REVIEW OF THE METAL SECTOR IN THE FEDERATION OF BIH
The significance of the metal sector for the economy of both the Federation of Bosnia and Herzegovina and the state of Bosnia and Herzegovina, as well as other countries of the Western Balkans, is extremely high. The metal sector in the Federation of Bosnia and Herzegovina has great competitive advantages due to existing raw material resources, and a competitive and qualified labor force.
In the period 1995-2000 the metal sector in the Federation of Bosnia and Herzegovina was characterized by a low level of capacity utilization, outdated equipment, a lack of available raw materials and a disjointed market in the country and broken business ties with export destinations. All these factors prevented successful production. In the period between 2001 and 2004, several large companies in the metal sector managed to end the privatization process by finding strategic partners. These companies then underwent restructuring, procurement of new equipment, resolving the status of employees and securing financial resources for entering the foreign market.
Although the Federation of Bosnia and Herzegovina belongs to the group of small metal producers, considering the available capacities and thanks to the long-standing tradition, the importance of the metal sector in the economy of the Federation of Bosnia and Herzegovina is great, especially compared to other European countries. With a long-standing tradition, with available natural resources (especially iron ore, bauxite, lead, zinc and copper), the significance of the metal industry can be seen through the perspective of total production, exports, number of employees and share in GDP. The metal processing sector accounts for almost one quarter of the total production of the state of Bosnia and Herzegovina, with about one third of exports being produced in the Federation of Bosnia and Herzegovina.
The metal sector in the Federation of Bosnia and Herzegovina can be structurally divided into four groups:
production of base metals,
production of metal products,
production of machines and devices,
production of parts for motor vehicles.
In the last ten years, the automotive industry of the Federation of Bosnia and Herzegovina (metal production, metal processing, tool making, plastic processing, mechanical and electrical engineering and textile products for the auto parts industry) has experienced dynamic development and has become strongly export-oriented, exporting to an average of 90% of its production worldwide. Companies from the automotive sector produce a wide range of parts and components.
The production of base metals is characterized by the lowest capacity to create added value per product unit, and the key success factors are economies of scale, mass sales, competitiveness in the costs of basic inputs and securing financial capital under favorable conditions.
In the production of metal products, machines and devices, as well as parts for motor vehicles, the key success factors are: the application of technological innovations in products and processes and strategic partnership with international companies within the scope of activity.
For the further growth of the metal sector of the sector and its full competitiveness, investments are needed, be it direct investments, long-term investment loans or other suitable sources of financing.
The promotion of foreign direct investments in the metal and electrical sector is necessary for several reasons:
• Inflow of technologies, know-how and management knowledge in the country and used in the most efficient way through the internationalization of business,
• Inclusion of domestic companies in global and regional business and marketing networks, which puts their competitiveness in the context of regional and global competitiveness managed by investor companies,
• Additional capital for investing in increasing the productivity and competitiveness of companies.
The metal and electrical sector, as one of the most important processing sectors in FBiH, is closely connected with other sectors and their mutual influence is great. The most significant influential sectors are: energy sector, construction, transport sector, banking sector, etc. That is why it is important that these sectors also develop and that their impact is positive.