Will the government help out the country's embattled glassmakers?

Makers of glass, one of the Czech Republic’s best known exports, have been facing serious problems in recent months. One week ago, the biggest Czech glassmaker, Bohemia Crystalex Trading, was forced to close down another factory due to severe financial difficulties. Now, the Finance Ministry has for the first time suggested it would be willing to help the glassmakers financially.

Photo: CTK

In September, Bohemia Crystalex Trading, which produces 90 percent of Czech glass, closed two of its four plants and let nearly 2,000 employees go, in order to stay afloat. The company’s management later struck a deal with its creditors and applied for a moratorium under the insolvency act, securing operations in the company’s two remaining plants.

Although the Finance Minister Miroslav Kalousek said then that a bailout was not an option, he changed his mind recently, when one of those two factories was also forced to close down. On Tuesday the minister suggested that a bailout for Bohemia Crystalex Trading was not entirely impossible. However, the head of the glass workers’ labour union František Kuric says the state should have intervened much earlier:

“I don’t believe Minister Kalousek when he says he wants to help us and I will tell you why: the state could have negotiated with the creditors to keep the money in our accounts so that we could keep the production going until a tender was announced. We had enough money until the end of December to pay our employees and continue to produce the orders we had. So I personally think the state could have intervened earlier, and I think Mr Kalousek’s statement is just an excuse.”

Photo: CTK

The finance minister said that a financial injection from the state would have to be based on guarantees that the companies’ losses would not deepen and that renewed production would gradually start making a profit. But according to František Kuric, that is unrealistic when the company is already going through bankruptcy proceedings. He also points out that it is much more expensive to start production from scratch than to keep it going:

“Just starting production would cost tens of millions of crowns. So the inactivity of the state will be very costly for any potential investor who would like to renew production. And it will also be hard to renew the trust of our customers. We had orders that are not being fulfilled and we know that some of our customers have already turned to our rivals, even though they don’t produce such high-quality glass.”