Bunge, the leader of the domestic vegetable oil market, which derives annual turnover in excess of 150 million euros, is set to close its Unirea Iasi plant, and lay off 300 employees, after the group decided to concentrate its output in one production centre.
Over the past three years, Bunge's restructuring process and the closure of 3 plants (Bucharest, Oradea, and now Iasi) has involved the dismissal of over 700 employees. "As in any business, we are constantly assessing our cost base to secure and improve our company's efficiency, in order to remain competitive. Last year was challenging, with price hikes both for raw materials and packaging and rising energy costs, whilst this year is expected to be equally challenging. As a result, we decided to restructure our industrial operations," stated company representatives.
According to the above-mentioned sources, the former plants generated losses in 2006, but company representatives would not specify last year's sales figures or profit margins, either.
Bunge plans to relocate the entire production of the Iasi plant to the unit it acquired from Agricover Buzau in 2007, which makes the plant the US group's sole production unit domestically.
Bunge's reorganisation decisions are not just related to the Romanian market, but also to plants in Hungary and Bulgaria, and follows Bunge's strategy of efficient distribution across the regional market. "In 2-3 months, around 20% of overall production at the Buzau plant will be sold in Bulgaria," stated company representatives.
In Buzau, the domestic arm of the US producer will invest 25 million euros in plant modernisation. "The modernisation process will start immediately and last between 9-12 months," said Bunge representatives.
Bunge currently controls around 40% of the vegetable oil market through the brands: Floriol, Soreanca, Unisol, Ulvex, Raza Soarelui, and Rumen.
After it closed the Muntenia plant in Bucharest, and sold 6-hectares of land to Spanish real estate development and constructions group GEA Prasa, Bunge raised around 29m euros. As a result, the same strategy is also expected to be endorsed for the Oradea and Iasi plants.
"In 2008, we'll decide what to do with the land on which the Oradea plant was located, but one of the options is clearly to put the land up for sale," the company's representatives stated.
The vegetable oil market, which is estimated to be worth more than 250 million euros, has also been affected over the past two years by foreign currency fluctuations, which has encouraged many producers to halt exports. Moreover, domestic entrepreneurs switched to biodiesel or put their businesses up for sale, such as Ultex Tandarei, which is owned by businessman Ilie Nitescu.
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