Spanish home appliance manufacturer Fagor, which is planning to launch a refrigerator production joint venture with a Chinese partner in Poland, is battling to stave off the imminent threat of bankruptcy.
In mid-October San Sebastian-based Fagor Electrodomésticos, part of Spain’s giant cooperative industrial and retail group Mondragon Corporation, filed for bankruptcy protection from its creditors as it tries desperately to refinance its debt. It is estimated to owe overall around €800m (£672m).
The Basque country firm, with five Spanish plants and eight others in France, Poland, China and Morocco employing almost 5,700 worldwide, has seen its sales fall by more than a third since 2007 reaching €1.17bn (£1bn) last year.
In September, Fagor announced its Polish offshoot FagorMastercook had agreed a €56m (£47m) joint venture with the Chinese appliance maker Haier to create 500 jobs at a new plant in Wroclaw. To be launched next June, the factory was initially due to turn out 500,000 refrigerators annually, raising this to one million units by 2019.
Then, late in October Fagor Mastercook also filed for bankruptcy protection from creditors at the Spanish commercial court in San Sebastian. There is now uncertainty over both the joint venture plan and the future of the subsidiary’s four existing plants in Wroclaw.
Fagor, claimed to be Europe’s fifth ranked appliance manufacturer, was dealt a further blow when its appeal to Mondragon Corporation for direct financial assistance was rejected. In statement, the parent group said bluntly that Fagor’s proposal was not viable and bailing it out “would not serve to secure its business future”.
Mondragon said a “fundamental issue” is the capacity of Fagor Electrodomésticos to “compete in the global market and adapt to all the changes taking place in the sector with new competitors and new rules of the game”.
Explaining Mondragon is “an association of autonomous and independent cooperatives” and not a holding company, it insisted “responsibility for business management lies entirely in each one of them”. In recent years, Mondragon stressed, it has already provided solidarity and cooperative support to Fagor worth €300m (£252m).
Nevertheless, Mondragon said it would do all it could in the coming months to help Fagor “safeguard the maximum number of jobs in sustainable business units”.
A crisis meeting between Fagor, its parent group, the Basque regional government and provincial authorities keen to safeguard jobs was called by the government yesterday at the regional centre of Vitoria.
Meanwhile, angry Fagor workers have been staging demonstrations protesting at the threat of plant closures including a continuing lock-in at the plant of Fagor’s Edesa offshoot at Basauri in the Basque Country.
Parent group Mondragon comprises 289 separate companies, of which 110 are cooperatives, employing in all 80,320. In 2012, the corporation posted combined turnover of €12.9bn (£10.8bn).