In 2007, the electrical industry took a 15.5 % share of the market from the sale of its own products and services of the Czech Republic’s manufacturing industry as a whole of revenues. For the output of added value, it was 12.5 % and 15 % for the total number of workers. The electrical and electronic industry places third after the metallurgy industry and transport machine engineering industry in overall revenues Graph No. 1).

Heavy-current electrical engineering accounted for approximately 50% of production in the Czech electrical industry in the past, but with the influence of greater growth in other branches of electronics, especially computer technology, its share fell to 44 % in 2007 (Graph No. 2).

Entrepreneurial organisations traditionally act in the following production domains:

After an initial slackening in the 1990s, a radical change occurred in the volume and range of computer technology production. Office technology occupies a negligible share in the production of the branch in comparison with computer technology. In 2001 and 2002, several supranational companies, prompted by investment incentives, launched the building of a new capacity in the Czech Republic. Most of their plants are “Greenfield” projects. The buildings of former enterprises were also used to a limited extent. These enterprises export most of the computers they have produced to world markets allowing the Czech Republic to be ranked among territories with a developed production of competitive computer technology. The share of computer technology in the production of all electrical industry branches in the Czech Republic in 2007 was 24%. These companies employ only 5% of the people working in the electrical industry in the Czech Republic. The foreign trade balance in this commodity, which was markedly unfavourable in the past, showed a surplus in 2002 and this trend has continued. This result contributed positively to a change in the total trade balance of the electric and electronic industry. Graph No. 3 illustrates the share of revenues of both computer and office equipment within the whole branch.

Heavy-Current Electrical Technology

Electrical machines and equipment have a stable position in the structure of the Czech electrical industry. Its main products are electric motors, generators and transformers, electricity distribution and switching equipment, cables and insulated conductors. In recent years, especially on the basis of foreign investments, the range of electrical industry products has been extended to include electrical equipment for the automobile industry. The technical level of products and services reaches world standards. Products are mostly sold to countries in the European Union. Enterprises engaged in heavy-current electrical engineering employ 58 % of the people working in the electrical industry in the Czech Republic. The trade balance in this commodity has been traditionally favourable. Foreign owners of large production organisations have carried out the needed modernisation of technology, improved the organisation of production and arranged new business connections. Graph No. 4 illustrates the share of revenues of individual product fields in the whole market of heavy-current electrical technology.

AV Engineering, Electronic Components

A significant change occurred in the production of electronic components and telecommunications. New production units came into being and the product range changed. Facilities for the production of equipment for higher-level telecommunication systems, radio and television transmitter and transmission systems was modernised. New production centres of supranational companies were built as “Greenfield” investment projects. An example is the manufacture of Panasonic television sets. The new production base for the manufacture of electronic components, television screens, telecommunication equipment and consumer electronic has become successfully incorporated into international trade. The branch accounted for 21% of total electrical industry production in the Czech Republic in 2007. Enterprises engaged in the branch employ approximately 18% of people working in the electrical industry in the Czech Republic. The foreign trade balance in this commodity has been, as in other European countries, unfavourable on a long-term basis, despite production capacity growth. Graph No. 5 illustrates the share of revenues from the sale of electronic. components and radio and television transmitters and receivers within the total revenues of the branch.

Instruments and Automation Equipments

In contrast to other electro-technological branches, such strong growth of foreign capital was not recognised in this group. However, the most important international companies are acting on the Czech domestic market and dealing with production and distribution of measuring, controlling, automation and medical equipment. They do not only make their own deliveries, but also carry out project designing and servicing. In 2007, revenues in the branch accounted for 11% of the total revenues of the electrical industry as a whole. Enterprises operating in this branch employ 19% of people documented in the electrical industry in the Czech Republic. The foreign trade balance in this commodity has been, despite export increase, unfavourable on a long-term basis. Graph No. 6 illustrates the share of revenues of individual fields within the total revenues of instruments and automation equipment.

Main Economic Data

Production and Revenues

The production of the electronic and electrical industries in the Czech Republic, in terms of revenues from the sale of products and services, has been growing in the past eight years. Graph No. 7 illustrates the development of revenues in the individual branches of the electrical and electronic industry.

Employment

More than 30 000 new jobs have been created in the electrical industry in the past seven years. The creation of new jobs was favourably influenced by the investment activities of foreign companies which have built new production facilities. The number of employees in the electrical industry in 2007 reached nearly 210 000 people. Traditionally, the largest employers are heavy-current technology companies, which employ 58% of the total workforce in the electrical industry in the Czech Republic. The share of numbers of employees in individual branches of the electrical industry is shown in Graph No. 8.

Exports and Imports

Exports from the electrical and electronics industry have been growing as a whole since 1998, when they totalled 109 billion CZK. In 2007, they reached over 600 billion CZK, the total growth of exports in 2007 reached 20 %. The largest share of the exports of electrical industry products is accounted for by heavy-current technology exported to EU countries, primarily into Germany. This is due to the geographical proximity of suppliers and their customers and the capital participation of German firms in electrical industry enterprises in the Czech Republic. (Graph No. 9).

Imports of electrical goods reached nearly 560 billion CZK in 2007, the total growth of imports in 2007 reached 17 %. After a mild slump in 2002, it has been continuously growing. The biggest volume of imports was created, as tradition indicates, in AV engineering and electronic components. Graph No. 10 illustrates the development of imports according to the individual fields and years.

The total balance of trade in electrical industry goods had been, until 2003, unfavourable for the Czech Republic on a long-term basis. The deficit has been decreasing in recent years as a result of a steady growth of exports. Traditionally, most responsible for the unfavourable balance are AV technology, electronic components and devices and automation engineering. Important importers are also firms engaged in production branches other than the electrical industry, such as the automobile industry, the power industry, transport, consumer goods, etc. Historically, for the first time, a favourable foreign trade balance was recorded in the electrical industry in 2004. In 2007, it continued to grow and exports exceeded imports by 42 billion CZK. Graph No. 11 characterizes the development of the foreign trade balance with electro-technical production.

Foreign Trade classified by Continent

The territorial distribution of foreign trade with electronic and electrical goods is illustrated in Graph No. 12. The figures show a strong (92%) export orientation of the Czech electrical industry to Europe market. In imports, too, the Czech electrical industry is showing a strong orientation towards Europe, where 54% of the country’s imports originate. In imports, a steady larger role is still being played by the suppliers of electronic components for the assembly of computers and other equipment originating mainly in Asia (41%).

Foreign Trade classified by Country

The following demonstration of the export and import orientation of the Czech electrical industry in Graphs No. 13 and No. 14 shows that the most prominent countries are Germany, the Netherlands, France and Great Britain in exports. In imports, the decisive place is held by Germany followed by China, the Netherlands and Japan. Foreign trade orientation of domestic exporters and importers has not significantly changed on a long-term basis.

Investments

The transfer of new technology to the production base has enabled further cultivation of competition in the production of the Czech electronic industry. In the 1997-2007 period foreign investments in the electrical industry reached over 150 billion CZK. The current trend of investment in the electrical and electronic industry should continue into future years due to the continuing interest of foreign investors, a qualified work force, relatively steady and still low labour costs, etc. The electronic and electrical industry accounts for about 30 % of total foreign investments in the Czech Republic and occupies second place after the automotive industry.

Prospects of the electrical industry in the Czech Republic

In the electronics and electrical industry, it applies more than in any other branch that efficient production in most lines of business must be oriented to a large market area. The expansion of the European Union in 2004 has brought to companies and enterprises operating in the Czech electrical industry a chance to take advantage of the largest world market area. Evidence that the process is successful is supported not only by the continual growth of exports, but also by improving the balance of the whole of foreign trade with electrical goods, which was since 2004 recorded as favourable. It is without doubt that the endeavour of the EU is to create an integrated economic whole which will be capable of competing with the US, Japan and China in certain significant commodities and sophisticated production fields of which electrical engineering firmly belongs. The ability of domestic manufacturers to stand their ground in the face of competition from foreign electrical industry firms, both on the domestic and foreign markets, will be determined by their ability to invest in technical development, the innovation of products and also in human resources. It is most desirable that in addition their production capacity, enterprises with foreign capital participation should increase their developmental capacity taking greater advantage of employing creative domestic workers. Electrical engineering is typically a subcontracting and complementing industry. From the point of view of the Czech manufacturing industry, this branch is characterised by its high proportion of added value in production, its processing of relatively small volumes of material and energy and its ability to not burden the environment excessively. Therefore, even in the long run, it will be considered a positive part of Czech industry. On the basis of present development, it is possible to realistically suppose that by 2010 revenues of electrical and electronic producers will continue to grow. New capacity will create new job opportunities and employment in the electrical industry will continue to grow, although slower than revenues because pressure for greater work productivity will continue.