Romanian Car Part Maker Subansamble Auto Pitesti Fires 800 Of 3,600 Employees On Dec 1

"Half of our production goes to Dacia and the other half is exported. The crisis has hit from both sides as orders from Dacia decreased 20% and we also have problems with our foreign partners, who lowered their orders by 40-50%. We have to resort to collective layoffs and we have still to assess our outlook and set a strategy for 2009," company manager Gheorghe Badea said Sunday.

 

The management’s decision to lay off 800 people is based on the fact that the company saw declining demand in October and November and there are no signs the situation is to improve any time soon.

 

"So we’ve decided to resort to collective layoffs and we hope layoffs stop here,” Badea said.

 

He added the company’s contracts with Dacia have been suspended and the company will adapt to the schedule of the carmaker, which halted production until Dec 7, to cut back on its output.

 

Subansamble Auto Pitesti also halted production from Nov 19 to Dec 8.

 

The company, which makes car parts and accessories, employs 3,600 people in its four units in Pitesti, Craiova, Campulung Muscel and Curtea de Arges. The firing of 800 is the biggest such measure the company has ever resorted to. Sacked employees will receive two salaries as severance pay.

 

Other companies supporting the local auto industry have announced temporary halts in production, layoffs or the non-renewal of contracts for temporary employees.

 

Auto industry cable maker Leoni fired 10% (22 people) working on the Dacia platform in Mioveni (22 de oameni), and lighting device maker Elba Timisoara sent 35% of its employees (400 people) on temporary unemployment until Dec 8. Elba also said it won’t renew the labor contracts of its 84 temporary employees, which expire in December, January and February.

 

Dacia has yet to decide next week whether or not it will renew the contracts of 600 temporary employees.

 

French tire maker Michelin will shut down its factories Silvania and RomSteel Cord in Zalau starting Dec 12 until January, also citing declining demand. Michelin hasn’t yet made a decision on whether or not to halt production at the third factory it own in Romania, Victoria Floresti in Prahova.

 

Romanian car manufacturers said last week they will propose a series of measures meant to revitalize the local car industry, including VAT delays, a more relaxed lending regulation and higher taxes on old cars.

 

Used cars ten-month imports doubled on the year to 205,086 units, while new cars registrations on the Romanian market saw a 2.4% drop to 252,935 units over the mentioned interval.

 

In October alone, new car sales dropped 26.8% on the year to 24,438 units.