Your company was founded 55 years ago. What have been the major steps in the evolution of the company?
The company was established in 1947 with the project of construction of the very first hydroelectric power plant in former Yugoslavia after the Second World War. It was the Jablanica power plant, together with the dam. Soon after this pioneer and very complex project, "Hidrogradnja" moved and became specialized in all types of civil engineering and construction works. It means that "Hidrogradnja" became the head of technical project covering all kinds of hydroelectric plants, dams of all types, tunnels, water reservoirs, water supply systems, water purification systems, sewer systems, river regulations and any kind of ports (sea ports and river ports). We are also involved in a lot of industrial projects as well as in various building constructions, mining and basic civil engineering projects like roads, bridges, railways, airports, tunnels, etc. Moreover, we offer services related to the domestic market in BiH, and aimed at the production of construction material. We also deal with concrete products factory in the Sarajevo region, which produces all types of concrete pre-fabricated products and elements. We also have two quarries in BiH (production of various types of aggregates). All other services of "Hidrogradnja" can be offered on both, domestic and international markets.
"Hidrogradnja" started its international activities more than 40 years ago. The very first project took place in Lebanon, and later on, "Hidrogradnja" moved to other markets like Libya, Iraq, etc. The business philosophy of the company has constantly been developed in order to adapt the company activities to the markets needs. In this regard, it included various co-operations with domestic and foreign partners. Partnership is one of our key assets on both, local and international market. Let me give you some examples: our cooperation with the Enka in Turkey (a leading construction company in Turkey and Europe). We also worked with Behtel from San Francisco, USA and finally on very interesting but demanding project in Iraq. This was a huge project, complex in terms of finance, as well as in technical and technological terms. Its purpose was the construction of a large dam in Iraq, amounting to almost $US 1.7 billions. Unfortunately, this project was to be stopped due to the Gulf War, so only one third of the project was completed. Therefore, this business opportunity turned out to be a big shock for the company, because we lost a lot of money, machinery and equipment. But we are really proud that under such difficult circumstances, we managed to organize the return of all our workers in the country (at that time we had more then 3000 workers engaged in this project). The evacuation in itself was a huge project and a real challenge. At that time, all of our competitors, especially the international ones, expected us to be totally broken down, because such huge losses could destroy a state, not to mention a company. At that time we were among in the top ten of the world leaders in construction. There is one list, the ENR list, which contains the most successful contractors in the construction world, all over the world. I'll give one example; in 1990 we were at the 8th place of a Water top ten; in 1986 we were at the 6th place in the Middle East top ten and few years before that we were at the 16th place of the leaders on the design-construct contractors list. So, we were really among the top the ten in the world, and we managed to stay among the best. Thanks to the very important feature of our managerial style, i.e. flexibility, we managed to reorganize our business and to focus on some other markets.
Unfortunately, another following, historical shock was the war in BiH. In this war we lost all our equipment, plants and machinery, which resulted in 80 $ millions of damages. In order to describe you our position at that time, (our HQ were in Sarajevo even during the war), I can tell you that we lived in a totally blocked and surrounded city, and that we were supposed to carry out all of our operations under such conditions. We had no electricity, no water supply, gas, food, phone, e-mail and no possibility to reach the rest of the world. And when I say that we are very proud that we managed, not only to keep all of our international markets, but even to open the new ones, I hope you'll be able to understand how difficult it was to do that under such circumstances. At that time we had a very big project in Libya. By the way, we've been working in Libya for more then 30 years without interruption, and we succeeded to keep it even during the war in Bosnia. During the war, we managed to open new markets in Tunisia, Greece, as well as a small branch office in Germany. At that time, in order to organize and establish an effective and efficient communication as we could at that time, we opened two additional representative offices in Zagreb (Croatia), and Istanbul (Turkey), which enable us to communicate with some other markets, partners, possible inventors, etc. That is how we, in a few words, organize our operations during such difficult circumstances like the war in Bosnia.
Now, we have some other international markets and plans to enter new markets. And that is what we are doing. These are related to Jordan and Malaysia. Now, we work in Libya, Jordan, Malaysia, Greece, Germany, with the representative office in Zagreb. Also, we've been very active on the local market. I would mention the third feature of our business philosophy (I don't want to waste your time with all of them), and that is the corporate and social responsibility for all societies we've been working with. It includes, of course our native country, which is the HQ of all our operations.
So, during the war, beside our activities in the company, the two of us were at the top of the reconstruction activities in Sarajevo. Mr. Drino was the director of the Directorate for Reconstruction and Development, and I was the director of operations in the same Directorate. It was our way to support the tormented city and the country and we did the things we knew the best. So, we managed to establish this Directorate, organize its activities and collect funds based on donations. Even in such a difficult situation we managed to collect the money. At that time we covered all sectors of life in the city, our aim was to facilitate the lives of the citizens of Sarajevo. So, when someone asks us what improvements have been done, I'm happy to say that we achieved many great things. Even though it was a very demanding task, as we were both engaged in the usual activities of our company, we did it with joy and pride. The other thing is, when you live in a totally blocked city, without electricity, water, gas, possibility to transport people and goods, without communications, and you manage to collect a lot of money, you manage to organize transport of goods to the city, and you manage to carry out all this under fire, then we can say this was a big managerial lesson. So, among all business and management schools, MBA and other, I would say my best managerial school was my position of director of Operations in 1994, in the project of reconstruction of Sarajevo.
Now, let's go to my first love, "Hidrogradnja".
What is the situation of the company now?
At the moment, we have 1300 employees including all of our local markets. Regarding the process of privatization, we started ours before the war. We were very eager, even at that time (10-12 years ago) to become privatized as soon as possible. At that time, we managed to privatize 30% of the company, and the owners were small shareholders, actual employees of the company. Then the war broke out, economic and business activities were stopped including process of privatization. In the second year of the war, the government brought the decision that all companies which didn't succeed to be completely privatized, (which means all companies), will become temporarily state owned. This "temporarily" is still the today situation. To shorten the story, we are on the list of the app. 50 (previously 86) most important strategic companies for the country. And our process of privatization is supposed to be completed with the assistance of the International Community, and part of the IC is in charge of our business family. We've got information that in the middle or end of the year this procedure or this tender will be finally published. So, we expect our process of privatization to be finished by the end of the year.
| Why are you so eager to finish with this privatization?
We've been working on the international market for more then 40 years, and this is the difference between us and some other companies in BiH, which have been working only on the local market. We are very familiar with the strict rules of the international markets, how to compete, how to become one of the top ten in the industry. However, something that represents obstacle for us, although we managed to overcome it, is that we are not a private company. That's why we want to become privatized as soon as possible.
Are you ready to get in touch with partners, either directly or through the privatization agency?
Actually, we are trying to find a partner who will join us, and I'm sure that in the end of the year we'll find one foreign partner. According to our experience from the past, we know who could be our potential partner.
We have a good cooperation with the agency: we cooperate very closely on all materials, programs and proposals related to the privatisation, and the only way to do this is through our company, because this is how we can present ourselves to potential strategic partners. We have now been cooperating for 4 years.
Potential foreign partner should be one with the reputation, who can be useful for us, to help us with the new, advanced technology, which is able to insure jobs for our employees and that is important to us than the cash.
So privatization will bring you both modern technology and market growth?
Yes, as we suffered a lot during the war, we lost at least one technical period.
Maybe it's not very moderate to say that even when we were blocked and without proper communication with the rest of the world, we really did our best to stay at the top of new technological achievements. As a proof, I'll mention only two things; the new technology is related to the construction of bridges and we applied this one during the war in the region of Mostar, where we reconstructed all destroyed bridges. That was the latest technology, and we are very proud that we managed to catch up and to use it efficiently. One more example is the one of a dam construction (I won't bother you with technical details, although all civil engineers like to give details). The new technology is to use the rolling concrete for dam constructions. We used that in our project in Greece and in Jordan. I'll stop here because it will take a lot of time.
You said that you were producing construction material like cement, concrete. Is this activity still going on, and is it an activity that you intend to expand?
Yes, in BiH. We are very proud that we managed to reconstruct all of our plants and facilities by our own financial resources. Now, we have two quarries, factory for production of concrete prefabricated elements. This is a very important factory although it was situated on the confrontation line and it was totally destroyed. The war was still going on when we started its reconstruction. Now, it works and we are very happy with it. We added some new things to this plant like equipment for extraction of river gravel, so in our product range of various types of aggregate, now we can include this river gravel, which is a special aggregate.
How did you manage to finance this reconstruction?
Out of our profits and projects. Our turnover is much less than before the war. Before the war we had more then 350 $ millions a year. That was our annual turnover. Now, the maximum is 50 $ millions.
How can you explain that in a country that needs so much infrastructure and reconstruction there are no major projects taking place?
This is a matter of investing and that's a big problem for the country. BiH is in a very specific position. We are a post war country with all the consequences caused by the war. More then 60% of all the economy has been destroyed.
This is roughly speaking. But, the other thing is that we are a country in transition. One of the phases in this transition is the privatization process, that is to say one of the most important things to reach the market-oriented economy, which is the final goal of this transition including the transition of our society: building a sustainable peace, a sustainable economy and improving democracy. Other neighbouring countries in transition don't have these additional issues to solve. We have to solve all these problems at the same time. I think you can understand that this is a difficult and demanding task. Also, during the war we were depending on the international aid, but our country has to forget about that phase, in order to have additional transition and to become a commercial state. So, various types of transition are to be implemented here at the same time and that's pretty complex.
From the other side, if you put yourself in a position of a potential investor, what would an investor like to have? First thing is stability: political and economic stability as well as the one of the banking system. Some improvements have been made in this difficult and very sensitive issue of the political stability in BiH. But still, a lot of promotion of this progress has to be done by the IC. Therefore, I consider this kind of report very important, to show businessmen and ordinary people living abroad, who don't have a chance to come to Bosnia, to present the status of the country, and to show them that there is a progress on the run. I think that on the promotional aspect it hasn't been done enough in BiH. This is one of the problems related to the foreign investment. So, that's how it happens that a country having a lot of needs does not have enough projects.
You took part in the reconstruction of Sarajevo. Do you feel, you and your company, can also help your country to promote its image?
Yes, and we do so. We know that each citizen of BiH is, in a way, ambassador of this country and especially we, the business people who have the possibility to be in contact with various foreign partners on a daily basis, with various international institutions, but it's still not enough. On the other side there are unfortunately not many companies like ours.
What message would you address to the international business community?
Before the war we had a very good reputation on the international market with high-skilled workers, ready to execute any kind of civil engineering project. But the situation being what it is after the war, the big problem now in the country is unemployment. That means that the next step would be a new project, that is to say investment.
I would like to express our happiness to see you and to cooperate with you. We are very confident in your prestigious magazine and in the fact that you will explain who we are, what we want, and what we are expecting.
We are open to new ideas, new partnerships, alliances, new projects, especially new creative ideas, and we hope that this century will be the century of such ideas, especially for BiH.
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