. On the contrary the evaluation of public transport (average of 2.98, and 7 poor marks) has worsened significantly, again with the worst evaluations coming from companies involved in trading. It is interesting to note that really large industrial companies didn’t provide such a negative opinion. The offer of accommodation with an average of 2.95 shows that companies would welcome a solution being found in the city to the provision of first-time buyers flats for young graduates – in this case companies who have complained about a lack of experts for research and development work are most critical.
On the other hand the disposal of solid waste in the city is rated relatively highly (average 2.28 and two poor marks) and is one of the best rated services next to promotion of the city. The range of property on offer is rated relatively highly with an average of 2.5, however the marks show a relatively large difference of opinion. This particularly applies to services and trade companies based in rented space which require office buildings as opposed to “Greenfield” sites as they are significantly more critical.
Road maintenance, the offer of car parking spaces and a generally better transport infrastructure are the services which were marked as requiring the greatest improvement. Companies also requested greater initiative from the council in support available for businesses, more transparent tender proceedings and more frequent contact.
Services for Entrepreneurs
The next section of the questionnaire ascertained the opinion of the companies on which services should be provided by local government. Apart from typical generalities such as “not hindering business” and “not causing unnecessary hurdles to business” and “reducing red tape” companies expressed their opinions on 13 possible areas of public intervention. Graph No. 7 highlights the number of answers to individually offered options, showing us which forms of support there is the greatest demand for. Answers in this section need to be assessed in the context of segmentation of respondents. We can’t assume that a certain type of support is universally beneficial for all.
The sum of answers ‘definitely yes’ and ‘probably yes’ is practically in every case (and in the first nine is most significant) greater than the sum of ‘probably no’ and ‘definitely no’, with two exceptions. Respondents don’t have much confidence in the provision of guarantees for loans. A second “unsuccessful offer” is the organisation of clusters in a given branch of industry. This may be attributed in part to the massive campaign seen in the last year which tried to promote clusters. Subsidised loans and an incubator for start-up businesses are only seen as advantageous by slightly more than half of the companies questioned. Interest in financial tools for business support (besides guarantees for loans and credit this also includes subsidised rent) is most often requested by smaller companies, generally those with local owners and of a non-industrial nature (e.g. sales, services, infrastructure). The group of chemical and petrochemical companies expressed the greatest interest in an incubator inspite of the fact that the incubator wasn’t primarily targeted at them.
The greatest demand for support expressed by business owners is for the city to be involved in activities that don’t require a significant financial investment, such as the provision of information about development plans, joint advertising opportunities, or the participation of companies in the creation of development plans. Support for winning public tenders is highly desired by companies providing services, whilst support for exports is recommended by those companies who are not currently involved in exporting, and the building of industrial zones is most welcomed by suppliers of energy and services.
Graph No. 7 – Demand for Business Services
| Czech | English |
|---|---|
| Garance za uvery | Loan guarantees |
| Organizace klastru ve vasem oboru podnikani | Organisation of a cluster in your branch of industry |
| Zvyhodnene pujcky | Subsidised loans |
| Inkubator pro zacinajici podnikatele | Incubator for start-up businesses |
| Podpora exportu | Export support |
| Vzdelavaci kurzy | Educational courses |
| Zvyhodneny pronajem nemovitosti k podnikani | Subsidised rent of business property |
| Asistencni sluzba pri jednani s urady | Assistance in dealings with authorities |
| Budovani prumyslovych zon | Building industrial zones |
| Podpora pri ziskavani verejnych zakazek | Support in winning tenders |
| Spolecna propagace | Joint promotion |
| Ucast podniku na tvorbe a realizaci rozvojovych planu | Participation in the creation and implementation of development plans |
| Informace o rozvojovych zamerech mesta | Information about the city's development plans |
Other requests most commonly listed directly by those questioned include:
• commencing an active housing policy – companies are short of specialists and flats are required for these people, e.g. first-time buyer flats for young graduates;
• improve transportation infrastructure in the city, build a ring road, improve roundabouts with limited throughflow
• make tender proceedings more transparent, overturn the opinion that public tenders are awarded to a limited group of “chosen ones”
Overall Opinion
The overall evaluation of local government and institutions is again seen to be at an average level. Pardubice City Council was rated relatively well attaining a mark of 2.29 on a scale of 1 to 5. It received the best marks from companies in the chemical industry (1.89) and other services (1.75), and the worst marks from infrastructure companies (2.64) and strategic services (2.57). Nine companies rated it as excellent, whilst three companies assessed the operation of the council in relation to support for business as insufficient. Most of the marks were twos. The Regional office was assessed slightly worse with an average of 2.46, more or less only down to the lower number of ‘excellent’ marks.
Out of the other institutions the Job Centre received the worst mark (2.81; although strategic services with high demands on qualified personnel are very dissatisfied giving a mark of 3.57, whereas electrical engineering companies gave a mark of 2.40). The Regional chamber of commerce received a more positive assessment of its activities (2.52; although the services sector gave 2.83 and industrial companies below 2.35). CzechInvest ended with the best mark (2.20), which could be influenced by the fact that a given company is a member of the chamber of commerce, i.e. whether it came into contact with the agency or not.
The assessment of the city as a place for carrying out business is higher than average – seven companies consider Pardubice as “excellent”, twenty nine as “good”, and only three responses were negative (“poor” place for carrying out business).
Graph No. 8 – Overall Evaluation
| Czech | English |
|---|---|
| Magistrat mesta | City Hall |
| Krajsky urad | Regional Office |
| Urad prace | Job Centre |
| KHK | Chamber of Commerce |
| CzechInvest | CzechInvest |
| Mesto jako misto pro podnikani | The city as a place for doing business |
The following were most commonly listed as positive elements of the local business environment:
• geographic position in the centre of the Czech Republic / Europe, relatively short distance to eastern markets, closeness to Prague and Hradec Králové; rail and airport access
• qualified workforce thanks to industrial tradition in the area and the general level of education of the local population (university and electro-technical secondary school);
• industrial zone, support for new investors by the city and region
Access to the city is considered as the most serious negative factor according to the number of answers, and this is primarily down to the absence of a motorway link.
Other negative features include:
• low-level mobility of the workforce, lack of available workforce, weakening vocational educational base (engineering, construction..);
• insufficient care for the environment (liquidation of grassy areas, increase in construction in the city centre);
• lack of support for local companies, strangely
• growing number of state offices and officials in the city (region, City Council, districts) – growing number of “paper shufflers” and red tape for entrepreneurs
Conclusion
The survey of the business environment is a resource on the opinions of businesses operating in Pardubice. The results of the survey cannot be considered to provide an absolutely perfect description of the business environment in the city, nevertheless besides factual data about more than fifty leading companies employing local residents it provides an insight into the thoughts and feelings of their top managers, including those who didn’t respond for whatever reason (most commonly down to a lack of trust in the City Council – city and willingness to communicate). In any case the fact that the survey was undertaken has sent a positive signal to the business sector: the public sector is interested in the conditions for carrying out business within the city and would like cooperate with businesses to improve those conditions.
In comparison with the same survey carried out in 1999 it is evident in a number of indicators how successful the city has been in attracting foreign investment and how these companies have enriched the local economy. In addition to this it is necessary to emphasise the continuing importance of the chemical and petrochemical industry for Pardubice.
In conclusion we would like to thank all managing directors and managers who so willingly participated in the survey and made available such important information.
Kontakt:
Magistrát města Pardubic
Pernštýnské náměstí 1
530 21 Pardubice
Tel.: 466 859 111
E-mail: posta@mmp.cz
ID datové schránky: ukzbx4z
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