April
2008
ECONOMICS
 
Vol. 4 No.3  
 

Workers unite against low wage policy

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Employees from multinationals Dacia-Renault and InBev have declared a general strike.
More than half the 13,000 workers from the car factory Automobile Dacia in Mioveni, Arges county demand a 149 Euro pay rise for their monthly wage.
This is the largest increase in salary ever requested by a labour organisation in Romania. The workers argue that in 2007 the productivity of Dacia-Renault saw a record increase of 173 per cent, which means a profit of about 150 million Euro. Meanwhile an employee earns a medium wage of little over 200 Euro per month.
Estimates show that the strike costs the French-owned Dacia-Renault around ten million Euro per day, taking into consideration the daily production of 1,300 units is stopped.
Around 180 InBev Romania employees from a total of 200 from a beer factory in Blaj, Alba county, have declared a strike because the company’s leadership has refused to agree a salary increase of 18 per cent.
The workers from Blaj argue that InBev offered a larger wage increase to the employees from its other beer factory in Ploiesti, Arges county. Belgium-owned InBev is the producer of Bergenbier, Becks and Stella Artois beer brands in Romania.
By the time The Diplomat went to press, the two strikes had not concluded.


Romtelecom set for EU stock markets

Romania’s Government is planning to sell between ten and 20 per cent of its 45.99 per cent shares in Romtelecom, the largest Romanian fixed telephony company.
The majority stock of 54.01 per cent in the company belongs to Greek company OTE. Now the authorities are trying to organise an auction to hire a consultant to evaluate the terms of the privatization, such as the quantity of shares and the moment for the listing. The options for the destination for Romtelecom shares include stock markets in Bucharest, London, Vienna and/or Frankfurt.
“In case the stock markets are down, we could postpone the initial public offer until the situation will offer us a successful listing,” Minister of IT&C Karoly Borbely told The Diplomat.


Deutsche Telekom buys into Romania

Deutsche Telekom has agreed to purchase 20 per cent stake in Greek telecom company OTE, the majority shareholder of Romanian landline leader Romtelecom and the third largest mobile operator in Romania, Cosmote.
The German telecom giant will buy the 20 per cent stake from the Marfin Investment Group (MIG) for 2.5 billion Euro, subject to approvals from the Greek Government.
Deutsche Telekom is present on the Romanian market though its majority stake in Hungarian Magyar Telekom, which is the owner of Romanian telecom carrier service brand Eufonika.


Ford to build minivan and
small class car in Romania

Ford will start production at the newly acquired Romanian car plant Automobile Craiova of the two-seater minivan the Transit Connect, with the first vehicles ready for mid 2009.
By the end of 2010, the factory in Craiova, Dolj county will also start building a small class car. According to John Fleming, the CEO of Ford Europe, this model will be built only in Romania and is targeted for export.
At the beginning of March the European Commission decided the Romanian Government gave 27 million Euro in illegal aid to Dolj-county car plant Automobile Craiova, money which the factory must give back to the authorities.
After a four-month investigation into the privatisation, Brussels has decided that the Government asked a much lower price for the acquisition of the former Daewoo car plant in Craiova, only 57 million Euro, than if the privatisation had come without such stringent conditions.
The decision shocked Prime Minister Calin Popescu Tariceanu, who explained that Ford was the only company interested in buying Automobile Craiova, so the terms had to be favourable.
“What does the European Commission want Romania to manufacture?” he said. “Buttons? To export wooden crafts? I cannot accept such a way of thinking.”
Romanian officials have been heavily criticised by politicians and lawyers for failing to inform the European Commission prior to the deal, which could have cleared any potential breach of state aid regulations before the sale.
“The Commission supports regional development, but this should not change the nature of competition,” the European Commissioner for Competition Neelie Kroes stated.
The company has pledged investments of 677 million Euro in the Craiova plant and John Fleming said the production of the Daewoo Matiz car will continue in Craiova until the end of this month.


Pharma sector slammed with
22.6 million Euro penalty

Romania’s Competition Council has imposed a 22.6 million Euro penalty on four companies in the pharma sector for anti-competitive practices.
The Council argued that pharma producer Eli Lilly Export set up a deal with distributors A&A Medical, Relad Pharma and Mediplus Exim before a Ministry of Public Health auction.
According to the authorities, the producer arranged for its anti-diabetes medicine to be divided between the three distribution companies prior to the tender.
The Council also found that the Ministry of Public Health did not organised auctions for medicine against diabetes between 2004 and 2006.


Short News

Central Bank aims to rein in galloping inflation

Romania’s Central Bank (BNR) has raised the key interest rate to 9.5 per cent from the previous 9.0 per cent. BNR has gradually increased the interest rate every month since January, when the value was 7.5 per cent. The BNR instigated the new rise in an attempt to temper the 7.97 per cent inflation rate registered last February. The BNR has revised up the inflation prognosis for 2008, from 4.3 per cent to 5.9 per cent and decided to maintain the 3.8 per cent target for 2008. The National Prognosis Commission estimates an inflation of 5.4 per cent for 2008.

President to fly in second-hand Tarom plane

Romanian Aviation Company Romavia has purchased two Airbus A310-325 from Tarom to transport President Basescu and Prime Minister Tariceanu. The expenditure for the two airplanes is 54 million Euro including the customisation and modernisation costs.

Six companies to build new
nuclear reactors

Romanian power producer Nuclearelectrica has concluded an agreement to allow six companies to construct two more nuclear reactors at Cernavoda power station. Enel (Italy), Electrabel (Belgium), Iberdrola (Spain), CEZ (The Czech Republic), ArcelorMittal Romania and RWE (Germany) and Nuclearelectrica will set up a mixed company that will build, operate and exploit the reactors. Total investments in the joint company are estimated to be 2.3 billion Euro.

Farmers flush with EU cash

Around 167,000 Romanian farmers have started receiving from the Romanian Ministry of Agriculture, under the Common Agricultural Policy for 2007, the first EU payments. This is money allocated to Romania after it joined the European Union.

Minority stake in major airports due for sale

The Government claims it is preparing to sell five per cent of its shares in Henri Coanda Airport in Otopeni on the Bucharest stock market. This process has just begun and the Ministry of Transport is seeking an evaluation company to determine the value of the airport. In 2007, Henri Coanda estimated a net profit of about 4.5 million Euro. The Government holds 80 percent of the shares in the airport. Also for sale should be minority stakes in Baneasa Airport ‘Aurel Vlaicu’, ‘Mihail Kogalniceanu’ airport Constanta, Timisoara airport and Port Administrations in Galati and Constanta. The Government claims the listings will start this September.

Lugoj wins financing for ring-road

The Romanian Government has signed a 24.7 million Euro financing agreement for the construction of the ring road around Lugoj city, Timis county. Portuguese JV Monteadriano Engenharia E.Construcao - Sociedade Construcoes da Costa is the main contractor of the project, set for delivery by 2010. The 26.5 million Euro project is co-financed by the Romanian Government through the state budget and the European Commission through an ex-ISPA facility. The ring road will be 9.6 km long, 12 metres wide and will have three traffic lanes. The project also includes the construction of a bridge over the Timis river and two passageways.

Vodafone buys into high street presence

Vodafone Romania has purchased 66 per cent of Proton Technologies, a distributor of products and mobile telephony services. The rest of 34 per cent of the shares remain in the hands of the outgoing owner of Proton Technologies, Gabriel Cristian Sandu. The company will start distribute Vodafone’s services exclusively, after a rebranding of its 73 stores, most of them located in Suceava, Iasi, Brasov, Constanta and Cluj counties as well as in Bucharest.

Colgate Palmolive dumps
Romania factory

Colgate Palmolive is closing down its production facility in Brasov by the end of 2008 and transfering all its local operations to Poland as part of its European-wide restructuring. The factory currently employs around 46 people in the manufacture of toothpaste, washing up liquid, shaving foam and hand cream.

Steel giant aims for 50 per cent
production increase by 2013

Steel giant ArcelorMittal will invest 1.5 billion Euro in ArcelorMittal Galati to help increase its local production by 50 per cent. The Galati-based factory intends to sell its steel on the western European market and in the next five years plans to increase annual production from 4.7 million tonnes to seven million tonnes.

Local law firms consolidate

Romanian law firm Stefanica and Dutu has joined rival Voicu and Filipescu to create a larger domestic legal service in commercial law, litigation and arbitration. The joint-boss of the former firm Daniel Stefanica has become a partner at Voicu and Filipescu.

Marks and Spencer UK takes
over Romanian operations

UK department store chain Marks and Spencer Group plans to open 50 new stores in the Balkans, following its 50 million Euro purchase of 50 per cent in its regional franchise partner, Greek-based Marinopoulos, which operates six Marks & Spencer stores in Romania. Marinopoulos also has the franchise rights for Starbucks and Sephora in Romania.

Romania hosts more top retailers than Norway

Romania has taken over countries such as Norway, Luxembourg, Finland, Slovakia, Estonia and Brazil as countries hosting the top 250 retailers, according to a study by real estate agency CB Richard Ellis. Romania ranks 39 of 61 countries, UK and Spain are placed first and second in this top, while Bulgaria ranks at 44. More than 20 per cent of the world’s most important retailers are already operating in Romania.

Ferrari showroom due for Otopeni

Romania will see a Ferrari showroom this May in Otopeni, representatives of car importer Forza Rossa, a Ferrari partner in Romania has stated. Forza Rossa’s majority shares are owned by Romanian couple Ion and Camelia Balzac, with 47.5 per cent in the hands of Italian-owned Cefin Holding. The luxury car brand was also the target for a launch by AutoItalia, the official importer of Maserati, Fiat, Alfa Romeo and Lancia.

Brits begin building Arad mall

Dawnay Day, the British investment and financial services group, has started the construction of Atrium Center in Arad county due in 2009. The total investment will reach 72 million Euro.


 
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