Romanian State in search of solutions for Daewoo Craiova

The Romanian authorities are trying to figure out a way so that Daewoo Automobile Romania can continue to operate on the auto market. One solution would be to keep the current range of models, whose licence, granted by Daewoo Korea (now a subsidiary of General Motors) expires in 2005. At the same time, the state is looking for an investor to take over the Craiova-based plant.
The Romanian factory was left out by General Motors, when the US company took over some of the Daewoo Korea assets, but the Bucharest officials say the ideal solution would be an agreement for the American giant to make Opel cars at Craiova.
There are hardly any other solutions, while the alternative of a financial investor is ruled out. There is too much money at stake and the auto market is extremely competitive. Car imports are big, with this trend set to increase, once its size and the cancellation of customs barriers allow importers to grant discounts enabling them to compete with Romanian-made cars. This way, Daewoo will compete against almost every auto make.
However, the authorities are aware that the Craiova plant must be kept alive. To attain this goal, the Government is also thinking to grant Daewoo some fiscal incentives, besides scouting the market for an investor.
The Romanian state owns 49% in Daewoo Automobile Romania, with the rest belonging to Daewoo Motor Corporation.
According to government sources, several attempts at dialogue have been made in Romania and in Seoul, but the Koreans have not come up with any solution so far.
“To keep production going in the short term, three goals must be attained: Daewoo must continue to supply parts for the production process, export markets should be very clearly outlined (some of them should be ceded to Daewoo Romania), and the models geared with Euro 3 equipment should start being made as soon as possible,” government sources told Ziarul Financiar.
By the time the paper was ready for print, the Daewoo Romania officials had not made any comments on this issue. At any rate, the ball is now in the court of Seoul’s high-rank officials.
Daewoo Craiova is Romania’s second-largest carmaker and one of the main exporters, with deliveries assessed at over 110 million dollars, accounting for about 1% of the total value of Romanian exports.
While the Romanians are busy looking for a solution that will not cost any of the 3,800 workers their jobs, the Koreans are drafting a restructuring study for the plant.
“We are also expecting the conclusions of this study, but I don’t think we will go for it if it involves layoffs,” the quoted sources said.