Now we strive for development of

“Croats invented the world’s most terrifying naval weapon”Croatian Inventor Ivan Vukić

Now we strive for development of „dual use“ technologies for Securesocieties

1. Background story2. About Croatian RIS3 and Cluster3. Croatian defense industry sector - overview

Presentation Content

3. Croatian defense industry sector - overview4. Identified competitiveness area and priorities5. Success Stories 2016-2018 – Cluster projects 6. Identifed obstacles 7. Potentials

2- Croatia RIS 3

Health and

quality of Life

Energy and

sustainable

environment

SECURITYTransport and

Mobility

Food and

Bioeconomy

KET

ICT

MINE ACTION DEFENSE „DUAL-USE” CYBER SECURITY

2 – About Cluster

•Cluster officially established - May 6th 2013.

•Legal Form: Not for profit organization - currently transforming into

Innovation Cluster model with Šestan-Busch ltd. as Cluster organization

•Emphasis on strengthening competitiveness of Croatian Defence&Security industry and support in Croatian RIS3 processDefence&Security industry and support in Croatian RIS3 process

•Membership strength: 50 (private companies-all scales, research organizations, regional government specialized for defence) – triple hellix

•Key (Global) players: HS Produkt, Šestan-Busch and DOK-ING

2 - Cluster of Defense industry territorial spread http://eng.hkkoi.hr/

Companies

Research institutions

Support institutions

and associationsand associations

Public institutions

connected to

Defense & Security

SECTOR OVERVIEW - I

EXPORT- 1,5 billion kuna (approximately 225Mil EUR) in 2016 (data applies

exclusively for military suppliers)

Republic of Croatia– within 25 Top World Military Exporters Sector Specialization – High tech Sector: Orientation on top modern products and

technologies – Our producers do not tolerate semi-solutions and unreliable products and services for the market

Croatian Military Export in Millions of Kuna’s

**Above table does not incorporate the whole spectrum of various export and products that could be classified as defence products: e.g. Software solutions in Cyber security, clothing textile for special purposes, etc.

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

2008 2009 2010 2011 2012 2013 2014 2015

Kuna’s

IS THIS THE REAL PICTURE?

RIS 3 – Used as a tool to scan Priority area Global competitiveness

•WORLD BANK (Porters Five Forces Model) – Provided support in segmenting and determining Global Position of identified Priority areas of Croatia RIS3

•RAS Agreement - 5 mil EUR Worth through strategic project „Cluster Initiatives”

•DEFENSE „DUAL-USE” subthematic priority area (CROATIA RIS3) was scanned and analyzed with very interesting results for Croatia policy makers analyzed with very interesting results for Croatia policy makers

•Project leader was Ministry of Economy Republic of Croatia as body in charged for industrial policies and investments

•Clusters were used as main beneficiaries of Project results and main operational support for each area (interviews, meetings, public consultations)

•Cluster membership themselves verified results and determined the future prospects and suggested Action plan to upgrade Sectors potential and competitiveness

Segmentation – Defence Industry Croatia overview

Company distribution based on NACE classification and production segmentation; 2016; n=41

Ships Weapons

Vechicles

Source: Ministry of Economy, World Bank

Communication

PPE

Defense Industry CRO – Sector overview

Number of companies

Turnover Export Employees Profit/Loss

2014 2015 2014 2015 2014 2015 2014 2015

Textile 13 427.964.929 443.993.325 94.845.715 104.598.795 1.607 1.658 17.394.443 5.141.149

YoY 104% 110% 103% 30%

Communication 6 365.082.243 366.738.012 87.202.538 40.424.130 628 614 5.238.472 18.071.386

YoY 100% 46% 98% 345%

Weapons 6 593.768.936 674.224.951 538.108.507 589.146.000 1.727 1.683 150.236.243 209.134.719

Financijski pokazatelji industrije - 2015; n=41

10

Izvor: FINA

Weapons 6 593.768.936 674.224.951 538.108.507 589.146.000 1.727 1.683 150.236.243 209.134.719

YoY 114% 109% 97% 139%

Footwear 5 377.495.882 282.072.411 117.415.582 137.829.774 1.744 1.708 10.375.335 -12.104.310

YoY 75% 117% 98% -117%

PPE 5 90.369.636 74.144.474 83.107.326 62.613.905 87 109 27.424.889 13.461.722

YoY 82% 75% 125% 49%

Ships 2 11.910.210 14.247.127 2.106.709 68.086 23 25 299.805 377.597

YoY 120% 3% 109% 126%

Vechicles 2 375.843.061 216.305.016 298.652.705 141.919.106 656 585 6.351.553 -59.254.675

YoY 58% 48% 89% -933%

Return on assets (ROA) Return on Equity (ROE) Net Margin Export Share

2014 2015 2014 2015 2014 2015 2014 2015

Textile 3,6% 1,0% 6,0% 1,8% 4,1% 1,2% 22,2% 23,6%

Communication 0,9% 3,2% 1,5% 4,8% 1,4% 4,9% 23,9% 11,0%

Weapons 21,3% 27,5% 33,8% 33,3% 25,3% 31,0% 90,6% 87,4%

Financijski pokazatelji industrije - 2015; n=41

Defense Industry CRO – Sector overview

11

Izvor: FINA

Weapons 21,3% 27,5% 33,8% 33,3% 25,3% 31,0% 90,6% 87,4%

Footwear 1,7% -1,9% 2,5% -3,0% 2,7% -4,3% 31,1% 48,9%

PPE 41,5% 17,1% 54,1% 22,4% 30,3% 18,2% 92,0% 84,4%

Ships 0,5% 0,7% 2,5% 2,7% 2,5% 2,7% 17,7% 0,5%

Vechicles 1,3% -12,5% 9,3% -69,8% 1,7% -27,4% 79,5% 65,6%

Strategic segmetation – What we do? For who?

Product Product + Service Solution

Military

A1 A2 A3

Products

and

solutions for

Security

Military

Civil Security

B1 B2 B3

B1 Segment?? - Yue Yuen International

• Nike, Adidas, Reebok, ASICS, New

Balance, Puma, Under Amour, Converse,

Merrell, Salomon,Timberland

• 400,000 employed

• 320 milion pair of shoes per year• 320 milion pair of shoes per year

We understand that we need to go into B2 and B3

Product Product + Service Solution

Military Security

A1 A2 A3

Products

and

solutions

for Security

Military Security

Civil Security

B1 B2 B3

B2 Segment example - Williams Fire & Hazard

B3 Segment example – McMurdo

Trends - PPE

Smart textiles and materials - Graphene?

Combining usage of various PPE components - integrated solution•

•

17

Technological integration with ICT – Wearable technologies and equipment•

Durabilty + service•

Trends - UAV

Inteligent and connected (simultaneously controlled vechicles)

UAV in Search and rescue – filed that is coming

• Use them as important data collector – connecting links

•

•

18

Inteligent and connected (simultaneously controlled vechicles) •UAV Market 2014 - 2020 (billions USD)

Source: Markets and Markets, Report Buyer, Big Market Research, Reports n Reports, Report Linker

•RIS 3 with „Dual Use” priority enabled financing of R&D projects through valid operational program

Success Stories 2016-2018 – Cluster projects

ŠESTAN-BUSCH - Multifunctional protective helmet for Civilian Market

DOK-ING- Prototype of Special robotic vechicle for counter terrorism operations and duties

•How to match speed and flexibility of private sector (inventions, new product development, identified potentials and hazard) with SLOW and burdened by procedures administration (especially in Defense /Security)

Identified Obstacles

• Cooperation on R&D Projects - especially on Defense „dual use”

tematics – EDF, DIDP, EDA; NATO – Cluster is operative body that can

find (or be) potential partner in Croatia

• Upcoming EDF Program – strenghtening capabilities of support organizations - Clusters and associations - this is the KEY

Potentials

organizations - Clusters and associations - this is the KEY

• Areas of interest - narrow it: For Croatia PPE (smart textile, new

materials), integration platforms (add-ons, hud-up displays,

connectivity, sensors) and simultaneous control systems + robotics

• Programs to be flexible and open minded – copy good examples: Urban

Challenge by DARPA – great example..Set clear challenge and let the

industry and innovators find best solution

• PEOPLE, PEOPLE, PEOPLE - build NETWORK (Jack MA Philosophy)

THANK YOU

ŠESTAN-BUSCH ltd.

Goran Basarac, MBA.

22

Goran Basarac, MBA.Executive director of strategic planning

and projectsPresident of Croatian cluster of Defense

industry

mail: goran.basarac@gmail.comsestan-busch@ck.t-com.hr

www.sestan-busch.hrhttp://eng.hkkoi.hr/