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It seems that this outcome was almost inevitable and that the blame cannot be placed entirely on the foreign owners as was first suggested. The shift of labour intensive production to countries with cheaper labour forces is something that has been common in Western Europe for a long time, now it seems it is a business strategy that even Slovenian enterprises are worrying about. Andrej Engelman, Deputy Director of The Office for European Affairs, believes that the entry of Slovenia into the EU on May 1st is also not the reason for Tobacna's decision to close. He argued that the tobacco industry in Slovenia was over protected (by the government) and hadn't managed to adapt to new circumstances. A history of Tobačna Ljubljana Tobacna Ljubljana is a company with an interesting history. In 1871 - K und K Haupt Fabrik Laibach began production of cigars in the Cukrarna, Ljubljana and in the following year moved to a new area near Trzaska. In 1957 Tobacna Ljubljana introduced machines for joining cigarettes to filters and the legendary Filter 57 came on the market. In 1991 two international corporations, Reemtsma from Hamburg, and Selta from Paris acquired between them a 75 per cent controlling stake in Tobacna. Ten years later Reemtsma bought out Selta to become the major shareholder. A year later, in 2002, Imperial Tobacco of England bought 90 per cent of Reemsteme's controlling stake to become the new owner of Tobacna Ljubljana. Recently the Imperial Tobacco group announced the reorganization of its European industrial plants and that it would cease production of cigarettes in Slovenia, Slovakia and Hungary. Necessary Economic Reforms In the opinion of Cveto Stanic, Vice President of the Chamber of Commerce and Industry in Slovenia, the closing of the Ljubljana factory is a consequence of the current economic situation in Slovenian industry. Stanic further estimates that the Slovenian economy will suffer due to insufficient investment in development and new technology. He believes that the process of moving production to regions with cheap labour cannot be stopped and that the only preventive measures that can be taken are economic reforms. Lojze Socan of the Faculty for Social Sciences blames the government for not fully understanding the need for structural economic reforms. Of particular importance is the failure to invest in new technology and skills. Only 4 per cent of the Slovene economy is using modern technology compared to, for example, Ireland where the comparable figure is over 40 per cent. Failing to address this obvious imbalance can only lead to greater impoverishment for Slovenia.