SKF Begins VMZ Restructuring, Cutbacks

SKF AB (Sweden) has begun implementing the long-planned employment cutbacks at the VMZ-Sopot bearing plants acquired last year from the Bulgarian State Privatization Agency. Now renamed SKF Bearings Bulgaria EEOD, SKF purchased the former state-run VMZ bearings manufacturing facilities in March 2002. • article and history: SKF's VMZ-Sopot acquisition As part of the acquisition, SKF agreed to pay USD $6.5 million in cash up front, with $6 million invested on improvements. In addition, however, SKF had to agree to keep all of the plant's bloated payroll legacy of 1,700 workers for a minimum of one year. During the second and third years, SKF will be allowed to gradually slash payroll by up to 70%, to under 500 workers. The state's intention for limiting the cutbacks was simply to try to smooth the effect on local unemployment and the overburdened government support programs. VMZ, or Vazovski Mashinostroitelni Zavodi Co., was a complex of massive machine works and factories around Bulgaria, including hundreds of smaller, nearby state-run businesses which fed VMZ with materials and partially finished goods. VMZ produced artillery shells, ball bearings, consumer products and specialized machinery. SKF acquired only the bearing-related facilities. In the 1980's and 1990's VMZ was vastly overstaffed, even by state-run, communist-era standards. The VMZ works employed more than 25,000 people in the mid-1980's, shrinking to around 13,000 in the mid-1990's as Bulgaria's financial crisis and the demand for weapons in eastern Europe, especially for VMZ's artillery shells, virtually disappeared. In the months since the initial moratorium on employment cuts expired, eBearing has been told SKF let go at least 400 workers, and probably more. At the same time, however, SKF has been holding up its end by investing heavily in the facilities. Environmental, production, efficiency and engineering issues are all being addressed in addition to worker education and training. SKF considers VMZ important because it is a well-known and key supplier of deep-groove ball bearings throughout eastern Europe. VMZ plants in Sopot, Kalofer, Karnare and Bogdan produce 22mm to 100mm diameter deep-groove ball bearings. SKF confirmed to eBearing that VMZ can also produce a very limited and inconsequential selection of tapered roller bearings.