Top 15 car part producers see higher sales, but lower profits

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Profits generated by the top 15 car part producers in Romania fell more than 70% in 2007, year-on-year, after a second wave of investments was started by global giants such as Continental and Michelin in their Romanian plants.
According to a survey conducted by daily Ziarul Financiar, the top 15 companies that operate in the car part industry derived a cumulated net income worth 11 million euros last year, down from 39 million euros, the level reported in 2006.
 
“Investments are recouped over a longer period of time and there are also many who are reinvesting,” the paper quotes Monica Barbuletiu, vice-president of the Romanian Agency for Foreign Investments (ARIS) as saying.Car producers, which, in some cases, have been present on the local market for over 10 years, are currently investing to boost initial production capacities or introduce new equipment and production systems.
Two of the major investors in the domestic car part industry are Continental and Michelin, which hold the top 2 positions in the car part producers’ ranking depending on turnover.
 
Continental’s development and retooling budget this year amounts to 40 million euros, while so far overall investments in the five plants have topped 300 million euros. Following a similar pattern, Michelin has injected around 250 million euros into its three Romanian plants with annual investments worth 40 million euros.
“They have seen major developments in the past two years and many plan to boost their
businesses in the following years, as well. However, we don’t hold data about all the companies,” said Barbuletiu.
 
While in the case of domestic profits most players in the sector are weak, in the case of sales all of them posted growth. Thus, according to the data reported to the Finance Ministry, the cumulated turnover of the top 15 companies in 2007 went beyond 2.7 billion euros, up 37% on 2006.Also, the number of employees at the 15 companies rose by 13% and reached almost 50,000 people.
 
The car part producers’ ranking did not see any major changes, after Continental and Michelin retained the top two positions in terms of turnover. The next positions are held by firms that have a strong presence both domestically and in Europe. The surprise position in the ranking was Italian tyre producer Pirelli, which derived 115 million-euro turnover, up from 17 million euros in 2007.The coming period may bring other producers among the top players, attracted by Ford, which are currently seeking locations for future plants.
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