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Production renewed in the “Smederevo steelworks”

Sat, 04/07/2012 - 17:32 -- MRS

The production has been renewed in what was until recently biggest Serbian exporter – Smederevo steel mill, and as the majority holder, the Serbian Government will open a tender next week, looking for the strategic partner. Many foreign companies are interested in this metallurgy giant, Minister of Economy Nebojsa Ciric told the International Radio Serbia, but would not specify from which countries they come. According to him, it should mean a new privatization process and developmental cycle. More in the report of Jelena Milenkovic.

As the owner and manager of the Smederevo still mill, the Serbian Government has engaged the problems that are burdening this company, which is of the strategic importance for the whole country. It is clear that only the partnership with a strong international company can provide the stability of the production process and regain the reputation of the factory that was until recently the biggest exporter in Serbia. Namely, in January this year the Government bought off the steelworks from the previous owner US Steel, for the symbolic price of one dollar, with the goal of preserving the production and working places of some 5,500 employees. This was a visionary move – maintaining the production so that the future privatization would be successful. Also, such decision had a social dimension. The state has obtained complete base resources and net circulation assets in the value of 100 million dollars, and most importantly, it provided social security for the employees.

It is becoming increasingly more certain that making the strategic partnership with a foreign company that sees the investment in the Serbian steel mill as a good developmental chance would be the best choice. According to minister Ciric, the chances of realizing it are good, and that the strategic partner will be found in the first half of 2012. It would enable the development not only for the Smederevo steelworks, but for the entire metallurgy sector.

The national media speculate that the partner for this company could come from China or Japan, as some companies from those countries have expressed interest for investments. These two Asian states are powerful economy forces that control the international steel market, have huge production, big exports and are ready to invest in new markets.

Economic analysts assess that in case of failure to find the foreign partner, it could be an additional burden to the state budget, around 100 million euros annually. However, if the Government had not made the right move and help the still factory, the losses in the Serbian economy would have amounted to double the amount of the company itself. Shutting down the giant in Smederevo would mean the increase of the import of metal products of 30%, and the disturbances in the market that would result in additional lay-offs, i.e. the very scenario that the Government was aiming to prevent. Judging by the current turn of events, this year will be the new beginning for the Smederevo still mill. This company has the developed cooperation with the Serbian Railways, train coach factory in Kraljevo, motor industry in Rakovica, Belgrade, as well as other companies in the metallurgy sector.

The management and employees of the steelworks expect the strategic partnership to enable starting the production of steel sheets to be built into the vehicles manufactured in Kragujevac, which means the expansion of the business and certain profits. The workers are satisfied because their wages are paid regularly. The production is going on without holds, the raw material has been acquired and the chances of successful privatization are high, it has been confirmed by President of the union Sinisa Prelic. According to his assessment, the fact that the company is working increases the chances of business expansion and regular salaries. These days the management of the factory has signed several contracts on cooperation with companies from Italy and Turkey. Over the past ten years, during which the company was owned by the US Steel, the workers have been trained to work in new conditions and in line with European standards, says Prelic. The Smederevo steel mill has the capacity and trained workforce, ready to face the challenges of the new privatization, and the employees are aware of the responsibility they have in realizing the prospects of this company.