16 companies on BVB to lay off 5,000 employees

The drop in demand for manufactured products and the need to cut costs led several companies listed on the Bucharest Stock Exchange (BVB) to forego over 5,000 employees this year, according to an analysis made by Business Standard, based on data reported by 16 companies.

A further 2,350 people are to be temporarily laid off and most of them will return to their jobs when demand rebounds in their field of activity, according to the management of these enterprises.

Some companies, such as car parts producer Compa Sibiu, industry supplier Altur Slatina, oil, gas, and construction company Dafora Medias, and aluminum smelter Alro Slatina reported staff reductions as early as the first three months of this year, according to their quarterly data.

Most companies registered in the first quarter a decline in the number of employees of up to 40 percent compared to the average 2008 level. However, most restructuring programs applied by the companies' management are to take place this summer and some of them will extend to 2010.

Analysts on the Stock Exchange say that when companies are laying off over 50 percent of their staff, investors should be very careful. "In theory, a 10-15 percent staff downsizing is not a negative sign, but when figures exceed 50 percent, investors are thinking that the company is drifting away. At the moment, the main problem of companies that are operating layoffs is that they find it difficult to recover the production money, considering the lack of demand," said the Head of the Equities Market Analysis Department within Banca Comerciala Romana (BCR), Mihai Caruntu. The Oltchim Ramnicu Valcea and Alro Slatina plants announced the largest number of restructured jobs in the first half of this year.

Business Standard