by Florentina Gagiu | 17 November 2008 | 0 comments
Hit by the world economic crisis
Year 2008 started promising for the aggregate works in Romania. The intermediary financial results forecasted economic performances above the ones in 2007 and it was mentioned about a huge investment next to the shore. The world economic crisis has ruined the plan of the siderurgists. Now, at the end of the year it’s being spoken about reducing the production and about unemployment.
At the middle of September, the Ministry of Economy has sent to Brussels a study that shows that the Romanian siderurgy is profitable, that there is consumption and that the commercial balance sheet for metallurgy has remained positive. Even if the production recorded a small decrease there is nothing alarming. Obviouslly, because the data presented to the European Commission were the ones for the first quarter of the current year. Meanwhile, the effects of the global economic crisis have turned up also in our country, and the siderurgy was among the first affected. Mainly based on export, the Romanian aggregate works confront with a decrease in demand for steel on world level and due to this fact they are forced to reduce their production or worse, to stop it for a period. Arcelor Mittal Hunedoara has announced public that it will reduce at half, starting with this month, the production and those 1.200 employees will be sent in vacation by turns. The Russians from Mechel have stopped at the beginning of the month the activities to the special steel aggregate work in Targoviste and those 3.000 employees are in technical unemployment. A similar situation is also at Resita, where 1.000 employees will cash 75% of the wage due to the production reduction at the TMK aggregate work. At Galati, since October it has started the process for shutting down some sections and the production is expected to reduce to half in the following period. The officials of the aggregate work have mentioned that there won’t take place dismissals.
The companies that supply the siderurgical aggregate works have also turned into victims of the international economic crisis. Only at Galati 850 employees to this type of partnership companies will lose their jobs because of the production cut at ArcelorMittal. According to the data supplied to the press by National Agency for Labor Force Occupancy ICMRS, company that has built the siderurgical aggregate work, has dismissed on November 1, a number of 100 employees. In the same day, the company Grand Smithy Works International that operates in the slag waste dump of the work has sent home 200 employees. On December 1, the company Super A Plus K, specialized in siderurgical reparations will dismiss 260 employees.
Reducing the activity at the aggregate works was due to the fact that there were recorded some superior financial results in the first six or nine months of this year against the similar period of 2007. For instance, during January-September 2008, the Mechel aggregate work in Campia Turzii has recorded a profit of about 27,4 million euro, unlike the loss of 720 thousands euro recorded in the first nine months of last year. The turnover also increased with 50% in the first three quarters of 2008, reaching to 165,5 million euro. At Targoviste, Mechel obtained a net profit of 4,5 times higher, from 6,9 million euro to 31 million euro, and the businesses have increased with 50%, till 275,6 million euro. The representatives of the company consider that these results are due to the fact that the orders for export have increased. At Galati, the Arcelor Mittal work has obtained in the first six months a turnover of about 1,1 billion euro and a net profit of 30 million euro. In comparison, also during the last year the businesses of the aggregate work were of 1,7 billion euro and the net profit of almost 48 million euro. Galati owns at the moment 80% of the steel domestic production and 65% of this is being exported.
The Indian Lakshmi Mittal, one of the richest men in the world and companies that have as owners Russian business people, are controlling almost in totality the Romanian siderurgical market. The main players is ArcelorMittal, who owns the siderurgical aggregate works in Galati and Hunedoara and the producers of pipes from Roman and Iasi. At Galati, it is produced almost half of the thick tray of the ArcelorMittal group, global leader on the siderurgical market. The aggregate work from Galati was privatized in 2001, being taken over by Mittal. At the moment, the Indian businessman owns 45% of the stocks. In 2004, Mittal has taken over the former Siderurgica Hunedoara. On the next position is ranked Mechel, company controlled in proportion of 85% by Russian stocks. In Romania, the company is property of the aggregate works from Campia Turzii, where are being produced wires and special steels, and from Targoviste, specialized on special steels. Mechel has become the owner of those two aggregate works in 2002 and respective 2003 when it has purchased them from Conares company, registered in Switzerland. Another company with Russian capital, TMK, owns the work from Resita, the oldest in the country. TMK has become owner after the Romanian state has dispossessed the American company Nobel Ventures of the stocks owned at the aggregate work, because it hasn’t respected the privatization contract. The action has started a huge scandal that ended with a suit against the authorities from Bucharest to the Court of International Arbitration from Washington. The smallest player from the market is Tenaris, company that uses the steel of the aggregate work from Calarasi.
During this year it was spoken a lot about the intention of the Austrian company Voestalpine of investing in Eastern Europe not less than 5,5 billion euro in a future siderurgical aggregate work. For locating the future production unit, the Austrian have eyed a land surface situated near the Constanta Port. However, they will balance the advantages and disadvantages of an investment of this proportion in Romania and on next year they will take a decision in this sense. Other options taken into account for investment are Bulgaria, Turkey and Ukraine. If Romania is designated the winner, we’ll benefit of the biggest ever green-field investment made by a company in our country. The advantages of Romania in report with the other states consist in proximity to the port, lack of customs taxes and the investments forecasted for the power production. Initially, the Voestalpine management had to decide in December the future location but the crisis determined the company’s officials to wait till next year.
The phenomenon of reducing the steel production isn’t unique in Romania. The existent offer on the market has created problems to the biggest siderurgical aggregate works, these being forced to redefine their strategy. Arcelor Mittal has reduced its production with 15% for keeping constant its prices. In Ukraine, Zaporojal, leader on the market, has decreased its production by 5%, and Azovstal by 20%. Magnitogorsk, the third producer from Russia, has reduced it by 15%. Severstal, the biggest Russian producer was forced to cut up to 30% of its production at the aggregate works that he owns in Russia, United States and Italy. In China, several companies that supply a fifth of the domestic steel have agreed on reducing the production up to 20%. In the same line is also the leader of the Chinese market, Baosteel Group. Close to us, near Sofia, the biggest siderurgical complex from Balkani, Kremikovitzi, is close to collapse, the economic crisis worsening its difficult financial situation.
The Romanian siderurgical industry was kept alive for a long time by the public budget that invested funds for covering the losses caused either by political or social interests. Per total almost 2 billion dollars were injected till 2004, year in which the European Union has asked to Romania to stop subventions.
03.09.2010
03.09.2010
