A ZF analysis shows that the cities with the highest declines in the number of inhabitants faced a significant industrial decline, with industry being the major pillar of the economy in those areas.
“Of course the shutting down of industry is one of the causes of the decline in the number of inhabitants,” says Elena Damian, director general of the Chamber of Industry and Commerce of Vaslui. She lists several plants in Vaslui county which used to have several thousand employees before the 1989 revolution, and which have closed down.
The towns of Vaslui and Barlad, both in Vaslui county, are among the most depopulated, losing 27.8% and 27.7% of their total number of inhabitants respectively.
Industrial giants that provided work for most of Vaslui inhabitants collapsed after 1989 and those left without a job and without job prospects went to look for work abroad.
“They closed down because they had no more orders (…). Mecanica Vaslui produced equipment for the mining industry and as it shut down, the plant did too. Moldosin Vaslui produced for the oil sector, which in turn collapsed. Energy, gas, all became more expensive, so production costs could no longer be covered.”
She says Vaslui currently relies on agriculture, where the companies of businessman Adrian Porumboiu exploit around 40,000 ha of farmland with 8,000-9,000 employees. Another sector that Vaslui is reliant on is clothing manufactured based on orders.
However, in the last decade, clothing manufacturers in Vaslui and Barlad lost thousands of employees. For instance in 2002 Confectii Vaslui employed over 2,200, while last year the company had just 394 employees left. The number of employees of Confectii Barlad was down from over 2,600 to 867 last year.
A telling example is that of steel plant Sidex Galati (currently ArcelorMittal Galati). In 1999, ahead of its privatization, the plant employed over 31,000, but now it has a little over 8,000. Several thousand other people who lost their jobs because of the disappearance of businesses dependent on the steel giant.
Galati is in fact the town that lost over 67,000 inhabitants, i.e. almost a quarter of its overall population.
In the past nine years the population of the 100 largest cities in Romania fell by around 16% from 9.6 million in 2002 to 8.1 million in 2011, according to data centralized by ZF based on the censuses conducted by the National Statistics Institute (INS).
The town with the biggest decline in its number of inhabitants in the last nine years is Roman (Neamt county), linked to the layoffs at laminated products plant Petrotub Roman (currently Arcelor Mittal Roman). Over 3,850 people left the Roman plant between 2002 and 2011 through voluntary layoffs.
The layoffs were justified by the plants’ management through an effort to boost efficiency, but production also diminished significantly compared against the period before 1989 as the shift was made towards the market economy. After 1989, as plants lacked sales and marketing departments to promote their production, they faced tough competition from developed markets.
Businesspeople who lived those times recall that the large industrial plants operating in communist times had oversized personnel, were not used to making savings on production costs because they had no competition from foreign giants – there were one or two producers at the most on the market , technology was obsolete because they had monopoly on the market, and many companies fell into the hands of people with no expertise in the field, leading the plants towards insolvency.
Most companies which were privatized after 1990 through the MEBO method (management and employee buyout), went insolvent because of faulty management or because of other factors and closed down. Another cause was the lack of support from a strong shareholder able to support the companies even in a difficult market context.
Aerostar is successful
Airplane manufacturer Aerostar Bacau (ARS.RO) is one of the few cases of successful privatizations through the MEBO method, with the company held by employees now dominating the Romanian aeronautics market more than 20 years after its privatization.
While Avioane Craiova and helicopter manufacturer IAR Brasov, both controlled by the state, are now just a memory, having closed down the bulk of production capacities and laid off almost all employees, Aerostar invests in the development and expansion of production and has become one of Romania’s major exporters in a high-tech sector.
The majority stake of Aerostar, 70%, was acquired in 2000 for 5.3 million lei by the Employees Association, PAS, which at the time was run by Grigore Filip, the current general manager and president of Aerostar, and by Iarom.
Iarom later also bought the employees’ stake and is currently owned by Grigore Filip, general manager of Aerostar, Doru Damaschin, financial manager of Aerostar, and Mihai Toncea, each with 33%.
Over the years, Aerostar has collaborated with international aeronautics giants such as the EADS group, for which it manufactures civil aviation components and parts for Airbus aircraft and supplied parts and subassemblies for Dutch-held Fokker.
The turnover of the airplane manufacturer climbed significantly in the first half of this year, by 38%, to RON88.1 million (EUR19.6 million) in the first half of this year amid significant export orders which contribute by 83.8% to the company’s sales.
(EUR1=RON4.4881)
(English version by Daniela Stoican)