ECONOMY

Alternative plans for defense industries

The government has prepared a response to the country’s creditors regarding the proposed shutdown of Greece’s defense industries and will forward it to them on Monday in the hope that they will take their demand off the table, kathimerini has learned. The response comprises alternative plans for each of the three industries.

Mining and metallurgical company Larco has two main problems: excessive staff and the burden of old state subsidies. The government’s plan involves either reducing the staff by 20 percent without a pay cut for the company’s remaining personnel or introducing horizontal pay cuts for everyone. On the subsidies obstacle, state consultants will alter the terms of the two tenders – regarding the sale of the plant at Larymna and of the mines – so that they become more independent, although it will be difficult to find a buyer for Larco who would not acquire it without buying the mines too.

The government will also make a point of reminding its creditors’ representatives, known as the troika, that Dutch firm Cunico Resources has expressed an interest in the acquisition of Larco to state privatization fund TAIPED.

In the case of Hellenic Defense Systems (EAS), the troika has also expressed two objections to it being allowed to continue to operate: the need for 144 million euros of additional support to fund a generous voluntary exit program among other things so as to cut staff from 850 to 341 people, and that the forecasts for future revenues, mainly from exports, are not realistic. The government’s response is a plan for a smaller bonus for those who leave the company so as to reduce the total cost of voluntary exits. Consultants have also provided new data that improve the company’s financial figures and further cut the funds needed for the company’s support.

Finally, as regards the Hellenic Vehicle Industry (ELVO), the situation is more difficult, as its main problem is that it does not have any new orders that would safeguard its survival in the future. The drafting of a decent plan for it has also come too late. The government had proposed the funding of ELVO with 27.5 million euros until it completes any orders it has, in the hope that new ones or an investors may come up. The troika deems both unlikely. Athens will now propose the extension of the plan up to end-2014.