SAB Miller, the world's second-largest beer company, last year closed down its Buzau-based factory because of the slower-than-expected Romanian market growth. It is now the turn of Austrian group Brau Union to admit it has one too many production units.
The Romanian-based branch of the Austrian group, Brau Union Romania yesterday said it would shut down its plant in Reghin, giving up almost 15% of the production capacity and letting 220 people go. The group will be left with six factories. The Reghin-based plant has a production capacity of 500,000 hectolitres.#leadend#
"We had to do something in order to secure cost-effective production and to better meet market demand," Werner Schneidhofer, chairman of Brau Union Romania said, explaining the decision to downsize.
However, this decision is rather surprising, considering the Romanian market is finally showing signs of recovery, after the past two years' decline. In the first half of 2003, beer consumption went up 10% and, should this pace maintain throughout the year, the market will set a new record.
On the other hand, Brau Union has seen its market share shrink over the past two years. The Austrian leader became the market leader in 2000, when it bought Brewery Holdings and doubled market share to 36%. However, Brau Union had come to hold only 33% of the market last year, with the downward trend continuing in the first six months of 2003.
Brau Union officials yesterday said the shutdown of the Reghin-based plant would slash costs and generate significant savings, with the new resources to be aimed at investments in the company's brands. "We aim to increase production and sell more beer in Romania," Schneidhofer also said.
The Reghin factory will stop making beer at the end of September. Some 40 of the 260 employees will continue to work in the sales department after that date, with the rest to receive a substantial compensation package. According to company officials, the compensation packages were calculated during negotiations with trade union representatives and are included in the collective labour contract.
"The compensation package includes 10-17 monthly salaries. We will also run a six-month complex counselling and professional assistance programme to help employees find other opportunities," Schneidhofer stated.
On the other hand, trade unions in the food industry yesterday protested against the closedown of the Reghin plant. Dragos Frumosu, leader of the National Food Industry Union Federation said the owner of the plant had not consulted with the unions on this issue and had not tried to find a solution to fire fewer people, either.
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