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Herz Salami unable to finance regular production, cuts job

  The Herz Salami Factory, one of Hungary’s oldest and most illustrious salami producers, has been forced to lay off 130 of its 450 employees because it lacks sources of credit to finance normal production, the daily newspaper Népszabadság reported on Thursday.

Herz Salami Factory CEO Endre Nagy told the newspaper that the company has been unable to come to an agreement with its sole creditor, CIB Bank, on the restructuring of HUF 4 billion (€13.75 million) in debt, including an additional working capital loan necessary for undisturbed operations.

Nagy said Herz most of the debt was inherited when Herz Salami changed hands and separated from Pick Szeged, Hungary’s biggest meat company, five years ago. They paid off more than HUF 1 billion of that debt since but got into problems as banks changed to a much stricter lending policy with the financial crisis.

The Herz Salami Factory CEO remarked that the global financial crisis has made it impossible for the company to obtain sufficient credit to finance regular production.

Nagy said that demand for Herz salami has not diminished as a result of the global economic crisis, adding that the European Commission’s decision last week to grant the company’s flagship product, Budapest winter salami, “protected designation of origin” status has generated an increase in orders.

Herz Salami Factory recently received word that government decrees that would make it possible for the company to obtain state support to companies hit by the crisis are expected to be adopted within the next couple of weeks.

The Herz Salami Factory, which was established more than 120 years ago, had revenue of HUF 7.15 billion in 2008. Export sales, mostly in neighboring countries, a well as Germany, Sweden and the Netherlands, generated revenue of HUF 1 billion last year. (MTI-Econews)