chronic' problems plague southeastern europe
TRANSCRIPT
business
'Chronic' problems plague Southeastern Europe The task of regenerating the economies in Southeastern Europe is being underestimated. That is the blunt conclusion reached in the latest "Economic Survey of Europe," just published by the United Nations Economic Commission for Europe (UNECE).
The countries, as identified by UNECE, are Bulgaria, Bosnia-Herzegovina, Croatia,
Romania, Albania, Macedonia, and Yugoslavia (Serbia). One of the seven—Serbia—is figuring out how to recover from internal conflict and NATO bombings; two others—Albania and Macedonia—are recovering from the massive movement of refugees. And the others all have felt the impact of the recent conflict
Together, says UNECE, they constitute the poorest region of Europe. In terms of per capita gross domestic product, they are as far behind the most advanced transition economies of Central Europe as the latter are behind the average for the European Union.
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Moreover, the economic distance to be bridged by these seven economies before they reach anywhere near the income levels of Western Europe "is not only vast but has been increasing during the 1990s," the study says.
According to the survey, until the chronic poverty and economic stagnation of the region is addressed, Southeastern Europe will continue to be a source of instability and of threats to European security.
"Simply repairing the damage incurred as a result of the Kosovo conflict will only return the region to the same condition" as before the war, which itself was a major factor in the crisis, comments Paul Rayment, an economist in UNECE's economic analysis division.
Given the scale of structural problems in the region, the survey argues that the best way to get things moving is to develop a modern-day Marshall Plan to supply the region with significant amounts of grant aid. However, agreed-upon programs would have to be carried out.
"Increasing the foreign debts of countries, some of which are already heavily indebted, is obviously not the best way to provide them with assistance and establish the confidence required to attract foreign investors," Rayment says.
Yugoslavia must play a central role in any reconstruction and development program for the region, the survey contends. Not only is it a relatively large economy in the region and strategically located on the main transport routes to Western Europe, but it is also an important market for neighboring countries.
"If the Yugoslav economy remains in its present state," Rayment says, "it will impede the economic recovery of the other Southeastern European economies and will inevitably generate political and social tensions throughout the region."
According to the survey, the outlook for the transition economies—UNECE tracks some 27 countries, including those of Central Europe, the Baltics, the Balkans in Southeastern Europe, and the former Soviet Union—has deteriorated quite sharply since the beginning of the year. The downturn began in mid-1998 and was triggered by a series of shocks, starting with the Russian crisis and ending with the Kosovo conflict.
In the first quarter of this year, industrial production fell in most of the transition economies. For Eastern Europe, this is the first decline in aggregate industrial output since 1993.
The survey built on UNECE's recently
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Chemical production suffers in Balkan countries
Annual change 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Bulgaria 1.3% -25.1 % -18.2% -17.0% -11.8% 36.4% 17.0% 6.2% -3.3% -22.2% Croatia na -10.0 -27.8 -11.8 -4.4 2.3 4.3 -2.4 -2.9 -0.6 Macedonia na na na na na 16.6 2.0 46.8 -7.8 20.3 Romania na -24.2 -30.6 -19.7 2.3 3.1 5.0 -5.4 -24.1 -14.6
na = not available. Source: "The Chemical Industry in 1998 Annual Review," United Nations Economic Commission for Europe publication
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c & e n t a l k s w i t h . . .
W hat's in a name? Well, if the name is Perkin Elmer, quite a bit. Nobody appreciates this
quite as much as Robert J. Rosenthal, president of EG&G Instruments, which completed its $425 million acquisition of Perkin Elmer Analytical Instruments Division in late May. When EG&G bought the company from Perkin Elmer in March, it also bought ownership of a name widely known and beloved by millions of users who got their first exposure to Perkin Elmer instruments as early as high school. The old Perkin Elmer is now known as PE Corp.
Ah, but Perkin Elmer—there's a name that trips lightly off the tongue, and Rosenthal, 42, plans to capitalize on this famous brand—and its sales, service, and global support presence in 100 countries—in the newly named Perkin Elmer LLC. Rosenthal is also president of this entity.
Rosenthal tells C&EN, "I want Perkin Elmer to regain its position as the undisputed industry leader in analytical instruments." But to get there, he's having to shake up the company. Last week, he announced that he's cutting 350 jobs, or 12% of Perkin Elmer LLC's global workforce, the first in a series of planned cost-cutting and other initiatives. "We must adjust our cost structure to make it best in class," he says.
Prior to its acquisition of Perkin Elmer Analytical Instruments, EG&G was not particularly well known for its analytical instrumentation, Rosenthal says. The Wellesley, Mass.-based company, founded in 1947, was better known as a supplier of optoelectronic, mechanical, and electromechanical components, instruments, and services, primarily to the government. Analytical instruments represented less than 20% of its $1.5 billion in revenues in 1998.
On the other hand, with more than 60 years of experience, Perkin Elmer LLC has developed hundreds of industry-standard analytical instruments, as well as advanced software for analyzing the increasingly complex data generated by such advanced instrumentation. Its systems are widely used in research laboratories, as well as in quality testing labs.
In fiscal 1998, Perkin Elmer Analytical Instruments generated $578.3 million in sales; its acquisition by EG&G helps that company accelerate its shift from government to commercial technology markets. In addition to instruments, EG&G cur-
Robert Rosenthal rently has four divisions—life sciences, optoelectronics, engineered products, and technical services. It is in the process of divesting technical services, and when that's completed, Rosenthal notes, Perkin Elmer LLC will represent in excess of 40% of EG&G's total revenues—larger than any other division.
Rosenthal says the "integration of life sciences, optoelectronics, and instruments is exciting." He talks about being "off to the races" with an enthusiasm that would make one conclude he's been with either Perkin Elmer or EG&G for decades. Actually, he joined EG&G only in March 1999.
But he is an avowed enthusiast of instruments, a love he comes by naturally from his days as a student carrying out research using a wide variety of analytical instruments. He received a B.S. degree in chemistry from the University of Maryland, Baltimore, in
1978; an M.S. degree in physical chemistry from the State University of New York, Buffalo, in 1979; and a Ph.D. degree in physical chemistry from Emory University in 1982. He joined Nicolet Instrument Division as an applications scientist specializing in vibrational spectroscopy in 1984.
He worked his way up in that company, later becoming director of Nicolet's Spectroscopy Research Center. In 1986, he was named product manager for the company's line of research products and shortly thereafter assumed responsibility for all of Nicolet's spectroscopy products.
In 1992, Nicolet was acquired by Thermo Instrument Systems, part of Thermo Electron, Waltham, Mass., and Rosenthal was named president of Nicolet Instrument Division. He then moved over to Thermo Optek in 1995, where he served as president and CEO before joining EG&G.
Rosenthal says customers today want "answers, not just data" from .their instruments, and that's what Perkin Elmer LLC, which is based in Norwalk, Conn., will provide. He maintains that Perkin Elmer's "innovation pipeline" is solid. "The analytical instrument industry is in a state of flux today," he says with understatement, "and the industry is seeking a leader. As an industry, we haven't provided products that have made customers excited enough to buy new instruments. We have to provide a better solution, a better mousetrap."
Madeleine Jacobs
b u s i n e s s
published annual review of the chemical industry in 1998. As the review points out, GDP for the entire subregion of Central and Eastern Europe fell 1.2% to an overall index level of 64.6, compared with 100 in 1989. In 1997, GDP for that subregion had shown a positive result for the first time since the fall of the Berlin Wall.
Last year's decline was bad news for the chemical industry in the region. Looking
just at the southeastern countries spotlighted in the economic study for which UNECE had detailed information, only Macedonia showed an increase in chemical production in 1998 from 1997. Declines from the 1997 levels were reported for Bulgaria, Croatia, and Romania.
By comparison, there was some improvement in chemical production in the Central European countries in 1998.
Chemical output was up 5.1% in the Czech Republic, up 3.5% in Hungary, and up 6.6% in Slovenia. But there were declines of 3.8% in Slovakia and of 3.3% in Poland. Poland's drop in chemical production was not surprising, according to the annual review: In 1997, chemical production had grown 11.2% over the previous year, a rate seen as unsustainable.
Patricia Layman
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