BEIJING, June 20 (Xinhua) -- The hundred-year-old Smederevo steel factory, Serbia's biggest steel producer, which suffered losses for a long time, made a miraculous turnaround in 2016 after a Chinese buyer took over the plant.
Founded in 1913, Smederevo steel factory contributed 40 percent of Smederevo's government revenue when it was at full capacity.
According to Serbia's Ministry of Economy, the number of workers employed by the plant is currently around 5,000. In addition, the factory cooperated with 1600 suppliers, adding up to 16,000 employees that are indirectly dependent on the factory.
Just a year ago, a dismal cloud hung over the factory. The outlook was bleak as bankruptcy was looming on the horizon amid huge losses.
The steel plant was sold to a U.S. company in 2003, which then made some moves in reshaping the factory. The improvements did not last for very long. After the global economic crisis struck in 2008, the factory incurred losses for years. In 2012, the owner sold the plant to the Serbian government, leaving the future of the loss-making plant and its 5,000-plus workers in a state of uncertainty.
On April 18, 2016, the Serbian government signed a deal with HBIS Group, China's largest and the world's second-largest steel and iron producer, to sell Smederevo steel factory for 46 million euros. The factory was then renamed Hesteel Serbia.
Almost instantly, the atmosphere at the factory was charged with hope and optimism. Hourly salaries have increased by nearly 10 percent since last July, on top of a special bonus.
After the acquisition, HBIS sent 11 technical teams with nearly 200 experts to Smederevo steel factory to help resolve problems in equipment, technology, information and techniques. The troubled factory made a swift turnaround, becoming profitable in December 2016 after deep in losses for seven straight years. Production and sales in the month reached the highest level since 2010.
According to Serbia's Ministry of Finance, the factory's exports surged in the latter half of 2016, making it the second-largest exporter in Serbia and a main driver of export growth in the country. Smederevo steel factory had 22-percent production growth in 2016, compared with 2015.
Just in the first half of 2016 (before HBIS took over), it saw a year-on-year drop in production of 7.5 percent. This means that more than two-thirds of overall production in 2016 was made from July to December 2016, under the management of HBIS.
The purchase of the Smederevo factory by HBIS has had a great positive influence on the entire steel industry in Serbia. In 2016, Serbia's imports of steel products increased by just 4.7 percent, which is much less than in previous years. The share of the domestic industry in primary consumption was at its highest level since 2012.
Hesteel Serbia aims to increase steel production at the Smederevo plant to 1.69 million tonnes in 2017 (from 1.1 million tonnes in 2016), with output value reaching 800 million U.S. dollars. Enditem (Edited by Wang Xiantao, Yang Qi, kateqiyang@xinhua.org)
A single purchase
