Kraft Schedules First Layoffs For June

• Negotiations continue with Brasov companies to keep certain production lines in Romania

Ovidiu Vranceanu

Kraft Foods Romania has notified the Brasov County Employment Agency of their decision to postpone the first wave of layoffs from their factory in Brasov until June to give more time to ongoing negotiations with a Brasov-based manufacturer of food production equipment interested in taking over one production line to continue to produce certain brands of chocolate owned by Kraft. Layoffs were initially scheduled for May. "Most of those who will be laid off in the first wave work on this production line which is to be transferred to the Brasov-based company," said Dragos Grigore, the workers" representative to the Kraft European Enterprise Committee.

Lachlan Grave, the CEO of Kraft Foods Romania, recently confirmed that negotiations were taking place with a Brasov-based company, as well as other interested parties, in order to keep the production lines in Romania. If such agreements are concluded, some of the 440 Kraft employees in Brasov will be transferred to the partner companies.

Based on the growth rate communicated by Kraft Foods Romania, the company"s sales for 2008 can be estimated at more than 240 million USD (164 million EUR). The management is not expecting any significant increase in profit this year. Last year, Kraft Foods Romania did not improve profitability because of an increase in the price of raw materials on the commodities exchanges and the devaluation of the RON.

Kraft announced plans to close the chocolate factory in Brasov by the end of this year. This is the company"s only production unit in Romania. The 440 employees will be laid off in several steps starting in June. According to Doina Cavache, Corporate Affairs Manager for Kraft Foods Romania, the reason is that it is impossible to develop the production capacity.

"The strong development of the Kraft Foods Romania business in the last few years has generated a need for increased production capacity," said Lachlan Grave, the CEO of Kraft Foods Romania. "Because of space limitations in the existing buildings and the location of the factory in the middle of the city, increasing the production capacity in Brasov is not a viable option. We have studied the production capacities of our factories and identified the opportunities to consolidate production more efficiently, so as to ensure the necessary sizing to support future development. The transfer of production will not affect our commitment to continue to develop the business in Romania," he said.

Doina Cavache added that chocolate tablets production would be relocated to Bulgaria. In fact, the company asked some of the management of the factory in Brasov to relocated to Bulgaria, too, but they refused because of the living conditions in the neighbouring country.