Factories manufacture dreams, disillusion across Balkans

23/04/2012

Despite fanfare and hope, some foreign investment projects across the region remain only on paper.

By Paul Ciocoiu for Southeast European Times in Bucharest -- 23/04/12

Thousands of promised jobs never materialised when Nokia came to Romania. [Reuters]

When Finnish mobile giant Nokia announced five years ago it would open a production plant in the village of Jucu, Romania, no one knew the euphoria would be short lived.

The plant drew other investors, mostly suppliers, covering a 150ha industrial park. Real estate took off in the area, which was to be known as "Nokia Village". About 2,200 people got jobs at the production facility, with the Finnish managers promising a 60m-euro investment that would create 15,000 additional jobs.

Four years later, in 2011, the company announced it was relocating its production facilities to Asia. Bucharest officials were stunned by the move and had no explanation for the quick departure of the company that created an economic revolution in central Transylvania.

The Nokia scenario is not unique, though other companies deployed on a smaller scale.

In the remote town of Vaslui, in eastern Romania, a communist-era steam gauge factory was taken over by a Dutch company in the early 2000s. Enthusiasm surrounding the take-over was enormous, former employee Ionel Biclea recalls.

"Everyone felt, amid the harsh economic conditions at that point, the factory would basically be reborn. The future seemed so bright to us with the Western investor behind us," he told SETimes.

But the rules of capitalism didn't favour the factory. Over the years, the new owners turned the production-type factory into an assembly one. The fierce competition coming from Asia helped sealed the factory’s fate.

"Of the about 2,000 employees, less than a 100 remained. We were so disappointed. Most of us had worked there since the factory was established in 1978. It was only then we came to this rude-awakening that a foreign investor is not necessarily the savior," Biclea added.

Serbian President Boris Tadic was on hand to celebrate word of Fiat’s planned production at its plant in Kragujevac. [Reuters]

In Serbia, people are losing jobs in factories run by individual owners. A large number of new private owners have ignored their promises of expansion, and have, in fact, laid off employees.

Bulgarian businessman Valentin Zahariev purchased a factory in Leskovac that produced plasticised sheet metal. Although he arrived promising to hire more than 200 people, he sacked a third of the company's workers.

Nis-based construction company Gradevinar provided a livelihood for 20,000 people. In 2007, the company was purchased by Serbian businessman Djordje Nicovic, who fired the workers and stopped all operations.

Dairy Swedmilk opened a plant in November 2007, employing 120 workers and contracting with 1,200 farmers. The plant failed just a year later, and was sold to US-Israeli company Phoenix Energy, but the outstanding debts to farmers proved to be more than it wanted to handle.

Turkish dairy company Sütas bought the bankrupt dairy on April 4th, and plans to start operations within six months.

“It is going to be a huge investment for our farmers and stock breeders,” Minister without Portfolio Hadi Nezir said in a statement.

Ljupco Aleksov, a farmer from Kadino, told SETimes that the sale offers farmers the hope of rejuvenation -- not only farmers from Skopje, but from other parts of the country as well.

Generally speaking, while many companies announce they will set up business and factories in the region, the plans don't pan out.

In Macedonia, several factories -- including those of the French firm Montupet, Slovenia's Iskra, Turkey's Shishe Dzham and Bortek -- announced their intentions to open plants, but they never materialised.

But this not always the case. There are happy endings to be found.

In Serbia, Italian company FIAT opened a plant in Kragujevac, under a contract that was signed in 2008. Production of the FIAT 500 L will start shortly. By the end of the year, 2,500 people will have jobs at the plant, and the country's annual exports will grow by more than 1 billion euros.

The Benetton factory in Nis will become the largest textile investment in Serbia with its planned expansion. [File]

And Italian clothing company Benetton announced last month that it will expand its current factory in Nis over the next four years to employ about 3,000 workers.

South Korea's car part maker Yura has opened three factories in Serbia and employed close to 3,500 people in the last two years. A fourth factory, which is being built in Leskovac, will employ another 1,500 workers.

In Macedonia's free zone, the US company Johnson Controls, the UK's Johnson Matheey and Italy's Teknohose are building plants and plan to hire hundreds of workers.

In Iassy, Romania, global supplier of technologies and electronics, Delphi, recently opened its fourth plant in the country. Delphi has invested more than 300m euros in the four plants, which employ more than 12,000 people.

"Romania offers a great combination of availability of skilled labour for manufacturing and university graduates for engineering and management; existing infrastructure and utilities as well as a competitive cost of doing business including wages, utilities and services," Agnieszka Przymusinska, Delphi communication manager for Central & Eastern Europe, told SETimes.

"The country offers a great pool of well-qualified employees. With proper training, the local candidates adapt very well to automotive industry standards. Our employees are dynamic, qualified and dedicated," she added.

Although business investments seem to be hit-or-miss, that does not stop companies from planning.

Auto parts firm Draxlmaier is expected to open a plant in Kavadarci, Macedonia, that will employ 4,000 people in the next three years.

SETimes correspondents Marina Stojanovska in Skopje and Biljana Pekusic in Belgrade contributed to this report.

This content was commissioned for SETimes.com.