AFTER ITS RESTRUCTURING PROGRAM WAS ACCEPTED, "Romarm" is no longer being monitored by the IMF

• Interview with Vasile Crişan, general manager of "Romarm"

Reporter: "Romarm" will begin a reorganization process. What is the main objective of this reorganization?

Vasile Crişan: What truly represents a reorganization of "Romarm" is happening now. We have submitted to the Government a draft of this reorganization plan and they have accepted it, as did the International Monetary Fund. I think that what the International Monetary Fund is looking for, in the case of "Romarm" at least, is something that we also want, namely financial independence. A company, regardless of whether it is state owned or private, is only economically healthy if it doesn't financially depend on someone. The most important thing right now, is that following this reorganization plan, "Romarm" is no longer a company monitored by the IMF. Also, after the second review of "Romarm" which was conducted by the government, the implementation of private management is still being studied.

Reporter: What are you going to do in order to obtain your financial independence?

Vasile Crişan: We are going to implement the measures proposed as part of the program to reorganize and return the company to profitability.

Reporter: More to the point, what steps are you going to take?

Vasile Crişan: First of all we want to change the structure of the company. We want it to stop operating with 16 branches, and to only have four divisions. The first division will be that of weapons, ammunition and infantry equipment. This division will include the Cugir weapons plant, the Sadu Mechanical Plant, the Cugir Mechanical Plant and Metrom Braşov. The second division will deal with artillery and armored combat vehicles, consisting of the Vehicle Mechanical Plant of Moreni, the Bucharest Mechanical Plant and "Arsenal Reşiţa". The third division will focus on ammunition for artillery, consisting of the following plants: U.P.S. Dragomireşti, the Mija, Tohan, Carfil and Plopeni mechanical plants, and the fourth division - Missiles - will consist of the plants of Electromecanica Ploieşti and the Industrial Production Center of Clinceni. The plants which make up each division complement each other. In other words, when one of them gets an order, in order to reduce the delivery time, any of the plants of a specific division can take on a part of that order, because they are almost identical, in terms of the products that they can make.

Reporter: What will happen to the plants which have historic debts?

Vasile Crişan: When it comes to the other plants - Pirotim Victoria, the Făgăraş Powders Plant and the Făgăraş Special Products Plant -, given their economic status and the lack of prospects of being competitive and selling their products profitably, we are proposing their reorganization as companies subordinated to the Ministry of the Economy. This will launch an accelerated privatization process, for the former two, whereas the Special Products Plant of Făgăraş will be liquidated.

Reporter: Have you estimated the savings which you expect to achieve through this reorganization process?

Vasile Crişan: Aside from the savings we would make on the plants which will be transferred to the Ministry of the Economy, we will also see higher savings in employee expenses, because there will no longer be 16 general managers, there will be only four of them. In other words, there will no longer be the need to pay 16 general managers, 16 CFOs, 16 deputy general managers, etc.

Reporter: When will "Romarm" become financially independent?

Vasile Crişan: Once we implement the measures we have decided on.

Reporter: And when is this expected to happen?

Vasile Crişan: We have planned to implement this program next year.

Reporter: Aside from the reorganization of the company into four divisions, what else does the program accepted by the Government involve?

Vasile Crişan: We are also looking to attract entities from the private sector, either Romanian or foreign, into partnerships with "Romarm". We are looking for a form of association, it can very well be a joint venture, an acquisition of stock, that remains to be seen during the talks. We are currently talking to approximately seven companies, five of them foreign and two Romanian, with which we are negotiating such a partnership.

Reporter: Are these concrete cooperation talks?

Vasile Crişan: Yes, they are concrete.

Reporter: Can you mention some names?

Vasile Crişan: I can't do that, because we have signed confidentiality agreements.

Reporter: I understand that you would be willing to sell a block of shares in "Romarm"...

Vasile Crişan: Yes, we could sell stocks, or assets ...

Reporter: Did you talk about this to any of the seven companies you are currently negotiating with?

Vasile Crişan: No, we didn't talk to anybody about the plan to sell stock. Besides, I think most of them want to come and work with us on developing a product and the contribution of each party would be determined afterwards.

Reporter: Are you considering getting listed on the Stock Exchange, when it becomes possible?

Vasile Crişan: Getting listed ...I don't know whether we are currently attractive enough to do something like that. At the moment, our objectives are the ones I told you about, which means that acting in this manner, we are ensuring a strong core of the financing component, investment capital, which will result in our becoming independent from the government, as well as allow us to far more diversified and far reaching market all over the world, given the major interest of our partner.

Reporter: Will you be launching new products?

Vasile Crişan: Yes. Already, in about a week, we will have the latest product bearing the "Romarm" brand: the 5.56 caliber assault rifle. We are also working on the armored personnel carrier, which has a prototype which will be launched in 2013.

Reporter: What other investments are you considering for the future?

Vasile Crişan: Research and development is a very important chapter which we are focusing on. We are also considering retooling, where we are not efficient enough due to high costs of production. The moment we consider a retooling, we are also looking at how that can result in lower production costs, which would allow us to bring our products to market at lower prices.

Reporter: How many employees does the company have?

Vasile Crişan: 5,400.

Reporter: Do you intend to conduct any layoffs?

Vasile Crişan: No, quite the contrary, next year we will most likely hire more people.

Reporter: 90% of the output of "Romarm" gets exported. More to the point, what are you exporting precisely?

Vasile Crişan: We are exporting infantry weapons, missiles and anti-air weapons.

Reporter: Demand for weapons has risen significantly lately. Which countries have increased their demand in this sector?

Vasile Crişan: America has increased its demand for weapons the most.

Reporter: Does this mean it is getting ready for war?

Vasile Crişan: Not necessarily. One must always think of war in time of peace. Besides, American demand is not for military weapons, but for self-defense weapons. On this segment, we are going to have a very high demand, because we also manufacture weapons intended for the civilian segment.

Reporter: How has Romanian demand for weapons evolved?

Vasile Crişan: In Romania, demand is very high, because we have a national program of cooperation with the National Ministry of Defense. For the first time, the Romanian Army has initiated a national program to outfit Romanian soldiers with domestically produced equipment. So far, all of the Ministers of Defense bought weapons manufactured abroad, and the current minister has decided to launch a national program and to involve the Romanian economy in it - a very good thing, because the industry supports the Romanian economy.

Reporter: What does this national program consist of?

Vasile Crişan: This national program consists of delivering an unmanned aircraft, which will happen at the Romaero fair, with another company operating in the weapons business, of the armored personnel carrier that we are working on - 8X8, with offers a level three protection - and the 5.56 assault rifle.

Reporter: How would you describe the market you are operating on?

Vasile Crişan: We have a well established reputation, we have a reputation of 70 years, we are extremely professional, our products are in high demand. There are many companies in the market, small companies which have different lines of business, we do not overlap with them. At any rate, we are looking to reach the compatibility chapter very well, but we are also considering reducing our losses. I want to add that thanks to that program, by the end of 2012 we will no longer be losing money.

Reporter: "Romarm" is currently losing money ...

Vasile Crişan: Overall, it's true that we are losing money, because of the branches which have historical debt, but one of the major objectives of our plan for reorganization and return to profitability is to increase turnover and expand our market.

Reporter: Thank you!