Boxmark Leather, a former giant that is primarily known for manufacturing seat covers, has announced it is venturing into the defence industry amidst a growing push in Europe to beef up its defence capabilities.

In collaboration with one of its existing customers, the company has begun developing protective coverings for armoured vehicles and other military equipment. Serial production is expected to commence by the summer, director Marjan Trobiš told the Slovenian Press Agency.

Defence sector orders are currently on the rise, driven not only by conflicts in various regions but also by the European Commission's decision to bolster defence capabilities, noted Trobiš.

"We started developing the initial prototypes last year, and the final ones are now complete. Similar contracts are likely to extend to other countries, so we anticipate further production expansion. We are also liaising with several other potential clients outside Europe," Trobiš explained.

While the products must undergo lengthy testing before serial production can begin and Trobiš could not yet predict what proportion of future revenue might come from defence contracts given the sector's sensitivity to geostrategic trends, the diversification comes amidst major challenges in the company's core automotive market.

At its peak in 2015, the Kidričevo-based company employed over 2,000 people, mainly seamstresses. By the start of the pandemic, this number had fallen sharply to around 650.

Last year, staffing levels were further reduced to the current 360 due to restructuring and the relocation of production to Croatia and Bosnia and Herzegovina, although Trobiš does not exclude the possibility of future recruitment.

The company finished 2024 with revenue of €75 million and a modest profit. Trobiš attributes this partly to restructuring costs, including severance payments.

Despite forecasting a 30-40% drop in revenue this year due to the relocation of unprofitable production abroad, Boxmark Leather plans renewed profit growth. The initial months of 2025 look promising, Trobiš said.