Bulgarian Foundry Union

Zagreb 2019
GENERAL INFORMATION
Country profile 2017*
GDP approx. – € 52 200 000 000
GDP growth (annual) – 3,7%
Inflation, GDP deflator (annual) – 3,4%
Unemployment rate – 4,7%
Industry, value added (% of GDP) - 25,00%
Exports of goods and services (% of GDP) – 67,00%
Imports of goods and services (% of GDP) – 64,00%
Net migration (thousands) - minus 24

*Official data for 2018 will be available in September 2019

GENERAL OVERVIEW
Bulgaria´s economic growth is forecast to remain
robust in 2019, as household spending is spurred by
wage growth and an improving labor market.
The political situation and the government is stable,
especially after the wining of elections for the EU
parliament by the ruling party.

Economic growth has accelerated since 2015, driven

primarily by stronger exports and growing private
consumption. At the same time, exports continue to be
driven by increased eurozone demand, and
investments (including EU-financed infrastructure
projects) picked up again.
Main markets & sources
 Key indicators 2017, 2018* and 2019**
Real GDP (y-on-y, % change) Inflation (y-on-y, % change) -

Industrial production (y-on-y, % change) Unemployment rate (%)

Real fixed investment (y-on-y, % change) Real exports of goods and services (y-on-y, % change)

Current account/GDP (%) Fiscal balance (% of GDP)

7,0

6,2

5,5
5,3

4,5 4,5
4,1
3,8 3,8 3,9
3,7 3,6
3,4
2,9
2,5 2,6 2,5 2,4
1,8 1,7

0,9

-0,8
2017 2018* -0,4
2019** -0,9

* Official data for 2018 will be available in September 2019

** Forecast
FOUNDRY INDUSTRY OUTLOOK
Total number of foundries – 92*
Foundry union members – 50 companies
Total number of employees ~ 4500
Total casting production ~ 49 763 710** kg
Main markets - > 70% of castings are for export
Foundries closed – 4***
* Statistics data for 2017. Some foundries are part of (or registered as)
machine building or automotive companies, e.g. Spanish company
ATUSA(Berg Montana Fittings), registered as a fittings manufacturer and
therefore, not included.
** Some foundries are not included, e.g. aluminium foundry LINAMAR
MONTUPET LIGHT CASTINGS with aprox.15 000 tons of aluminum
castings (engine blocks) or Casting Forging Machinery Complex LTD with
some 2000 tons steel castings.
*** According to the statistics, for 2017 there are 2 foundries closed.
FOUNDRIES STRUCTURE
Bulgarian foundries structure*
180
161,9
160
More than 50% of
140 employees work
in some 5% of the
120
foundries
100 91,2
Number of foundries
80 75,4
Employees x 10

60 54
46,2 43,1
40

17,4 15,2
20 13
10
6 5 2 2
0
< 10 from 10 to 20 from 20 to 50 from 50 to 100 from 100 to from 250 to > 500
250 500

*The latest statistics for 2017. Official data for 2018 will be available in
September 2019
FOUNDRY PRODUCTION
Bulgarian foundry production 2017
by material

93654
100000

90000

80000

70000

60000

49764
48248
Production 2017, [kg x 1000]
50000
Sales, 2017 [kg x 1000]
40000 Sales, 2017 [€ x 1000]
28143
23774
22600

23124

30000
21097
20325

20000
10692
10526
11319

9766

4644
4168

10000

966
262
262

0
Nodular iron Grey iron Steel castings Light metal Other metal Total
castings castings castings incl. Al castings

* Statistics data for 2017. The rough estimation is that the total foundry
production is probably some 20%-25% higher, mostly nodular iron castings.
2016-2017 DEVELOPMENT
Sales 2016-2017,[€ x 1000]
60000
5% decrease
52400
49764
50000

40000 Nodular iron castings

Grey iron castings
28887
30000 Steel castings
23774
Light metal castings incl. Al
20000
Other metal castings
9858 11319 Total
8774 9766
10000
4565 4644

2016 2017
2017 total foundry production 5% decrease.
Nodular iron +28% .
Grey iron - 17%.
Aluminium +2%.
Steel, almost no change.
Capacity utilisation
As average around 30% of the total installed capacity is
free.
There are some foundries working at full capacity.
Major casting markets
•Cast iron- over 75% export for EU (main customer) and
small part for USA
•Steel casting – the main portion is for domestic
market(Bulgarian mining industry) and for European
mining and Clay milling industry
Aluminum - for European automotive industry, Energy,
Railway, Electrical etc.
Brass-Sanitary industry
Bronze- mainly centrifugal castings , small part for spare
parts and for the mining industry
 FOUNDRIE’S INVESTMENTS*
2008-2017
25,0

20,0
19,2

15,0

9,5 Euro, millions

10,0
6,5 7,7
6,1 5,6 5,7
5,0 3,6 4,5
0
0,0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Even though the information about investments is

partially incomplete, there is a steady growth since 2013.
Every year Bulgarian Foundry Union awards foundries
with biggest investments with 1st, 2nd and 3rd prize.
*The latest statistics for 2017. Official data for 2018 will be available in
September 2019
Investment projects are predominately executed with
co-funding from EU grants(“Energy efficiency”,
“Innovation and competitiveness” etc.).
Most often foundries invest in:
•New medium frequency induction furnaces
•No-bake moulding mixers & complete lines
•Automatic moulding lines for green sand
•Sand reclamation plants
•Automatic fettling&grinding
•CNC machines(milling, turning, grinding)
There is a trend, especially for bigger foundries to
expand the scope of their services in order to provide
their customers with more value added products.
Some foundries implement CNC machining, painting,
coatings, assembly etc.
RAW MATERIALS & UTILITY PICES
Raw materials price formation is based in general on
stock exchange prices plus premium (depending on the
quality and quantity, between 5% and 30%) + transport
costs.
Most foundries buy relatively small batches(around 20 t).
•Steel scrap ~ 300 – 340 €/ton
•Grey pig iron ~ 400 – 430 €/ton
•Nodular pig iron ~ 435 – 470 €/ton
•Aluminium ~ 2000 €/ton
•FeSi 75% ~ 1650 €/ton
•Natural gas – 23 €/MWh,(w/o excise duty, taxes and
VAT)
•Electricity ~ 0,08 €/kWh(free market, final price)
COST DEVELOPMENT
Labor cost Electricity, €/MWh avg.
End of 2019?
600 120,0
547 547
500 490 100,0 99,2
440 87,0
€/month

400
Foundry worker
80,0
75,3 80,0
average slary,
300 60,0
286,3 €/month

214,7 235,2 260,8 Minimum wage in 40,0

200
Bulgaria
100 20,0

0 0,0

2016 2017 2018 2019* 2016 2017 2018 2019*

Minimum wage increase in Bulgaria y-on-y is ~ 10 %.

This inevitably leads to even bigger increase of salaries
in foundries, with 12% growth in 2018.
Energy cost is also going up with an average y-on-y
growth of 10%.
Natural gas and water prices are also increasing.
SUMMARY
Opportunities
Some companies are transferring their business back
from China, due to the lower risk, logistics cost and
shorter delivery terms. Other ones are forced to re-
source castings due to closures of their suppliers.
Labor&Energy costs are still below average in EU,
although constantly growing.
Eventual relocation of a VW plant plans could give a
significant boost to the foundry production.
Risks:
№ 1 threat: shortage of skilful workers, with no clear
view how this problem could be solved.
Material, utility and salaries cost increase.
 THANK YOU FOR
YOUR ATTENTION!