It is reported that Azovmash one of the biggest Ukrainian machine building holding, plans to reduce the staff by 19.5% till end of the spring.
Mr Potrakhov chairman of the Donetsk regional committee of machine builder's trade union said, accordingly the production program was approved in January and the production will be reduced significantly. Respectively will be reduced the number of employees. If the situation will be changed in H2 2009 part of fired employees can be called back.
Millennium Capital analyst said “The Company did feel the demand reduction in 4Q of the last year. Despite of this the Company shows positive year results. But in 1Q09 the demand continued the fall and the changing of the trend is not forecasted it short term. This is a reason that the Company started to cut costs even in so non popular way. The Company is in a difficult financial situation. The trying to invite Donetskstal Group as a business partner is a sign that Azovmash lost the hope to solve the problems by themselves. The only cost reduction program will not help them to cope with a task of debts covering which volume was 7.6 times more than equity capital to end of 2008.”