ERNST & YOUNG SRL

 | 

VIORICA LUNGU

  |  12.11.2013

Export demand, layoffs and cost cutting

Starting with 2010, the production value of machinery and equipment manufacture followed the same trend as intermediate consumption. This enabled machinery producers to better anticipate the demand on the market.

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ERNST & YOUNG SRL

VIORICA LUNGU

VIORICA LUNGU

CONSULTANT – TRANSACTION ADVISORY at ERNST & YOUNG SRL

MARKET OVERVIEW

 
Meanwhile, the production of motor vehicles, trailers and semi-trailers was more or less stable. The production of transport equipment significantly decreased in 2010 by 5%-22%, depending on the specific category of the transport machines, same as the consumption. The decrease continued thus in May 2013, the production of machinery and equipment recording a lower value by 2% compared to May 2012, while producer prices increased by 1.2%.
 
 
In terms of machinery and equipment trade, the value of export and import continuously increased within a similar trend until 2013, when according to preliminary data provided by the Department of Foreign Trade and International Relations, the exports of vehicles, vessels and associated transport equipment increased by 20% in the first four months of 2013 compared to the same period in 2012.
 
 
In the mean time, imports of these products fell by 10%. A simple lending process for export production and issuance of bank guarantees for participation in international tenders would enable the increase of Romanians producer competitiveness on international markets. If the tendency will follow the same trajectory, it would enable Romania to finally get rid of the collocation “Import Country” and consolidate its position on cross-border markets.
 
 
Unfortunately, less favorable results can be observed in the machinery industry staffing. In the first six months of this year, 479
employees working in this industry have lost their jobs. The National Agency for Unemployment’s Top 10 layoffs areas in the first half of 2013 reveals that machinery manufacturing is placed on the seventh position in the chart.
 
 
Electroputere, a manufacturer of high power transformers, looks at laying off between 150 and 200 employees until October 2013 in order to streamline its costs. The company also reported losses of about RON 13 million in the first quarter of 2013.
According to national business daily Ziarul Financiar, another player, UCM Resi?a, an engine and metallurgical producer, which used to have 14,000 employees before 1989, now has no more than 1,600 employees. The process of personnel reduction doesn’t stop here. By October of 2013, 200 additional employees might need to look for another job.
 
 
The massive restructuring plan and the current insolvency of UCM Resita were caused by a significant decrease in orders from their main customer – Hidroelectrica. Amid Hidroelectrica’s restructuring, which has seen its orders reduced to a third in 2013, UCM’s business crashed three times in the first half of 2013 to RON 26 million. Losses reached RON 27.3 million, while cumulated debts stood at RON 859 million (EUR 200 million).

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