Economic trends such as inflation, increasing prices, a short supply of raw materials, the pandemic and transitioning to the Euro are challenges we’re all currently faced with.
How these circumstances affected Croatian manufacturers is an answer that varies across industries. Today, we touch upon the story of a successful family business, Mihoković Metal Solutions. This metal manufacturing and processing company has been establishing its well-deserved reputation and high positioning on the market for many years now, in increasingly unfavorable local (as well as global) economic conditions.
We talked about family entrepreneurship and putting the company in the hands of younger generations with this Croatian metal manufacturing and processing company.
“Mihoković Metal Solutions produces high-quality metal parts for various industries. Our work is primarily done from scratch, so we cover the engineering development of a product all the way to its finishing. Our clients are mostly processing and development companies. In 2022, we worked with the transformer industry, IT and automotive industry, as well as the medical, marketing and interior design industries,” explains Marina Mihoković Dvorski, Sales Director.
Given that Mihoković d.o.o. is a family business, we also commented on working in that type of environment.
“My parents are the founders of the company, my father is the Production Director, my mother is the Finance Director. There are three of us from the second generation. I’ve been in the position of Sales Director for years, my sister has recently taken on the role of Head of Development, and my brother works in the production technology department. Working in a family business means more than just taking on a function, it’s a lifestyle and a life path that you either decide to choose or not,” says Marina.
We also asked about the advantages and disadvantages of working in a family business.
“The level of trust in a family-run business environment is by far the biggest advantage because you can be sure that everyone is working in the best interest of the company. Also, there’s a bigger potential for personal growth and development in the area you’re most inclined to,” explains Josip Mihoković, who’s in charge of production technology.
“On the other hand, it’s impossible to separate work from your private life, so you need to learn to manage your emotions well. When something that would normally hurt you in a business environment comes from a family member, it’s far more intense. Sometimes it’s hard not to take things personally,” he adds.
We were most interested in how the current economic trends affected the business.
“The increase in the price of materials and energy has led to an increase in the price of services, with our factory bearing a large part of the increased costs. We had to raise our prices, but we didn’t increase them for the total value of the inflation. Production is first in the manufacturing chain and we need to make sure we retain employees. We also need to ensure our final product doesn’t become too expensive, as that will lead to a drop in demand in the longer term,” states Ana Mihoković.
“A lack of qualified workforce has forced us to import labor from abroad – especially in the production department, which has become unpopular among younger generations. Very few people decide to work behind a machine in operations,” she adds.
We also asked how the price of metal changed throughout this year and what that meant for the end products.
“The first change in the price of metals began in March of 2021, when no other industry was affected yet. The prices literally changed on a daily basis and went up by 120% – that is, if you could manage to buy raw materials at all.
At the time, it was very difficult to work. You had to inform your long-term business partner that you couldn’t keep the price in an offer for more than 2-3 days. On a weekly basis, the prices of what we were doing were increasing by 5-20%. Other material prices weren’t increasing at first, so the media hadn’t started raising awareness. The end customer couldn’t even notice these changes at the time because the market disruptions hit manufacturers first. The quality of materials deteriorated, which meant even more additional processing for us since we work with markets that do not tolerate imperfections on the surfaces of finished products.
After the enormous increase, the price of metal dropped. It’s not the same as it was a year and a half ago but currently it’s stable. We cannot predict what the next period will bring and how the increase in energy products will influence the prices of metal,” explains Marina Mihoković Dvorski.
When asked how they see the company’s future development, Helena Mihoković, Head of Development answers: “I think we have an enormous growth potential. The company is projected to grow by more than double in the next couple of years. We plan on developing by investing in new technologies and further educating employees, as well as expanding to new markets in the services and products that are most profitable for us. Also, we plan on relaunching the development of our own products.”