URB Suceava Blames China for 35% Sales Drop

URB Suceava Blames China for 35% Sales Drop URB Rulmenti Suceava SA (Romania; 72% owned by Rulmenti Brasov) reported production of both bearings and rings dropped precipitously this year, blaming domestic and export market competition from Chinese bearing manufacturers. All results are quoted via official state-controlled sources. URB Rulmenti Suceava SA was formed in 1983 as Rulmenti Suceava Enterprises; in 1991 the troubled company was reorganized as URB Rulmenti Suceava SA and Rulmenti Barlad took a 61% ownership stake, shared with state and private investors. Finished bearing production through the first half of 2007 crashed 37%, to only 1.2 million from 2006's first half output of 1.9 million. The company also supplies finished rings to other bearing manufacturers, in both domestic and export markets. Ring production fell even more sharply than bearings, to only 649,000 in first half of 2007, from over 1.7 million rings produced in the first half of 2006. URB said Romanian domestic deliveries fell to where they now account for only 7% of the lower sales level -- leaving 93% as exports. The company blamed dramatically increased competition from low-cost Chinese producers for the drop in domestic sales. For the first half of 2007, URB Suceava had sales of 6.9 million RON (USD $3 million), down 34% from first half 2006's sales of 10.2 million RON ($4.3 million). On those sales, the company recorded a first half net loss of 2.5 million RON (USD $1 million), slightly improved from 2006's first half loss of 2.8 million RON ($1.2 million). URB Suceava's capital and operating structure is responsible for posting fewer losses, even as production and sales dropped. In first half 2007, Suceava also sold down inventory by 20,000 bearings, providing some cushion. Other factors were blamed for the losses which continue to mount, year after year, such as antiquated energy-inefficient processes, overemployment, low productivity, difficulty achieving economy of production, structurally higher raw materials costs, sharply higher energy costs, compounded by inability or unwillingness to raise prices or cut overhead. Again, URB blamed most of its problems on dramatically lower selling prices due to increased competition from bearing manufacturers in China. The company's current problems are all the more acute, having posted massive losses for the past several years despite assurances and State aid predicated on some return to profitability. For example, in 2007, URB Suceava was to have returned profits of at least 37.6 million RON ($16 million).