Bulgaria's Faltering Military Plant Reopens for Workers

Industry | February 25, 2013, Monday // 11:17|  views

The troubled VMZ Sopot is the largest Bulgarian military plant. File photo

Employees in the troubled Bulgarian State-owned arms manufacturer, VMZ Sopot, are returning to work Monday after a 12-day paid leave.

Meanwhile, about 300 of them have submitted a request to terminate their employment in exchange of receiving four monthly salaries.

Layoffs will start at the end of the month or beginning of March.

600 have already been dismissed and the fate of the factory remains unclear.

On February 7, after heated debates, the Bulgarian Parliament decided to remove the arms manufacturer from the list of privatization bans.

This means the factory will be taken out of the restrictive privatizations list, thus it can be sold by the Privatization and Post-Privatization Control Agency (PPCA) without any preliminary conditions and clauses.

The vote was imposed after PPCA terminated the procedure for the sale of the military plant.

The sole bidder – Ruse-based EMKO EOOD, proposed to trade unions to eliminate from the collective bargaining agreement the procedure for laying-off personnel and upon receiving a refusal withdrew the bid.

During the debates, representatives of the left-wing opposition Socialist party, BSP, accused the then still-ruling Citizens for European Development of Bulgaria, GERB, of giving up on the strategy for the privatization of the weapons factory, noting the only feasible option was the implementation of a recovery plan and seeking new orders.

BSP further voiced suspicions VMZ Sopot is intentionally pushed towards bankruptcy and will end up being sold "for pocket change." GERB countered the factory has been in deplorable state for many years and only a speedy privatization will salvage VMZ Sopot from liquidation.

Candidates applying to buy VMZ Sopot were eligible to bid for it upon proof they have enough funds to cover its mounting debts, totaling some BGN 140 M, according to the strategy for the privatization of VMZ Sopot adopted by the Bulgarian Parliament in 2011, and the future owner was not to be allowed to lay off workers in the first three years after buying it.

According to GERB, a new strategy would take 8-9 months and this would be too long to avoid bankruptcy.

VMZ Sopot's workers, who have not received their wages for months, started staging strikes in November in the town of Sopot where tensions have been boiling.

The strike, however, was called off by the trade unions on January 25th after news about the transfer of BGN 4 M for the employees' overdue salaries emerged.

The center-right GERB cabinet, led by now-outgoing Prime Minister, Boyko Borisov, has claimed that only a significant layoff, to be followed by privatization, can salvage the works.

Proceedings against the factory by its creditors have already been started.

The syndicalists, who oppose planned layoffs in order to privatize the plant, have been calling on Borisov and his government to fulfill their commitment to secure the future of VMZ Sopot and asked for the people responsible for the plundering of the once thriving weapons manufacturer to be identified and prosecuted.

They also announced the Prosecutor's Office has already started a probe.

The Cabinet and personally Labor Minister, Totyu Mladenov, pledged to find work for all laid-off employees, estimated at about 900 from a total of 3 200.

Sopot, where the plant is located, is the birthplace of Bulgarian writer and poet Ivan Vazov, after whom it was named. The plant was founded in 1936, and during the communist period was developed into a large-scale military industrial unit.

VMZ Sopot produces anti-tank guided and unguided missiles, aviation unguided missiles, artillery ammunition, fuses. It also manufactures civilian products – it makes diamond tools, abrasive discs and grinding wheels, gas cylinders, food industry equipment, and household appliances.

VMZ Sopot has been in a troubled financial condition in the last few years. In 2007, Bulgaria's Privatization Agency started to sell some of the plant's assets in order to cover part of its debts; some of its assets were also sold at the beginning of 2009.

The bulk of the Bulgarian military-industrial complex was created during the communist period when the People's Republic of Bulgaria made lots of cash by selling arms mostly to developing countries. Together with the former USSR and the former Czechoslovakia, Bulgaria was the third COMECON member specializing in the defense industry.

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Tags: defense industry, VMZ Sopot, military factory, minority, stake, state-owned, Defense Minister, Defense Ministry, privatization, delayed salaries, Delyan Dobrev, Economy and Energy Minister, Podkrepa Labor Confederation, syndicates, Military-industrial complex, Economy and Energy Minister, Delyan Dobrev, Totyu Mladenov, Labor Minister, CITUB, Confederation of Independent Trade Unions in Bulgaria, Podkrepa Labor Confederation, trade unions, staff cuts, privatization, military plant, VMZ Sopot, Privatization and post-Privatization Control Agency, Emil Karanikolov, recovery plan, Boyko Borisov, Prime Minister, BSP, GERB, Strike, Emko


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