The contract was signed at the Economy Ministry in Ljubljana on Tuesday by outgoing Minister Zdravko Počivalšek and Koles directors Slavko Hrženjak and Uroš Rak.

The test production of 14x2 metre glulam is scheduled for the end of the year, and will bring 23 new jobs to the Kočevje area in the south, which has high unemployment.

The test phase is expected to take some six months until Koles obtains a certificate to confirm the product's quality. "We want the best quality product," Hrženjak said.

The second stage will then involve a CNC machine to manufacture an end product intended entirely for export.

Both Hrženjak and Rak said such products were in high demand abroad and in Slovenia, with Hrženjak saying "buyers have already responded extremely well" to our plans.

The pair had come up with the idea for the product because they believe Slovenia exports too much raw wood. "So why import something that can be made at home."

Slovenian company Ledinek was chosen to supply the equipment for the new facility.

Počivalšek welcomed the investment, saying wood was one of the foundations on which he had tried to build his ministership.

He said that since a directorate for wood was set up at the ministry three years ago, many major steps had been taken in wood processing, including in Kočevje.

He also highlighted the other major investments there carried out with the help of state incentives, such as Japan's Yaskawa investment in a robots factory and an investment by chemical company Melamin.

The grant for Koles comes from regional development funds to help the area cope with a rather high unemployment rate.

State Secretary Aleš Cantarutti hopes another investment will be brought to Kočevje as sock maker Intersocks is in the process of expanding its existing Slovenian location.