A century-old, land-locked shipbuilding company is developing a niche for itself by producing cargo vessels specially designed to entice Western customers.

Slovenske Lodenice, in Komarno, Slovakia, began to develop low-cost but high quality combined river/seagoing cargo ships in 1990.Judging by its order books, which are full until 1997, it seems to be on the right track, said a recent corporate profile report by Nomura equity research.

Slovenske produced five ships in 1990 that were tailor-made for the former Soviet Union's waterways, and fitted to endure the harsh Siberian winters.

In 1993, it produced 11 vessels. This year, Nomura plans to produce 16 and increase to 20 ships by 1997.

In order to stand its ground in the cutthroat Western market, Slovenske developed three new types of basic cargo ships over the last four years - the Rhyn, Rostock and Weser.

They have capacities between 2,600 and 3,700 deadweight tons and are built to carry dry cargo, including paper, wood and pulp, as well as containers.

The Slovenske ships are about 15 percent cheaper than similar Western models, said the Nomura study, with a price tag of 7 million to 11 million deutsche marks ($4.97 million to $7.81 million) a vessel.

The ships are popular with German customers. Last year, Germany accounted for about 70 percent of the company's ship sales, and Slovenske ships accounted for 25 percent of German purchases of ships with a capacity of up to 5,000 dwt., Nomura said.

The report said the Slovak company plans to extend its product range to include a custom-made model for the Scandinavian market and a vessel with a 4,600 dwt. capacity for Germany.

It also plans to develop a containership that could operate at higher speed, small scale tankers and higher capacity cargo ships. The size of ships that the Slovak shipyards can build is limited to 9,000 dwt.

The shipyards were established in 1898 in Komarno, where the river Vah meets the Danube.

In 1921, they were nationalized by the newly founded Republic of Czechoslovakia and integrated into the Skoda group. In the communist era, the shipyards became part of ZTS Martin, the heavy engineering and armaments group.

With the demise of communist rule, Slovenske was set up as a separate company in 1990, but was still state-owned. In 1992, it became a joint stock company. Prior to the break-up of Slovakia from the Czech republic in 1993, Slovenske was privatized through the voucher system. At present, more than half the shares are owned by investment funds.

Nomura analysts concluded that the main strategic issues confronting the company are the financing of working capital and capital expenditure and improvements in productivity to meet current demand.

In a bid to cut costs and deliver a quality product, the Slovak company has halved its work force to 2,800 from 4,900, and has developed contacts with German design offices. All the ships produced now receive the German Lloyd certificate.

Although the company is trying to reduce the sourcing of raw materials and components from abroad, about 60 percent of all engines, navigation systems, and other gear are imported.

In view of its concentration in a niche area, the Slovak shipyards are not in direct competition with other major east European shipbuilding producers such as Poland, Russia, the Ukraine and Romania, said the report.