From a Small Start to Leading Automotive Manufacturers ≫

We spoke with the owner of ALFA výroba jednoúčelových strojů, Zdeněk Kulič, about the beginnings of his business in Písek, South Bohemia, the devastating flood, the economic crisis, and the shortage of technically educated professionals. His company, which today mainly designs machines and production lines for manufacturing automotive components, has had to start completely from scratch several times. Today, however, we can probably say that ALFA has finally made it.

Písek has always been associated with the textile industry and the company Jitex. In the 1990s, you also started by manufacturing machines for the textile industry. What were those early days like?

It is true that before the Velvet Revolution I worked for thirteen years as a development design engineer in the knitting industry. I started my own business in 1990, when Jitex came to an end and we were expected to end with it. At that time, I should have been looking for a job, but I did not. Instead, I created one for myself.

Was it easy back then? Many entrepreneurs look back on the early 1990s with nostalgia.

As early as 1992, when we were building the company, we could no longer afford to focus solely on knitting machines. Some orders were still coming from Jitex out of inertia, but it was becoming increasingly difficult. At the same time, we were all learning how to operate in a completely new business environment, which was very different from working in a state-owned enterprise. That is also why the people who had left Jitex with me gradually moved on until I was left alone. Fortunately, not for long.

Can you remember a breakthrough project that really helped the company move forward?

I always wanted to build precise special-purpose machines, and fortunately that is exactly what happened. The first major opportunity came from WITTE Nejdek, which at that time was still a relatively small company. They still manufacture automotive locking systems today and are very successful in that field.

We started by producing various testing devices, production equipment, and simple machines for manufacturing automotive components. Over time, the machines became larger and more sophisticated, while our financial resources became increasingly limited because customers were unwilling to pay in advance. We were only paid after delivery, which forced us to rely on various loans.

I have very unpleasant memories of one particular bank from that period. It was not really the bank itself, but the decision of one employee who could not even be bothered to come and see what we were actually doing. Fortunately, we no longer have to deal with such situations today. Back in 1994 or 1995, however, that experience nearly put us out of business.

But you survived.

Because I travelled everywhere I could, asking for financing until we finally managed to obtain a loan from the former IPB, the predecessor of today’s ČSOB. We did not get it through personal connections. At that time, it was linked to a relatively large project for Bosch – a production line for automotive pedals.

After that, the company began to grow. We gradually expanded to our current size of around forty employees.

Was it a major loan at the time, worth tens of millions of crowns?

Not at all. It was less than ten million crowns, perhaps around eight million if I remember correctly. We were turned down many times, and it became a valuable lesson for us. Once we secured financing through what is now ČSOB, we continued to grow.

At that point, it became clear that we needed a larger production hall and better facilities. We moved into a former mill on the outskirts of Písek. It was a beautiful location, but nobody expected the devastating floods of 2002, which completely inundated the building.

After recovering several computers from the water and discovering that nobody was willing to insure us in the mill, we realized that we needed to build a facility on higher ground. That is why we have been located in the Hradiště area of Písek since 2006.

Can the flood of 2002 be compared to the economic crisis that followed in 2008?

The crisis was worse. During that period, we were simply grateful to survive. Fortunately, we secured a larger project in Malta, which helped us overcome the worst phase of the downturn.

I did not have to lay anyone off. A few employees left on their own, but after about a year and a half, things started to improve again. A flood comes and goes. During the economic crisis, we simply did not know what to expect.

A company like yours must invest continuously. Did you start investing more aggressively after the crisis?

We have to invest all the time. We constantly purchase new equipment for our workshops that helps us improve and expand our manufacturing capabilities. We also built a new warehouse to store finished products.

We finance all investments from our own earnings. In that respect, I belong to the old school. At the moment, we are considering the purchase of a high-quality 3D printer, and then, hopefully, there will be a break from major investments for some time.

Is it possible to estimate how many cars on the European market contain a product manufactured on one of your machines or production lines?

That is practically impossible to calculate. Take a pump, for example. It may be produced on a line consisting of fifteen machines, and only one of them is ours. Of course, we also build complete production lines, for example for pedals or fuel pumps.

It is difficult to quantify, but we work for BMW and Mercedes, manufacture steering column modules for Volkswagen, supply equipment for Nissan, and produce pedal assembly lines for Alfa Romeo. We manufacture around fifty machines per year and approximately two complete production lines during the same period.

What is the biggest challenge for a company of your size and specialization today? Is it also the shortage of skilled workers?

The biggest challenge is generally working with people. It seems to me that nowadays it is difficult to satisfy anyone through work alone, and that is naturally related to people's values and attitudes.

And yes, I agree with everyone who says that technically educated people are simply in short supply. We train some of our employees ourselves, but then we have to retain them so that larger companies do not recruit them away.

We hire graduates, but they come from many different universities. When someone graduates from the Czech Technical University in Prague or the Technical University of Liberec, there is a good chance they will have solid knowledge. When someone comes from a private institution that only claims to provide technical education, they often know very little.

I even developed a quick test of my own. The first question is: “What is pi?” More than once I have received the answer: “Yes, I think I have heard of it before.”

You do not export directly to the United Kingdom, but will Brexit affect your company in any way?

It will affect us only if it changes the exchange rate between the euro and the Czech crown. That is my main concern.

Our customers supply products to the UK, and we ourselves have supplied components for Land Rover, so Brexit could affect us indirectly in the future. Personally, I do not like Brexit, but there is not much I can do about it.