[Nettime-ro] \\ zerkalo -- 3epøka dE f!er vEch!

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The Evil Twins Fairy Tale -- Petitie 4 Cari & Oci
in 0+3 Acte. 15 re:sufleuri + 2o di etichiete

for additional comical relief:
http://press.princeton.edu/titles/5845.html




Kia, Kraft Suffer in East Europe as Exports Backfire -

By James M. Gomez and Agnes Lovasz

Feb. 16 (Bloomberg) -- Eastern Europe’s past is the Iron Curtain. The  
next year may
resemble the Rust Belt.

Companies from Kia Motors Corp. and Kraft Foods Inc. to Bulgarian  
fertilizer
producer Neochim AD are curtailing production or idling workers,  
throwing economies
that tied their fortunes to western capitalism into a tailspin.

“Nobody thought it would be like this,” says Dusan Dvorak, the  
spokesman for Kia’s
two-year-old plant in northeastern Slovakia, which has cut the hours  
for its 2,700
workers by 25 percent.

As Europe’s contraction engulfs former Soviet-bloc nations,  
governments are forced
to shore up economies built on a now- teetering model: creating an  
eastern factory
floor with cheap labor and land to feed western consumption. Leaders  
in the Czech
Republic, Hungary and Poland are drawing up crisis plans. Angry  
workers have rioted
in Bulgaria and the Baltic states.

“The question is to what extent the current model is sustainable,”  
says Rafal
Kierzenkowski, an economist with the Paris-based Organization for  
Economic
Cooperation and Development. “What we are observing is a kind of  
backfiring.”

Kia’s factory, which produces the South Korean automaker’s Cee’d  
model for export to
the west, has abandoned its goal of producing 300,000 cars a year by  
the end of the
decade. This year’s target is down to 170,000 cars from 240,000 as  
demand slumps.

“We don’t want to lay anyone off, but I don’t think anyone expected  
this,” Dvorak
says. “Everybody was counting on high growth.”

Slumping Exports

Slovakia’s exports have slumped 40 percent since reaching a record  
high in October,
dragging output down 16.8 percent in December, the steepest drop  
since the country’s
independence in 1993.

Similar production cutbacks have come in Poland, Hungary and the  
Czech Republic,
whose exports have all fallen more than 30 percent since September.  
Hungarian
industrial production slumped 23.3 percent in December from a year  
earlier, the most
in almost two decades, the nation’s statistics office said today.

Steelmaker ArcelorMittal, the region’s second-biggest employer, is  
cutting about 950
workers at its Czech operations through buyouts and layoffs.

Baltic Bust

Lithuania and its Baltic neighbors stand to suffer the steepest  
contractions among
eastern European economies.

Lithuania’s central bank said on Feb. 5 that gross domestic product  
will shrink 4.9
percent this year, compared with an October forecast for GDP to grow  
1.2 percent.
Swedbank AB, the Baltics’ largest lender, forecasts a contraction of  
10 percent this
year for Latvia, compared with a 1 percent contraction in a forecast  
published on
Nov. 20.

Among the victims of lower export demand is Lithuanian appliance  
maker AB Snaige,
which said on Jan. 21 it will cut 300 jobs. Estonia’s Norma AS, which  
makes
seatbelts for carmakers including Volvo and Saab, reported that  
fourth-quarter net
income dropped 16 percent on a 15 percent dip in revenue from western  
Europe. It
plans to reduce staff by 12 percent this year.

Less than a year ago, Neochim was reaping the benefits of expanded  
trade following
Bulgaria’s 2007 entry into the European Union. The company reported a  
5 percent gain
in sales and a 71 percent increase in profit in last year’s first  
quarter.

Now, “the entire plant is closed,” says spokeswoman Milena Nikolova.  
The 58-year-old
factory, founded by the former communist regime near the rugged  
border with Turkey,
sent all of its 1,500 workers home for an indefinite unpaid furlough  
last month
after demand in western Europe, the destination for most of  
Bulgaria’s goods,
evaporated.

‘Dashed Expectations’

“Expectations had been aroused dramatically since the fall of  
communism,” Jim
Rogers, chairman of Rogers Holdings, said in an interview last week  
in Singapore,
where his investment firm is based. “There are going to be lots more  
dashed
expectations.”

Rogers said he is shunning investment in eastern Europe on concerns  
the region’s
economies will deteriorate further: “Eastern Europe is a mess.”

While executives and policy makers acknowledge slumping exports and  
output are part
of the normal economic cycle that comes with free markets, few were  
prepared for the
severity of the decline in a region that only months ago was  
projected to keep
growing this year.

The International Monetary Fund forecast last month that economies in  
central and
eastern Europe would shrink 0.4 percent this year after growing 3.2  
percent in 2008.
Only three months earlier, the IMF was expecting the region to grow  
2.5 percent in
2009.

Production Cuts

“I don’t know if anybody’s crystal ball is working these days,” says  
Antonio
Francavilla, chief executive officer for General Motors Poland, who  
was forced to
eliminate one of three shifts this year because exports were “hit  
pretty hard. Where
it will all end up, I don’t know.”

With the region now dependent on western Europe to purchase more than  
two-thirds of
its exports, turning back isn’t an option, says Leszek Balcerowicz, a  
former Polish
central banker and finance minister and one of the architects of the  
region’s
trade-oriented economic reforms.

“The trade-opening process was one of the crucial reforms,”  
Balcerowicz said in a
Feb. 10 interview in Warsaw. It is “absolutely fundamental” if “you  
want to catch
up” with western economies.

Neil Shearing, emerging-Europe economist with Capital Economics Ltd.  
in London,
predicts “there will be a push towards diversification” of industries  
and markets.
“But a push toward protectionism, or any sort of self-sufficiency,  
would have a
disastrous impact for these countries,” he says.

Patchwork Solutions

For now, policy makers are cobbling together a patchwork of measures  
to strengthen
government finances and social services.

Czech leaders plan to reveal a package later this month that includes  
cutting
social-security contributions and boosting credit availability for  
small businesses.

In Poland, the government drew up a $26 billion proposal to increase  
social-welfare
spending and raise bank-guarantee limits and taxes on alcohol and  
imported cars.

The Lithuanian government responded to Jan. 16 riots in the capital,  
Vilnius, by
opening talks with trade unions and small- business owners about job- 
protection
measures as a way to head off any more violence by out-of-work citizens.

“I think social unrest will spread,” Shearing says. “It’s not  
difficult to feel some
sympathy from the locals’ perspective. They were promised that closer  
integration
with the West would bring an increase in standards of living, and now  
they have a
large and deep recession.”

It’s a bitter realization for Angela Dumitru, a 46-year-old machine  
operator for
Northfield, Illinois-based Kraft, the world’s second-largest  
foodmaker, which is
shuttering its Romanian chocolate factory after about 14 years.

“When Kraft came, they said we are all family,” she said after  
pushing through a
rusted turnstile at the factory. “I guess this family is growing apart.”






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