A Balkan boom

Croatia is now firmly on the map as one of Europe’s economic hotspots. InAVate caught up with Darko Ljutak, General Manager of Atman, one of the region’s largest AV integrators and rental firms to give his views of the country’s audio visual market.

Since the war-torn turmoil of the mid 90’s Croatia has emerged to become a significant economic power-house for the region. Freed of the need to support it’s poorer Yugoslav siblings the country now boasts a GDP per head, which out strips that of EU member states Romania, Bulgaria and even Poland. Small wonder then that Croatia too is treading the path to membership. So in the context of estimated 6% GDP growth for 2007 and low inflation, what’s it like to be in the Pro AV integration sector at the moment? If you believe what Darko Ljutak has to say, not bad at all!

Such is the profile of Croatia at the moment that Integrated Systems Events chose the capital Zagreb as one of its stops for the ISE Roadshow in autumn 2007, and I started off by asking Darko what he made of it:

“I visited this because a few of our vendors were there. Basically I think it was useful because a lot of people from the region came to Zagreb, from Bosnia, from Serbia and so on. I met certain people and really did some business, which arose specifically from this event. It wasn’t really an event for seeing products, but a good chance for regional companies to come together, especially the smaller ones who might not get to go to ISE in Amsterdam.”

Following the recent success of ISE 2008, the topic of tradeshows is a hot one, with the opinion of people such as Darko being key to its on going growth. A sentiment he shared with many of the other integrators I’ve spoken to over the last month is that ISE might be out-growing its present three-day stretch:

“Think about if you distribute 20 brands. 19 of them will be exhibiting at ISE, so that’s 19 meetings with your suppliers. And then you need time to see some new stuff, so three days really isn’t enough. And I’m from a small market. Imagine what it is like for a large company from Russia or Germany who carry even more lines. This year we had to split the responsibility. Two of us went specifically to look at the rental side of the business and the other pair was more into the system integration and meeting the vendors and the other everyday stuff.”

But what of matters closer to home? Atman was established in 1994, not a desperately auspicious time in its home’s history, and has weathered storms both economic and political to emerge as one of the largest AV companys in the region. It divides its activities chiefly between AV systems integration in Croatia and the former Yugoslavia, and equipment rental in the larger area. On the rental front Darko identifies corporate events, sport and live entertainment as his key markets with focus on: LED screens / banners, wide screen projector solutions and plasma screens. Atman is also the only company in the region that currently holds a rental stock of Panasonic’s giant 103” plasma display, placing the company in a select club in Europe. On the other hand rental LED inventory include 200 m2 of digiLED LED screen what makes Atman the biggest rental company in region and important player in Europe.

So what is the general state of play in the Croatian systems market? “The overall feeling is that for several years the market has been on an extreme upward curve,” said Ljutak. “That is to say that demand from the market in the first place is high, but also the number of different solutions that we systems integrators can offer has increased. I would say the market is booming, and has been doing so for the past three years.”

The biggest driver for this appears to have been consistent investment by foreign firms in the Croatian economy. There was considerable talk a few years ago, not least in these pages, of the possible effect that EU candidacy would have on the economy via direct funding for development and indirectly by attraction of foreign business. Darko doesn’t seem to believe that the former effect has been at all important, but the latter certainly has. His blue chip client list reads like a “Who’s-Who” of the big multinationals, with the IT industry (represented by Microsoft and IBM), the automotive industry and even electronics industry all seeing Zagreb as a key strategic city. “These companies are opening sales offices, distribution centres and regional headquarters in Croatia. The Ericsson office in Zagreb serves the whole of Eastern Europe and the Russian market.” It’s not hard to see why, Croatia stands conveniently at the border between Western Europe and the former soviet bloc.

With such a wealth of blue-chip business on offer for the integrator, how much competition is there for the work? Not as much as you might think. Asked for an honest assessment of his competition Ljutak believes that there are probably four serious players, including Atman, in the specialist AV systems integration market in Croatia. This is reflected in the competitive situation for large contracts that come up. “The chances of ourselves, or our main competitor winning any given contract are very large. There are two slightly smaller outfits, ourselves and our competitor in the field.”

‘You are only as good as your last job’ is a saying that applies doubly in such a tight market place, and your last job is only as good as your staff. In Croatia, as with many other AV markets, good staff are in short supply. They are in even shorter supply in a country where Ljutak says that only 7% of the native adult population hold a college degree or higher qualification. The good news is that this figure has prompted the government to invest heavily in further and university level education. This forms one of the few major installation markets that Atman operates in.

The bad news is that finding someone with an electrical engineering degree to design a AV system is difficult - a problem sure to be familiar to system integration forms region-wide. This shortage has driven Ljutak to take a new approach to recruitment: “More and more I’m not looking for AV trained people who know every decibel and memorise every specification. I need people who can think clearly, learn fast and solve problems. These are the most important attributes. I think our approach has been successful, the company grows year on year and we enjoy a good position in the market.”

But ensuring that remains the case requires constant updating of practices and staff, especially in a field in which technology and techniques moves on so rapidly. Maintaining the quality of work is really down to the systems integrators themselves and there remains no legal framework for AV integration in Croatia, or indeed in most other parts of Europe.

Internal training of staff is therefore vital, with a combination of visits to and from suppliers as well as attendance of trade shows all being part of the mix for Atman. Fortunately, despite its relatively small size in the grand scheme of things, Croatia is well supported by vendors in this regard according to Ljutak: “Most of the brands are very good. Our key suppliers such as Biamp, DAS Audio, digiLED, Kramer Electronics, Panasonic, Tannoy and Vity are all co-operative when it comes to training our staff and also meeting our customers for end user training.”

But the biggest single worry facing Darko and his team at the moment? Money. Not his own, but that of his customers. “There are a lot of clients who are perhaps unaware of the levels of investment required for what they need to achieve. When you bring a solution to the table they are often surprised by the cost associated with it.” Some things don’t change wherever you are.

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