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Pirelli Still Plans Investments in Romania

Pirelli said it still plans to invest another 250 million euros in its Romanian factories by 2011, despite the current economic landscape.

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The reconfirmation of the investment plan for Romania comes at a time when Marco Tronchetti Provera, the chairman of the group, anticipates a decline in consumer spending, which prompted Pirelli to lay off 200 people in Italy already, while the output of the Slatina, Romania, tyre plant was down to one third in December.

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"For the time being, we confirm next year’s investment, announced in October. The plant in Slatina is somewhat sheltered compared with other facilities because it is a new investment, with a higher technological level and a higher productivity. We have to continue to boost productivity, though," Enrico Malerba, chief executive of Pirelli Romania, stated.

Malerba added that Pirelli was currently experiencing a 30% decline in orders worldwide in the OE segment, and a 15% decline in the orders for the replacement segment. The replacement segment declined less because of orders of winter tires, which drive sales up.

"We expect lower demand next year, at least in the first half. Every survey shows the crisis worsening and peaking at the end of the first half, or even in the second half," Malerba said.

Pirelli has cut production at some of its factories or close some of them for the winter holidays early. "We have sufficient stocks and we had to halt production. This is not a pleasant situation but we took different steps in each country where we own factories, and adjusted to the situation. Therefore, we decided a short-term production halt in December in Romania," Malerba said.

In order to adjust stocks, production at the Slatina plant was cut down to one third in December, after two of the three lines were turned off. The 1,300 employees of the tyre factory were enrolled in a training program for the duration of the production halt, to improve their skills. After the training was completed, the employees were sent home for one week.

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Pirelli has said the unemployment period will not extend into 2009 and layoffs were out of the question given that the project was still growing and would attract new investments next year.

"We are not contemplating layoffs at the moment, especially since investments will require new employees, about 300 people, next year. Of course, it is hard to provide estimates for the time being. Our first priority now is to cope with the crisis and then think further," Malerba stated. (Tire Review/Akron)

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