US investor plans selling business in Bulgaria
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US investor plans selling business in Bulgaria
American Standard restructuring has impact in Bulgaria
American Standard Companies, one of the biggest US investors in Bulgaria, has announced plans to sell its business in Bulgaria by the end of autumn 2007.
In a February 1 statement, American Standard said that the board of directors had approved a plan “to separate its three businesses this year”. The company will focus on its global market-leading air conditioning systems and services and will spin off its global vehicle control systems business.
American Standard plans to sell the third segment, bath and kitchen business, by early autumn 2007. This means that American Standard will sell its two plants in the Bulgarian town of Sevlievo, Ideal Standard Bulgaria and Ideal Standard Vidima, which make sanitary ware and bathroom fixtures.
The sale process is expected to begin this month, the statement said.
“As part of our initiatives to rebuild Bath and Kitchen’s profitability, we have announced plans to consolidate manufacturing operations and sales functions in Europe. These plans will result in the elimination of about 210 to 250 jobs and cost about $29 million.”
Once completed, the move will generate annual savings of about $14 million, American Standard chairman and chief executive Fred Poses said in the statement.
American Standard came to Bulgaria in 1992 when it bought 51 per cent in state-owned sanitary and industrial fittings company Vidima.
In 1996 American Standard built the Ideal Standard plant as a Greenfield investment. Today the two Sevlievo based plants give work to more than 3600 local workers, making the small town of Sevlievo a positive example of foreign investment in Bulgaria. So far American Standard has invested more than $125 million in Bulgaria. The Sevlievo plants are American Standard’s biggest production units in Europe.
Approached for comment by The Sofia Echo, US embassy press attache Shelly Seaver said: “We regard the issue as a private company matter”.
Speaking on February 6, Seaver said: “It is too early to say what American Standard will do about its plants in Sevlievo and I cannot say how this will reflect the investment climate in Bulgaria”.
Sevlievo mayor Yordan Stoikov told The Sofia Echo: “First, I do not think that American Standard is withdrawing from Sevlievo.
American Standard said that they had engaged investment bank Lazard as a financial adviser. I will not comment any further because there is big money involved in the issue”.
As to the social impact in Sevlievo, Stoikov that there was no anxiety among workers.
“Of course, everyone is carefully monitoring the information, which is only natural,” he said. There had been no interruption in payment of salaries, and business was continuing as usual.
Bulgarian Chamber of Commerce and Industry deputy chairperson Tsvetan Simeonov suggested three possible reasons for American Standard’s decision. “First, American Standard might have received a good offer from a potential buyer for the Sevlievo plants. Second, American Standard’s experts might have found a better investment opportunity for the money they would receive for the Sevlievo factories. Third, it could be a combination of the first two,” Simeonov told The Sofia Echo. “The future buyer has every reason to continue production in Sevlievo because of its great potential. It would be very unfortunate if the Sevlievo factories stop working, and people were left without jobs, because they are skillful and qualified workers,” Simeonov said.
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