GM's $22 million to come in 2004

The $100 million contract between the US group General Motors and CFR Calatori SA for the modernisation of 57 engines will boost Electroputere Craiova’s revenues by $22 million. The money, however, will not reach the Romanian producer any sooner than 2004.
“This year will most likely be used for patenting mainly, so that the actual works will start in 2004. The revenues obtained by Electroputere from the modernisation works will account for 22% of the total contract value,” Petre Sabaila, Electroputere Craiova chairman told Ziarul Financiar.
Sabaila specified the revenues collected from the modernisation of the 57 engines will be equally distributed, $11 million in 2004 and $11 million in 2005.
The General Motors – CFR Calatori contract was signed last week and will take three years to complete. General Motors will bring the parts and technology, while Electroputere Craiova will carry out the actual upgrade works.
This contract will therefore breathe new life into Electroputere’s railway engine division. The company has not made a single engine since the early ’90s, and has sold mainly electrical transformers in the meantime.
Electroputere Craiova estimates 2003 sales to amount to $48 million, $36 million of which are already sealed by contracts. It will export about 80% of the $36 million’s worth, with electrical transformers as the main commodity. The company anticipates $1.3 losses this year.
The impact of the engine modernisation contract on Electroputere’s revenues should have started to show as early as this year, but the contract negotiations between the Americans and CFR took longer to complete than initially planned. The delay in signing the contract has also impacted on the negotiations between General Motors and the Romanian State about taking over Electroputere Craiova.