Vitkovice Heavy Machinery has resumed production but is cutting 350 jobs.
Jaromir Schmid, chairman of the Board of Directors, said that despite many changes in its current form, the company is not able to survive. “Some parts of the company are viable and will continue to operate, but some are not salvageable in the current market conditions. Unfortunately, they must be closed, and their employees parted, with all the formalities due to them under the collective agreement and Czech legislation,” Schmid.
The company was no longer able to pay its obligations, especially for energy supplies. Production stopped at VHM about three weeks ago, when energy suppliers disconnected electricity and hot water. The Board of Directors of the company itself filed an insolvency petition. The company has approximately 800 employees who stayed at home with 80 percent of wages.
This should be followed by the resumption of operation of the forge and hoop shop. “But they will not be operated directly by VHM, but by a new company that will rent both parts from the insolvency administrator. The foundry, molding, and dry cleaning plant, which are completely unprofitable and not ncompetitive, will be permanently shut down,” the spokesman said.
The company will lay off in all parts. Due to the pandemic, coronavirus sends notices by post.
VHM produces steel and steel products. They ended once in bankruptcy, two years ago, when the company still belonged to the engineering holding of the Ostrava businessman Jan Světlík. During the reorganization, the company was gradually taken over by SPV VTK, the founder of the Czechoslovak Group Holding Jaroslav Strnad. By investing money in VHM and securing its financing, the company was able to resume production. Now it is the majority owner of VHM Strnad holding CE Power Industries.
Miroslav Solanský, chairman of the OS Kovo Basic Organization of the Heavy Mechanics of Vítkovice, said that the trade unions had come to terms with the situation a few weeks ago. A company of this size with so many employees could no longer continue. “It is no longer possible to finance it. It will be divided into smaller operations, and some will become independent companies. We are addressing social impacts on employees, trying to find employment in the neighborhood or in new companies that will be established,” said Solansky.