Iskraemeco, manufacturer of devices and systems for electricity metering and billing, is number three in Europe and number six worldwide in terms of sales volume and turnover. The parent company is located in Kranj, Slovenia, and there are offices in 17 countries in Europe and Asia. Smart Energy International interviewed Slavko Vidic, president of the board of directors, to find out more.
MI: You have been with Iskraemeco for 30 years now – tell us a bit about the company.
SV: We have been known for technical innovation since the foundation of the company in 1945. At first the focus was on producing single phase electromechanical meters for local markets. We began selling internationally in the 1960s, and now we have customers in 100 countries, served by our 2500 employees in 20 countries. We have a wide network of sales partners, and our meters are manufactured under licence in several countries.
Production of precision electronic meters began in 1975, and in 1986 we set up the first system for metering and billing electricity. About 45% of our revenue comes from the European Union countries, 31% from other countries in central and eastern Europe, and 19% from Asia and Oceania. We have supplied customers with over 50 million products, almost 2 million of which are electronic.
MI: What impact has deregulation of electricity utilities had on your operations?
SV: The opening up of electricity markets has changed the way utilities operate; the focus is now on cost effectiveness and profit optimisation. This in turn has opened up new opportunities for Iskra. An electricity meter is changing into a complex device – it is no longer enough simply to offer basic consumption metering. Today our attention is focused on the development of communications, additional functions and software packages as support for connecting meters into total systems. So research and development activities at Iskra are ongoing, and our planned internationalisation of production, sales and engineering activities is allowing us to get closer to customers throughout the world.
MI: So R&D is a key aspect of your business?
SV: Certainly. Last year we invested over 6% of our revenues in R&D projects. We also devoted a good deal of attention to developing innovative products – in particular a new family of electronic meters based on a new microelectronic measuring element. Large industrial consumers are already enjoying the benefits of systems for automatic reading and billing, and these systems are increasingly being extended to residential consumers too. So our R&D activities are focused on communications and data processing for support of electricity billing and demand management for both C&I and residential consumers.
MI: Do your products meet international standards?
SV: Our business management system is based on a process model of constant improvement, determined in the ISO 9000:2000 standard. Our laboratories are accredited according to ISO 17025, and the tests and calibrations we conduct are important means of supporting the whole quality management system. Slovenia became one of the new member states of the EU in May 2004, and this has required the complete implementation of metrological conditions according to European metrology legislation for initial verification of our products.
We also pride ourselves on our good environmental practices. We obtained the ISO 14001 certificate for reducing environmental impacts in 1999, and we continue to assess and monitor our performance in this area. In addition we have an ongoing programme of abolishing dangerous substances in our products, and we are busy adapting our manufacturing processes to meet EU directives like ROHS and WEEE.
MI: Has the increase in the number of EU member countries affected you at all?
SV: Our main market in Europe is still Germany, where we hold 30% of the market share. The fact that we were already active in what was then the West German market stood us in good stead at the time of reunification, when the infrastructure in the eastern part of the country was upgraded and the existing meters were replaced. The reputation we have built up in this part of Europe has helped us to develop markets in several of the new EU member countries, notably in Hungary, Baltic states and the Czech Republic. Interestingly we cover our home market in Slovenia with one day’s production, so we export more than 99% of our meters.
The new EU member states are required to start the process of deregulating their power sectors, something that will offer real opportunities to companies such as Iskra in future. During the socialist years there was little or no consumption metering; power users were billed a flat rate. That is changing rapidly, and there has been widespread installation of meters in an effort to recover the costs of transmission and distribution, as well as to encourage energy conservation and efficiency improvements.
MI: Many people in the industry are interested in the growing Chinese market. Are you involved there at all?
SV: Iskra does not yet have production facilities in China, although this could change in the future. Utilities in China are becoming increasingly involved in privatisation, and as a result are looking for electronic systems. We have had some success with supplying electronic meters to C&I consumers in Mainland China, and we believe this segment of the market will be our main focus. In addition we provide more than half the meters required by China Light & Power, a utility based in Hong Kong. They are presently evaluating the possibility of introducing automatic meter reading, and we look forward to being involved in this development too.
MI: What were some of the highlights for Iskraemeco last year?
SV: We achieved our aims of increasing market share and enhancing our competitive position. During the year we completed investments in India, and established new trading subsidiaries in Belgium, France, Italy and Switzerland. We were particularly pleased to announce our first market success in France. And we also completed a series of AMR pilot tests for residential customers.
MI: How about 2004 and beyond?
SV: We expect to achieve a turnover of 140 million this year. At this stage about 40% of the products we sell are electronic meters, with 60% being electromechanical meters. This will, however, change in 2005 as we plan to manufacture more electronic systems. This year we have already gained three important orders for large AMR systems in Sweden and Finland, so our aim is to move from being perceived as a manufacturer of Ferraris meters to being a provider of system solutions.
Another key change for us in 2005 will be the drive to increase our share in supplying the C&I markets. AMR will also be a big focus.
MI: Where does most of your production take place?
SV: The majority of our production – 80% – takes place at our plant in Slovenia. However, we are expanding production facilities into eastern Europe and Asia, where we will produce in joint venture companies. We also have companies in India and Malaysia. So we expect to see more of our products coming from our facilities in the east in the future.
MI: Finally, tell us a bit about yourself.
SV: As you know, I have been with the company for 30 years – ten years spent in R&D activities, and then ten years in sales, eight of them based in Germany. Since then I have had ten years in a management role. I graduated in electrical engineering from the University of Ljubljana; the business made me a graduate of economics.
MI: Thank you for your input.