High polarisation of society benefits neither business nor relationships

At the TA3 television event Titans of Business, the president of the APZD and ZSP SR Alexej Beljajev openly assessed the current situation in Slovakia and the challenges that industry faces. He spoke about the high pressure of the energy crisis on our enterprises, the need for a realistic approach to decarbonisation, the role of artificial intelligence in the future, but also about the problems of the Slovak education system and labour market. The discussion also touched on the question of managed migration, demographic development and making public administration more efficient. You can read how he answered the questions of the moderator and the guests in the article below.

If you had to assess the current political situation in one sentence, how would you assess it?

It is probably hard to assess it in one sentence. I will say several. We are certainly not pleased with the current political situation in Slovakia. But on the other hand, when we look at the rest of the world too, we see that there the situation is also not entirely ideal. If someone had seen yesterday's televised debate of the candidates for president of the United States, it was also relatively sharp. 

It is true that at the moment there is a high polarisation of society, which does not contribute to calming the social situation and of course benefits neither business, nor relationships, nor anything. So it is not easy, but on the other hand I must say that the state, after Covid and after the last governments, is beginning to function. We, as industrialists, perceive that the state institutions are getting back into a certain condition that gives us some hope that things could be better in the future.

Has industry already recovered from the energy crisis? How do you perceive it? Is this crisis already behind us?

This needs to be looked at from two perspectives. One perspective is that in Slovakia there are industrial enterprises where the price of energy has no fundamental impact on the production calculation. For example, the automotive industry, where the price of energy makes up perhaps two, three, four percent of the total production price. Likewise in the group that I manage. With the turnovers we make, that price only has an impact on whether we pay two or three million more for electricity, but it is definitely not a fatal factor.  

But then we have highly energy-intensive industry. For example, the production cost of energy in a foundry like that, where energy makes up roughly 30% of costs. There it is already critical. We are coming under enormous pressure from competition from India, Turkey and other states that are simply cheaper because of these production costs. In addition, they have cheaper wage costs and other costs; they simply supply us some things significantly cheaper than we are able to produce them in Europe. The best example is, for instance, steel. Two years ago we bought steel for roughly 1500 euros per tonne of sheet metal. Today we buy it for 700 euros. Well, that means that the glut of steel coming into Europe is causing such enormous havoc that today these steelworks are really on the edge of what is possible. 

The European Union has also set certain goals for this within decarbonisation. This means that these metallurgical enterprises should invest massively in building new furnaces. These will mainly be electric furnaces. And no resources are simply being created for this at the moment. So rather, the factories in Europe, as far as heavy industry is concerned, are headed for closure rather than for some further development.

Europe must decide what it actually wants to do. Does it want to have heavy industry here? Does it want to have foundry production here? Take the situation with Žiar nad Hronom. We closed one of the most modern aluminium plants in Europe. Not because it was inefficient. The main reason was the high price of electricity. For example, Portugal and Spain, which are not connected to the classic European energy grid, have electricity prices that are orders of magnitude lower. And we are talking about the European market. So there are many problems with electricity and it will take a long time before we get out of it. 

You know, I think that with decarbonisation it is also easiest to set a goal of 2035, 2050. Look at how much the world's automakers invested in the electrification of cars. These are hundreds of billions of euros. Today those cars are not selling. And what are we going to do about it? Some automakers are slowly heading for bankruptcy. So I think that let's go for decarbonisation, but we have to arrive at it. We cannot set goals where someone somewhere decides and writes 2035 on paper and now we all go for it. But yes, we have to build the infrastructure, we have to prepare for it, and maybe it will not be 2035, maybe it will be 2050, I don't know, maybe it will be 2060. But this, what is happening in Europe today, is definitely killing Europe.

Artificial intelligence, digitalisation and robotisation are influencing further developments. There is talk of managed migration, the brain drain, that you have a big problem at present finding employees. Can this help in some way?

I think that we are on the threshold of one of the greatest social and industrial revolutions and challenges that humanity faces. Artificial intelligence will fundamentally change our view of how the world should function, for better or worse. I think that even much wiser heads are dealing today with how to actually proceed with that artificial intelligence. We had a big discussion about this last week at one of our factories, where we also invited some experts in the field of artificial intelligence.

And that intelligence really can, on the one hand, help and, on the other hand, harm. Let me give you just one example. It will be terribly important what information about themselves, and now I am talking about industrial production, companies put on the network. Because every piece of information you put on the network you will no longer be able to stop. You will not know what is happening with it. You will not know who is working with it. Take a thing such as design and technological data. Will someone put it on the network? If you put it there, it can happen that artificial intelligence, based on your data, designs that product for someone else entirely. This means that the problem with artificial intelligence is enormous. On the one hand it really can help enormously, but on the other hand it can harm enormously.

As for migration, we will have to learn to live in a multicultural society. We will not be able to live without migration, whether someone likes it or not. The fundamental question is, and this is my opinion, we should have only managed migration. That means accepting into society people who share our values — human, religious, work — simply those that this society professes. But if we think that we will be able to live without an influx of foreign labour, that is illusory. 

For one thing, Slovakia's demographic development is bad. And the second thing is that, due to better healthcare — even though in Slovakia it is perhaps a bit more complicated — the population is living to an ever older age. So that is the second thing.

The third thing is that we sometimes score an own goal. That is the early pensions and similar things. Last year in July 13 thousand people were drawing an early pension, and this year 45 thousand people. This means that we, as a society, are capable of destroying the labour market ourselves, because we make some unsuitable political decision.