The wave of automation in the manufacturing industry has brought about two-digit sales growth of Bulgaria-based component maker Festo Production in recent years. As the plant in Sofia is now too small for the needed further expansion, the company and its German parent Festo have decided to move part of the operations to a plant of the group in Turkey. The relocation will free space at the Sofia site for increasing the production of electronics and smart products that are seeing growing demand.
The decision signals an interesting turn in the Bulgarian industry. Until recently, this country was most often the host of production lines transferred from Western Europe because of the lower labor costs here; now lines are being transferred to other countries. The good news is that production in Bulgaria is preserved and will now focus on more complex devices.
After increasing its sales by 30% in 2021, Festo Production added 20% to its turnover last year, to some 260 million levs (approximately 130 million euro). "Compared to the pre-pandemic year 2019, we have seen cumulative growth of more than 80% in volume," Festo Production manager Georgi Atanasov told the Capital Weekly.
The growth has been driven by strong demand for the company's two main product groups: electronics and electric drives. Now the plant needs more equipment, space and workers to meet demand. The capacity of the existing site in Sofia however is limited.
That is the reason why the company has already initiated a process of transformation. It includes the investment of nearly 15 million euro: more than 3.5 million in reconstruction and expansion of the existing building and more than 10 million euro in new equipment. "On the one hand, that will allow us to expand our capacity for electronics and, on the other, to introduce the manufacture of new electric drive products," Atanasov explained.
As part of the transformation, the production of some of the non-electronic items that are currently made in Sofia will be gradually transferred to Festo's new plant in Turkey by the end of 2024.
"The plant in Bulgaria will focus on more complex products that contain electronics and software and that require the assembly of up to 100 components in a single device," said Atanasov and added: "For Sofia, that means vacating one of the buildings - literally - and re-equipping it with new machines for the manufacture of products that are much in demand."
The transfer is also prompted by the shortage of workers in Sofia who are ready to perform monotonous operations in production. The problem has become more acute since the end of the pandemic. "Last summer we had periods with two-digit staff turnover. That is one of the reasons why we tried to get free of products that require boring assembly operations and replace them with more complex devices," Atanasov explained.
Currently the company employs more than 1,300 people, including some 100 workers at Festo Production's another location, in the town of Smolyan, where the staff nearly doubled last year. "When you need continuous production at least five days a week, that is easier to achieve in a smaller town than in the capital city," Atanasov commented.
It was during the pandemic that Festo's engineering center in Sofia, which was set up in 2019, also expanded: from some 20 people at the beginning to nearly 120 now. "We plan to grow to some 250 engineers in the next three or four years," Georgi Grozdanov, head of the Technical Engineering Center, told the Capital Weekly.
Festo Production's engineers are located in a separate building elsewhere in Sofia. Since the beginning of this year the company's test laboratory, which works closely with the engineers, was moved to premises close to them to free space in the plant.
"Currently the area of the laboratory is some 1,000 sq. m and it will double in the next few years," Grozdanov explained. That will allow the company to close the cycle of development, testing and production in Bulgaria.