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Varga seeks to save Dunaferr jobs [Updated]

History

Could the government save the day and prevent the loss of 1,500 jobs at the Dunaújváros-based ISD Dunaferr steelworks? National Economy Minister Mihály Varga has promised to look into the possibility, which would certainly save the town from a financial catatrosphe – and certainly win the Orbán administration a few votes in next year’s parliamentary elections.

Last week, Oleg Mkrtchan, CEO of Dunaferr’s Ukraine-based parent company ISD Donbass, announced the laying off of some 1,500 staff from the Dunaújváros operation; this would represent just under 20% of the entire workforce there.

The decision on the staff cuts came about due to Dunaferr’s losses mainly related to low operating efficiency. Mkrtchan had stated on August 9 that over the past two years, ISD Dunaferr had incurred losses of HUF 50 billion (approximately $224 million), “as a consequence of the low operating efficiency compared to our competitors,” as quoted in Hungary-based business website Portfolio. Donbass privatized the company in 2004.

Donbass management launched official procedures related to the dismissals on Thursday, August 15.

However, hope may have arrived: Yesterday Varga verbally swooped onto the scene, telling Hír TV that “I think it is a fair offer from the government to say that we should sit down and talk about how we could reverse the bad privatization [of ISD Dunaferr] of 2004.” Varga went on to state that he would begin discussions with ISD Donbass ownership “in the next few days” on a government takeover.

Update: On Wednesday, MTI reported a couple of reactions from the Dunaferr side on a proposed deal between the government and the Hungarian business. ISD Dunaferr spokesman András Mezőközy call news of a government buyout offer a “surprise”, and deferred on further comment other than to state that acceptance of such an offer would be made by company owners, rather than management. 

Dunaferr CEO Evegeny Tankhilevich told the news service that he’d heard nothing about any intention to nationalise the company and added that management would certainly turn down such a chance.

– Material by Gabor Pakozdi was used in this report

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