Speculation continues to build that troubled Spanish electrical appliance maker Fagor, employing 5,700 people worldwide, will file for full bankruptcy, Spanish Industry Minister Jose Manuel Soria said yesterday while operations in France have now filed for bankruptcy.
As we have reported in the past few weeks, Fagor announced in October that it had launched initial proceedings towards bankruptcy protection while it tried to refinance its debt, which a source within the company said was €800 million ($1.1 billion).
Last week its parent company Mondragon Corporation refused to rescue the firm, which has suffered a slump in sales, and Fagor has not been able to secure refinancing.
"There was a possible plan for the salvation of the company which involved an additional contribution of money on the part of Mondragon, who finally decided that they could not do it," Soria told reporters, "This is the reason why yesterday afternoon the president of Mondragon informed me that Fagor will file for bankruptcy."
Fagor makes washing machines, refrigerators and other appliances at 13 factories in five countries and claims to be the fifth-biggest domestic appliance maker in Europe selling appliances under the Fagor and De Deitrich brands primarily in the UK.
Fagor Brandt France Files For Bankruptcy
Some years ago, in 2005, Fagor bought the French Brandt brand and operations from Israeli company, Elco. At the time Brandt traded as Elco-Brandt.
In recent years the French operations appear to have been trading as a subsiduary of the main Spanish based Fagor Electrodomesticos that, in turn, is a subsidiary of the Mondragon Corporation.
Yesterday afternoon this French subsidiary filed for bankruptcy at a French court near Paris putting 1800 French workers in four industrial sites in the Loir -et-Cher in the Vendee and in the Loiret at risk of redundancy.
News of events spread quickly through the French press with Le Parisien saying that only a last-minute agreement with creditors would have avoided bankruptcy appliance manufacturer Fagor -Brandt.
At the end of an extraordinary undertaking Central Committee on Wednesday morning at the headquarters in Rueil -Malmaison, company management announced yesterday afternoon that the company filed for bankruptcy and asked a bankruptcy reorganisation .
The Minister of Productive Recovery Arnaud Montebourg said Wednesday he wrote to his Spanish counterpart José Miguel Soria to propose a "concerted effort" to try to save all of the Fagor group. " We are ready to work together to support a process of recovery from the financial way" all the Fagor group , said the minister, who wrote to José Miguel Soria after lengthy talks with him on Tuesday .
Reports indicate that the company has sen a decline in the market of up to 37% since 2008, with recurring losses since 2009. Already forced to close its subsidiary in Poland , the manufacturer suffers a massive debt of around 800 million euros. In France , according to the unions ,Fagor Brandt debt amounted to €250 million ,including €142 million with external providers and €108 million from the parent company.
While the unions believe that the company is "viable" French workers have been laid off since late October at the plant in Vendôme ( Loir -et-Cher ,221 employees), where more than 300 people demonstrated on Tuesday ,for the continuity of jobs, as in the other three industrial sites in La Roche -sur- Yon ( Vendée ,339 employees), Aizenay (Vendee ,106 employees) and Orléans (Loiret ,523 employees).
French unions called all the "help" of the state. "We must cut ties with Spain and turn to the state it is the only solution ," explained Philippe Berger of the the CGT Union. He went on to say that, "If the state does not intervene , the consequences will be dramatic : it prefers to burn the factory that leave a working tool ."
The directors of the company were scheduled to be meeting Arnaud Montebourg , the Minister of Productive Recovery on Wednesday in a bid to seek some solutions.
The aim being "to do everything to preserve the industrial base." in a bid to save French jobs and the manufacturing operations. "FagorBrandt ,which has 14% of the appliance market in France, has a future," assured Montebourg before the French National Assembly . Montebourg reaffirming this position on Wednesday morning, the French executive wants to " save as many sites as possible to preserve jobs." "The French and Spanish governments want to unite their efforts to organize a resumption of activities," he added to the meeting of the Council of Ministers.
On Thursday ,another crisis meeting is to be held in Bercy with local and regional elected representatives seeking re-industrialisation of the sites with the help of the state. "The more time passes, the goodwill of FagorBrandt is impoverished . In case of default , we want to know the intentions of our sole shareholder, " warned Christian Legay, the CFE -CGC representative before entering EAC .
"Employees are highly mobilised , because they want them is to continue to fight for the slogan ' made French ' is not a slogan, but a reality, Christian Legay tells French press. "The social issue is still important I just called that FagorBrandt is 1870 employees plus number of subcontractors. So it impacts totalling approximately 3,000 jobs in France. We believe that the business is viable, it 's really a place for the French appliances. It was a real know -how. We have brands that are known sites that are performing. We just need funding and human resources to achieve to meet the challenge."