Gorenje the appliance maker that’s Slovenia’s second-biggest exporter, said it needs government aid soon to weather the economic slump after demand fell as much as 90 percent in parts of eastern Europe.
“Gorenje is paying more than 50 million euros ($64 million) of tax to state coffers every month; anything that would lower or postpone this burden is welcome,” Chief Executive Officer Franjo Bobinac said in an interview. “Labor costs are also big, so payroll taxes should be reduced at a quicker pace. These measures are needed as soon as possible.”
Slovenia, the small Balkan country with a population of only 2 million people, depends on exports for two-thirds of its gross domestic product, may consider steps similar to France’s 6 billion Euros in loans to car makers, Slovenian Finance Minister France Krizanic said last week. Velenje-based Gorenje, a competitor to Sweden’s Electrolux AB and Turkey’s Arcelik A.S. (Beko in the UK), saw total orders fall as much as 25 percent in January and February.
“The biggest drop was in Ukraine, where new orders fell by 90 percent and sales are down by 80 percent, mostly due to currency depreciation,” Franjo Bobinac, said in a February 13th telephone interview. “A similar drop was recorded in Russia.”
Gorenje has already taken steps to lower costs following the drop in demand. In January, it introduced a 36-hour working week, cut production, lowered salaries by 10 percent and accepted government assistance in paying wages. The manufacturer can “cope for a period of one year to 18 months,” under current conditions, said Bobinac, who personally took a 10 percent pay cut.
Gorenje, which employs 9,000 workers in Slovenia and exports 92 percent of its production, still predicts a profit in 2008, Bobinac said without being more specific. The earnings outlook for this year “will be clearer in the coming months,” he said. Gorenje, which also has factories in Serbia and the Czech Republic, reports full-year earnings on Feb. 26.