GYUMRI'S "KARHAT" PLANT FACES IMMINENT CLOSURE
Yeranuhi Soghoyan

http://hetq.am/en/economy/stromashina/
2 010/03/29 | 16:14

Feature Stories economy

"Government must protect interests of local manufacturers", argues
Deputy Director

The plant in Gyumri that manufactures stone-cutting equipment has
been on the edge of closing ever since it was privatized back in 2002.

Formerly known as "Stromashina", the Soviet industrial plant now
belongs to "Karhat Mekena, CJSC". Company Deputy Director Davit
Ghazanchyan told Hetq," We have always been in the business of
manufacturing stone cutting and processing equipment. During the
Soviet era the plant employed 825 workers but today we can't even
keep 55 people on the payroll."

Eight years ago, "International Business Center, CJSC" privatized
the plant and invested resources in an attempt to expand production
capabilities. The plant seemed to be doing fine until 2008. It exported
what it produced to Kazakhstan, Turkmenistan, Ukraine and Russia.

"98% of our orders came from Kazakhstan and Turkmenistan. But since
Kazakhstan was the first of the CIS countries to feel the full impact
of the financial crisis back in 2007, the plant felt the fall-out
as early as June, 2008. When the crisis went global in 2009, we were
already operating in a crisis mode, says Deputy Director Ghazanchyan.

Plant to close by April 22 if new customers not found

If the plant doesn't receive new orders by April 22, it will finally
shut its doors after operating in the red for the past two years.

Plant workers have already been notified of the inevitable closing.

Forty of the fifty-five current workers will be laid off. The director,
accountant and security staff will be the only ones left on the
payroll. Even Deputy Director Ghazanchyan has received a notice
warning that he too will be let go.

"Right now, we have eleven pieces of stone cutting equipment ready.

We've received deposits from Kazakhstan for three. But for the past
year and a half our customers haven't been able to pay the balance
owed and take delivery, says Mr. Ghazanchyan. "Last year, we received
100 million AMD in assistance from "International Business-Center",
but we haven't gotten anything this year."

"Karhat Mekena" hasn't applied for government assistance even though
there are programs available. Mr. Ghazanchyan said the plant never
had the need since they had a constant customer base and that
"International Business" always lent a hand if the need arose.

40 more workers to get sacked in Shirak

The situation has really gotten tense. If the job cuts go through,
another forty families in the area will wind up in dire economic
straits.

"Even without the impending cuts, the region has the highest poverty
rates in the country. If we get sacked as well, the ranks of the
unemployed will just get that much bigger," complains Robert Manukyan,
the plant's safety engineer. "I'm the breadwinner for a family of
five. We live in a hut. My son fought in Karabakh and came back
disabled. I've been working in the same factory for forty-four years
but the crisis doesn't care about all that. And the government's no
better. Forty more unemployed here, forty more there; it's all the
same to them."

"Every month our costs run between 7-8 million AMD, without even
operating," says Davit Ghazanchyan. "And I must add that our product
is just as good, if not better, than the stone cutting equipment now
being imported into Armenia."

"We produce quality equipment but government allows imports from
overseas"

"We have this plant here in Armenia, but the government allows for
similar equipment to be imported from China and Italy. It pains me
to no end. Let me be straight with you, the interests of Armenian
manufacturers are being defended. As far as I know, in other countries
the governments see to it that importers are only allowed to bring in
goods and equipment that isn't manufactured locally. Here in Armenia
it's the exact opposite."

In 2007, "Karhat Mekena" manufactured 883 million AMD worth of product
and employed 114 workers who made, on average, between 100,000-110,000
AMD per month. In 2008, production fell to 525 million AMD at the
plant which had 115 workers making an average of 126,000 AMD.

"The picture in 2009 was even sadder. We only produced 26 million
AMD of goods but spent 131 million. We had 68 workers and wound up
spending 68 million of wages for the year," argues Deputy Director
Ghazanchyan."It was "International Business" that bailed us out with
100 million since we were 105 million in the hole. Now, we're on the
verge of cutting 40 workers."

Plant accountant can't imagine leaving after 40 years

Plant accountant Roza Muradyan has been working here for the past
forty years. Even though she's not facing imminent dismissal, she
fears the day when she too will be gone, no longer climbing the
familiar stairs to her office at the plant.

"I've been working here since I was 18. I got married and got a job
for my husband here. Now, I have two sons working here," says Mrs.

Muradyan. "Our collective is one of the finest around. I just can't
imagine that one day I too won't be walking into this building after
all these years."

Deputy Director Davit Ghazanchyan assured us that neither plant
management nor "International Business-Center" had any inclination
of closing the factory but that they had to face reality.

"The immediate problem we face is coming up with new orders by the
April 22 deadline. It's not much time," he said. "It's with a great
deal of regret that the plant, the only one of its kind in the region
and the country, is on the verge of closing. We will do all we can in
the next two months to make sure another forty people don't wind up
on the streets jobless. But, I repeat, the government must help out at
least when it comes to regulating imports. That way, we'd at least be
able to sell what we produce. Otherwise, the plant will surely close.