By Anthony O. Miller
The General Manager, Petros Vrahimis, of the Cyprus Forest Industries yesterday guaranteed the financial security of any workers made redundant by a plan to close two of its mills.
“Nobody will be left in the street,” he said.
To cushion the layoffs, the CFI, in which the government is the majority shareholder, plans to pay each of the possible 50 workers large sums from its provident fund. While Vrahimis declined to state exact amounts, his figures show each will average well over £50,000 from the provident fund from profits made on the stock exchange last year.
The CFI also plans to pay each laid-off worker an extra sum, based on years of service and salaries, he said. And the Ministry of Labour’s redundancy fund will give most of them a one-off payment of “between £15,000 and £19, 000,” he added.
Each laid-off worker could average a final pay packet ranging from well over £65,000 to as much as £100,000, according to Vrahimis’ estimates.
“I was very worried what would happen to these people. They have spent most of their lives here. The majority who are going to lose their jobs have 15 to 25 years here,” he said.
The board plans to meet on September 12 to rule on the layoffs and “as a gesture of good will” is inviting employee unions Sek and Peo to discuss them before it meets.
“There is no ill will from the company, no intent to cheat anybody. We want to make the break the most amicable way.” But the two mills, which employ 50 workers, are simply losing several hundred thousand pounds a year.
“The problem is a lack of timber from Cyprus forests. There are plenty of trees … but they are not for cutting to supply lumber mills under Forestry Department conservation policies,” he said.
Those policies cut the CFI’s annual state timber quota from 34,000 tonnes in the 1980s to 12,000 tonnes last year and 8,000 tonnes this year – too little to keep the chipboard plant and sawmill running full tilt, he said.
Additionally, both plants are already money losers because they are 25 years old, outdated, and their capacity is very low. This makes it unwise to modernise them, he said.
Total turnover in 1999 was roughly £10 million, with £500,000 profit. That would have been higher, except that they have been “totalling losses” on the plants facing closure, he said.
“The cost of producing (chipboard) has been much higher than the cost of imported chipboard. So if we close the two plants and import 100 per cent of the chipboard, we’re going to realise a greater net profit,” Vrahimis said.
Vrahimis said he tried unsuccessfully to get around the Forestry Department’s dwindling annual quotas by buying Russian timber.
“We also tried to raise a type of bamboo (for chipboard) … but there was a problem with water. This type of cane needs a lot of water” and Cyprus is in its fifth year of drought.
“I thought sewage water would have been available, but it was not … and we needed about 3 million tons (3 billion litres) of water per year” to raise the bamboo, he said. “So we were not able to solve the raw material problem, ” he said.
“But you have to be a realist,” he said. “We invested quite a lot of money” to modernise the CFI’s profitable plants. “As a result, we created additional jobs … (and) were able to reduce the layoffs” to 50 from 70 proposed last year.
After the layoffs, “the company will be left lean to compete in the market, ” he said, since except for the two loss-making plants, “financially we are very sound very strong.”
“But if we don’t take this step now,” he said, “the future of the other 150 employees will be at stake. So in this way you are protecting the rest of the employees and the company.”
