Czech converter pursues new free-market direction

Kovohute Bridlicna, long ago a foundry, is writing new history as it stands unique amidst few manufacturing plants in ex-socialist countries and targets a global market.

In the hills of southern Bohemia, in the booming Czech Republic, is the fully integrated aluminum foil converting plant of Kovohute Bridlicna. With bauxite coming from Russian Siberia, Kovohute rolls, anneals, coats, prints, laminates and embosses foil for a wide variety of industries throughout eastern, central and western Europe.

Considered by far the Czech Republic's biggest converter of aluminum foil packages, Kovohute's vast facility covers an area about 1 km. long and .5 km. wide. The firm employs 1,500 people with a sales volume of $44 MM annually. Privatized in mid-1994, Kovohute is now owned by four equal partners.

Host for an exclusive PAPER, FILM & FOIL CONVERTER plant tour, as well as the source of Czech packaging information, was Jiri Drlik, a Kovohute principal and founder of the Czech Flexographic Technical Assn. Drlik, a genial, energetic executive, is methodically changing Kovohute from a commodity-oriented, state-owned plant into a facility that will run on full market values with a product mix aimed at the global market. (Overall market discussions in this interview were handled by Miroslav Ctvrtlik.)

Long Foundry History

Kovohute has a long and interesting history. Begun in 1835 as an iron foundry, the firm began to roll zinc in 1890. In 1921 aluminum was first rolled under the direction of the owners at the time - Framke and Schloz.

Developments in rolling technology continued until 1932 when thin-gauge aluminum foil was fully integrated into the production schedule. During World War II, while under Nazi occupation, Kovohute rolled metal for the Wehrmacht for use in antiradar systems.

After the war, Kovohute was socialized by the Czech government, and, in 1950, it rapidly expanded into the packaging market. A new rolling plant was built, flexographic printing equipment was added and a Lewis rolling system was installed for both hot and cold rolling.

Initial output was 20,000 ton/yr., and by 1973 the company was producing over 70,000 ton/yr. of aluminum. In that year, Kovohute added equipment for rotogravure, lamination and extrusion and became a fully integrated converting operation.

The privatization process was begun in 1993 and was finalized in September 1994. The present four owners constitute the majority of shareholders.

Divided into two basic facilities - a rolling plant producing sheet, tubes and foil and a converting plant - Kovohute Bridlicna sales are approximately 70% domestic (in January 1993 Czechoslovakia was divided into two independent nations, the Czech Republic and Slovakia) and 30% export (Poland, Germany, Russia, France, Israel and the Far East). The company supplies about 48% of all food packaging used in the Czech Republic.

The converting plant has two BHS (Germany) flexographic presses and three rotogravure presses (Polytype from Switzerland and Techma from Italy). There is one Techna (Italy) extruder and two Polytype and Techna dry-bond laminators. All inks are purchased from Germany, and varnishes are produced internally. Rotogravure cylinders are etched in-house.

Kovohute's product mix consists exclusively of converted aluminum foil products that tend to concentrate on the dairy, tobacco, food and confectionery markets. There is also dedicated production of high-grade blister stock that is for the international pharmaceutical market.

Major customers include Dannon (France), Nestle (Central Europe), Philip Morris (Central Europe, Far East), Olma (Czech Republic), Palma (Slovakia) and most of the dairy industry in Poland. Pharmaceutical accounts include Lecva Praker (Czech Republic) and Slovakofarma Hlohovec (Slovakia).

In addition, the company has supplied converted blister stock to a Ukranian pharmaceutical division of an American firm. This was paid in US dollars as a third-party payment.

There are several new developments on the horizon at Kovohute. The company is actively making progress with research and development on an innovative butter wrap said to offer shelf-life extension beyond 14 days. The approach utilized by the company's laboratories includes paper modification coupled with novel laminating technology. There is also active work to be found in the development of film/foil laminations through technology transfer agreements.

Almost One of a Kind

In an area where aluminum production has been severely curtailed, Kovohute stands unique. Environmentally sound and technically up to date, the plant is one of the few remaining in the ex-socialist countries. Aluminum production has stopped in Poland and Hungary; and been reduced by 50% in Romania; in East Germany two aluminum factories were closed; and there's only a small, obsolete plant in Ukraine.

Even in Austria, the main aluminum plant was closed because of obsolete technology.

In neighboring, heavily polluted Slovakia, the Ziar Nad Hronum plant is trying to stay alive through financial backing from the European Bank. New environmental improvements are being provided from Norway in an effort to rehabilitate the plant.

The future of Kovohute Bridlicna appears to be bright. Headed by its dynamic new management team, which actively seeks free-market intervention, the company is interested in joint ventures and partnerships with western converters. Drlik says, "I am very optimistic about our future. Our plan for 1995 is to increase our turnover more than 50%, and we fully expect to sell our products to an even more extensive global market."

An extensive tour of Kovohute Bridlicna and a visit with Jiri Drlik leave the distinct impression that we'll be hearing more about this company in the future.


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