Yugoslavia - Industry

Unlike other former socialist countries with inappropriate concentration of heavy industry, Yugoslavia inherited a diversity of industries. Before the disintegration of the federation there were thriving metallurgy, chemicals, textiles, automobile, furniture, and food-processing sectors. Industrial output plunged by 70 percent over the 1990s. Although industry wasn't literally "wiped out," it became less commercial than in communist times. During the 1980s, the communist regime set up joint ventures with foreign companies. Then, during the wars, strategic firms were re- nationalized , most other companies remained in social ownership, and less than a third were private. By the end of 2000, there were indications that much of what had already been privatized by Milosevic might be re-nationalized.

Industry is considered about 50 percent over-staffed, and most firms are bankrupt. In 1996, overdue inter-company debt was nearly US$2 billion (roughly 30 percent of the sector's contribution to GDP). The biggest loss-makers were 30 large state and socially owned companies, responsible for more than 60 percent of all losses. The complex system of workers' ownership of companies, a legacy from the socialist past, confuses shareholder issues. Although Montenegro was affected by the same problems, its active privatization policy transferred all state-owned capital to government funds to attract foreign investment.

Among the industrial enterprises that have ties with foreign investors, but were bombed in 1999, were the Zastava factory in Kragujevac, maker of the Yugo automobiles, the Sloboda domestic appliances factory at Cacak, and the 14 Oktobar factory in Krusevac, the largest heavy machinery plant in the Balkans.

Copper, zinc, and lead mining were an important contributor to industry. The Trepca complex near Mitrovica in Kosovo was the main mining area. In 2000, it was taken over by the U.N. administration in Kosovo because of environmental and health hazards, provoking protest from Belgrade, which accused the U.N. of confiscating the mine. Negative environmental impact from mining in Serbia is considerable, but no serious measures were taken by the Milosevic regime to counter it. Additionally, rivers and soils throughout Serbia, and particularly in Kosovo, were heavily polluted by oil spills from destroyed refineries and radioactive, depleted uranium shell debris from the 1999 bombing campaign. Serious concerns arose in the Balkans and Western Europe about the health of the population and the international peace-keeping troops based in the region. Sizeable international assistance could help to improve the situation, but most likely only in a long-term scenario. Sustained recovery in Yugoslav industrial performance will require, apart from ending the isolation and instituting trade preferences, considerable foreign investment and new technologies to be brought into the country.