Feature: A steelworks symphony by the Danube

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SMEDEREVO, Serbia, Jan. 5 (Xinhua) -- When taking weekend walks along the riverbank of the Danube, Vladan Mihailovic appreciates the roaring of heavy steel-making machinery from a nearby steelworks as if he were enjoying a symphony. Deep inside, the sound reminds him of the plant's bumpy road from near bankruptcy to success.

Mihailovic, currently the executive director for production at "Smederevo Steelworks," started to work at the steelworks in the early 1990s after graduation in metallurgy, but his first professional steps were marked with the worst difficulties, turning his early career into a battle for survival.

For many local residents, the steel mill was known as the Smederevo Steelworks and was considered "the pride of Serbia" as it was the only state-owned steelworks in the country.

But the rosy past didn't last long. The breakup of Yugoslavia, coupled with wars, fierce competition in the international market, and poor management, dragged the plant to the verge of bankruptcy in the early 2000s.


"At that time, it was a state-owned steelworks. We encountered many problems in production, especially in the procurement of raw materials," Mihailovic recalled in an interview with Xinhua.

Many state companies in Serbia were privatized in the early 2000s. Likewise, the Smederevo Steelworks was taken over by U.S. Steel Corporation in 2003. After years of work in Smederevo for the American producer, Mihailovic left Serbia in 2011 to work at a steelworks near the city of Detroit in the U.S. midwestern state of Michigan.

His life in America changed years later. In 2012, the American producer sold the steelworks back to the Serbian government for 1 U.S. dollar as the factory was in deep trouble, with production halved and one of the blast furnaces shut down.

Recalling that difficult episode, Ivan Matkovic, deputy general manager of the plant, said that after the U.S. company's departure, "we were very worried about our lives and whether the factory would be closed down."

When Mihailovic was asked for help, he agreed without hesitation.

"In May 2014, a new opportunity opened up for me -- to help improve the operation of the Smederevo steelworks," said Mihailovic.

He devoted all his knowledge and abilities at the time to help the plant overcome difficulties and prepare to welcome new strategic partners and investors.


A watershed opportunity emerged in April 2016. In response to the Belt and Road Initiative and according to its own development strategy, China's HeSteel Group (HBIS) purchased the "Smederevo Steelworks" for 46 million euros (51.9 million U.S. dollars), and established HBIS Serbia. The plant had been losing money for seven consecutive years until then.

In June that year, when Chinese President Xi Jinping visited the steelworks, he said, "Now Chinese and Serbian businesses have joined hands to usher in new chapters in industrial capacity cooperation between our two countries."

"I believe that with the close cooperation of the two sides, the Smederevo steel mill will surely be revitalized and play a positive role in creating jobs, improving people's lives and helping Serbian economic development," Xi said.

As one of the employee representatives, Mihailovic met President Xi at that event. Though more than five years have passed, Mihailovic still remembers many details of that conversation with Xi.

"All of us at the Smederevo Steelworks were very excited. In June 2016, Chinese President Xi Jinping came to inspect the factory, which brought a turning point for the factory and gave us confidence," Mihailovic said.

"I promised him back then that we would invest a huge effort and the knowledge that we have to make the project a success," he added.


After the merger, everyone was looking to HBIS for answers.

Daniel Glavas, a worker of HBIS Serbia told Xinhua that tremendous changes have taken place since HBIS' arrival. "At that time, we had no future, and we didn't know what the future would be like. Since the arrival of the new management, we have received guarantees on our positions and salaries."

HBIS formulated three principles of localization, known as "employment localization, benefit localization, and culture localization." The first principle led to securing the jobs of more than 5,000 existing Serbian employees at the steelworks, while HBIS only brought in nine staffers from China to the management team.

"Instead of worrying whether the factory will shut down or not, we now just focus on making bigger successes, and achieving the biggest possible production," Mihailovic said.

Leveraging its market position to greatly reduce the cost of raw materials and combining efforts from the parent firm in China, HBIS successfully sold finished products from the Serbian plant to all of Europe.

Chief Technology Officer of HBIS Serbia Zhao Kaixing told Xinhua that "the raw materials for the steelworks are mainly purchased from Europe, which truly realizes the benefit localization."

The steel mill reversed its losses over the past seven years in a short period of time. In 2018, it produced 1.77 million tons of steel, a record high in the 105 years since its birth.

Achieving a revenue of 1.05 billion dollars that year, the plant became Serbia's largest exporter and retained the position for three consecutive years until 2020.


Such a quick revival surprised Serbian President Aleksandar Vucic, who told Xinhua in an interview that the HBIS takeover brought a major improvement to the living standards in Smederevo and the whole country.

"A Chinese company saved our steel mill in Smederevo ... and we preserved 5,000 jobs for ordinary people. It is not only 5,000 jobs, with all their collaborators it is more than 50,000 jobs, which is a huge number for such a relatively small country such as Serbia," said Vucic.

Such a success assured many people at HBIS Serbia of the long-term presence of the Chinese company. Some have started to learn Chinese.

"Many of my colleagues, especially young people, have already started to learn Chinese. We hope to see more Chinese companies in Serbia and create more job opportunities for our children and future colleagues," Matkovic said.

Amid its rapid development, HBIS Serbia has in recent years poured millions of dollars in local road construction, water supply to villages and donations for education.

Through the concerted efforts of both China and Serbia, the symphony of steel by the Danube River will continue to produce new melodies.

For Mihailovic, the success of the plant is admirable. "Can you imagine that? In just 5.5 years, a plant that was just several weeks or months away from being shut down, is becoming one of the best plants in Europe." Enditem

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