Machine plant near standstill as demand dwindles in war-torn Donbass

Take note – story published 9 years ago

The machine-building plant Jelgavas mašīnbūves rūpnīca (JMR) is facing a possible forced shut-down of production because the bulk of its orders from southeastern Ukraine’s coal mining fields and metallurgical plants have ceased due to the war-torn region’s shattered economy, where demand for the Jelgava-produced heavy equipment has all but disappeared.

As JMR board chairman Pēteris Bila told LSM’s Russian-language service journalist Sergejs Pavlovs, “nothing has changed in the past year.”

“Altogether we are doing quite poorly. Ukrainians are fighting, they can’t work. It’s complicated over in Russia, too – along with the embargo there’s not much purchasing going on. Could that cause us to have to shut down JMR? Yes, it could,” he admitted.

“To tell the truth, we’ve had enough of the whole thing, there’s no normal work, just problems. Here’s the war in Donbass, here the ruble’s value is plunging, here there’s a new certificate required and certain equipment can no longer be imported,” he lamented.

In better years JMR reached an annual turnover of €14 million, which fell by a third last year from €1.18 million to only €800,000. The fall will undoubtedly continue this year, expects Bila. Currently the plant works only three days out of the week, supplying small amounts of product to Egypt, Iran and Kazakhstan. Although no mass termination of workers is expected, about ninety are still employed at JMR, mostly workers of retirement age or close thereto.

But to reorient to western markets would require a change of technologies, costing many millions of euro in investment which the owners of the factory do not have. Moreover they lack the conviction that the modernization would help JMR elbow its way into an already troubled sector.

“All hopes are on peace in Ukraine. If the war were to end, demand for our products in Donbass would again be great, as they’ll have to rebuild the whole industry,” the JMR chief told LSM.

As reported, the city of Jelgava's otherwise factory-friendly business climate is suffering from a number of plants troubled by the complicated political and economic relations with Russia. Mayor Andris Rāviņš is left keeping his fingers crossed for circumstances to improve far from home, as the city he runs tries to overlook such distant threats to its job-base as it celebrates the 750th anniversary of its founding.

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