The policy mix imposed on Greek industry led to a 4 percent year-on-year contraction in output in March, against 5.4 percent growth a year earlier, according to figures released yesterday by the Hellenic Statistical Authority (ELSTAT). The decline is mainly due to the 23.8 percent drop in mine and quarry output and the 2.5 percent fall in manufacturing production.
It is clear that local industry is running out of steam, just as the country needs to reorganize its production model to emerge from the crisis.
The “internal devaluation” has not led to a strengthening of enterprises’ competitiveness. The extended uncertainty of the past year and the credit crunch that the capital controls imposed, along with overtaxation and high energy costs have led to drop in output, job losses and lower salaries, according to industry experts.
The closure of leading companies such as IMAS, Softex, VIS, Halyvourgiki, Hellenic Steel, Viomek, Nutriant, Pepsico-Ivi, Neoset, Shelman and Delica is the result of the above policy, observers note. A new cycle of deindustrialization is seen to have started, which is also hitting firms in the service sector associated with industry.
Market insiders fear that the battle for survival, especially among export-oriented companies, is expected to become even tougher with the imposition of more tax measures and the increase in social security contributions. One such case is the prospect of the increase in the Special Consumption Tax on natural gas, which currently raises its retail price by 40 percent. A hike in the Special Consumption Tax on diesel will likely further harm the industrial sector as well as those of transport and agricultural production.
Any reduction in production costs could have an immediate impact on the benefit to industrial firms, as is evident in the case of steel company SOVEL, a part of the Athens-listed Viohalco group.
Company sources told Kathimerini that since March, when the firm signed a new agreement with Public Power Corporation for lower electricity charges, working hours have been extended from eight hours per day to 11-13 hours.