“It’s a $1m view from here,” says Andrej Polonec, gesturing at the view of Kranj old town across the nearby Sava valley and its backdrop, the snow-capped Kamnik-Savinje Alps some 12km from his office window. “Kranj is surrounded by nature,” he adds to press home the point.

Not that Mr Polonec has much time to drink in the landscape; as general manager of Iskratel, a telecoms equipment and systems provider, he works by his own admission in an industry where “products are obsolete within five years; we have to run to stand still.”

The cut-throat world of telecoms technology, dominated by heavyweights such as Alcatel-Lucent, Nokia-Siemens and Huawei Technologies. Nonetheless, Iskratel, which has revenues of just €100m ($138m) and a workforce of 1,000 (800 in Slovenia), manages to maintain a niche position in such areas as optical switching units by dint of dedicated hard work, emphasis on research and development, and a keen eye for trends.

“We have our own [proprietary] technology. We invest 20 per cent of turn­over and have something like 320 jobs in R&D. If you are flexible enough and innovative enough, you can stay in business,” he says.

Unfortunately for Kranj, capital of the Gorenska region and Slovenia’s third largest city with a population of 54,000, many local companies failed to make a similar transition when faced with increased competition after independence in 1991.

Franc Kuzma, a local entrepreneur, says: “Kranj was one of the most industrialised towns in Yugoslavia, and in some ways the most advanced – people would come from Ljubljana to watch films in our cinema; it was the only one with five projectors and wide screens.”

A once-thriving textile sector, in particular, was badly hit.

“The textile factories have all gone; many were bought more for the land value than the company itself,” he says.

Mr Kuzma, a mechanical engineer, has nonetheless leveraged local conditions – namely its precision engineers – to create a world-class micro company in the rarefied market of record turntable manufacturers.

Beginning in 1983 – “as it happens, the year the CD came out” – he began his quest to create the ultimate record player purely out of personal interest.

Today, his five-man company makes turntables and tone arms (the pick-up) for hifi aficionados. His products retail from between €3,000 for the basic model to €30,000 for the deluxe unit – the latter a beautiful brass contraption weighing in at 100kg.

More crucially for local employment, Kranj is host to one of Slovenia’s rather scarce foreign investment stories.

Goodyear, the US tyremaker, bought the production arm of the Slovene Sava group in 1998, investing some €168m into production facilities at Kranj to turn Sava Tires into a regional champion.

Since then, productivity per employee has “practically doubled,” with 90 per cent of production for export – chiefly to south-east Europe, says Thierry Villard, managing director of Goodyear Dunlop CSEE & Sava Tires.

Despite these successes, unemployment in Kranj has risen from 7.2 per cent last year to 10.4 per cent today, a shade under the national average, but disappointing given the proximity to wealthy Ljubljana (just 25km to the south-east) and even closer links to Slovenia’s principal airport – barely 10 minutes’ drive to the east.

The malaise means the old town of Kranj, perched on a rocky isthmus between the Sava and Kokra rivers, is a mixture of the renovated and the run-down – the distinct lack of tourists (admittedly, in October) not helped by a sign near the city hall that points to a decidedly-defunct looking information office.

“Kranj is so close to Ljubljana, it seems to lose its identity. The city has made efforts [to modernise] but it needs to do more, and more effectively,” says Iskratel’s Mr Polonec.

Stane Strauss, deputy mayor from 2006-2010 (Kranj was having local elections as this report was being prepared) accepts some of this criticism, but says previous local administrations had avoided essential investment decisions in crucial areas such as waste management, and squandered opportunities to attract European Union funds.

“In the past four years, we have obtained €35m in EU and state funds, and we have applied for another €35m-€40m. This compares to €200,000m gained in the previous 16 years. That’s nothing,” says Mr Strauss.

Recent efforts, including the council’s moves to allocate 23 hectares of brownfield land for industrial and business parks, will soon bear fruit, he says.

“We are renovating the city streets and renewing facilities, from public seating to the castle museum. The results will be obvious in the next few years,” he says.

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