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Heavy manufacturer saved by government

A major heavy manufacturing company abruptly closed its doors in early September, and then just as quickly recalled its idle workers. Political critics immediately accused the government of having bailed out the doomed company in order to conceal the critical state of the Slovak heavy industrial sector from voters before national elections set for late September.
The company in question, ZŤS TEES Martin, is a former armaments manufacturer that has been turned into an agricultural machinery factory. As an armaments manufacturer, ZŤS had 16,000 employees in 1989, but in 1992, during its conversion to peacetime production, the number of employees declined to 8,900. Today the company employs some 3,800 workers.

A major heavy manufacturing company abruptly closed its doors in early September, and then just as quickly recalled its idle workers. Political critics immediately accused the government of having bailed out the doomed company in order to conceal the critical state of the Slovak heavy industrial sector from voters before national elections set for late September.

The company in question, ZŤS TEES Martin, is a former armaments manufacturer that has been turned into an agricultural machinery factory. As an armaments manufacturer, ZŤS had 16,000 employees in 1989, but in 1992, during its conversion to peacetime production, the number of employees declined to 8,900. Today the company employs some 3,800 workers.

On August 28, Kovo heavy machinery labour union spokesman František Ledňák reported that ZŤS was planning to send 3,200 employees home because the plant simply had no work for them to do. ZŤS had sold only 30 tractors to Slovak farmers in 1998, Ledňák said, and had experienced five management turnovers since 1990.

"The main responsibility for what happened at ZŤS TEES lies in the hands of state," said Emil Machyna, chairman of the Kovo labour union, which organizes the plant's workers. "I don't think that the company will ever be able to pay off its debts and start over," he said.

Employees were sent home on full pay on September 1, but were recalled on September 7 after the company successfully negotiated a solution to its problems with the Slovak government. "After our negotiations, we found the solution. We will produce more agricultural tractors, maybe even some construction machinery and even some armament production. What the labor unions say about the collapse of the plant is not true," said ZŤS spokesman Ján Minár, but refused to give more specific details about the agreement.

"We have taken up some measures. They will either work, or we can possibly employ more people. But if the measures do not work, the situation will be a lot harder," said Minár.

The company's about face did not convince union leader Machyna, who responded that "Kovo was not able to discover how many employees really have a job. Management has been talking about the start of tractor production, but no one wants to talk about specific contracts and names of business partners. That's suspicious, to say the least. I think that management does not have work for at least 800 or 900 people."

Nor did the floundering plant make believers of opposition economic experts, who said that the ZŤS crisis was endemic in Slovakia. "About 30 to 40% of [Slovak] companies are experiencing serious problems like ZŤS Martin," said Ivan Mikloš, an economic expert with the biggest opposition party, the Slovak Democratic Coalition (SDK). "The crises in these companies may be very dangerous, especially if they are not solved very soon. The government is trying to postpone the solution for these companies until the end of September, after the elections," he said.

The government had bailed out ZŤS, Mikloš said, because it wanted to make sure that the issue of unemployment did not dominate the election campaign period. "If these companies collapse, it will involve thousands of employees," he warned.

Mikloš' words were borne out by representatives of ZŤS supplier Martinmetal, who announced on September 3 that the firm's 1,000 employees would go on strike September 9. Martinmetal workers had received only 60% of their July pay, and had not been paid since.

Production at the plant in 1996 totaled 2.12 billion Slovak crowns ($61.5 million), compared to only 531 million Sk ($15.4 million) during the first eight months of 1998. ZŤS TEES Martin has debts totalling eight billion Sk ($232 million).

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