EMCC European Monitoring Centre on Change

Vipap Videm krško

Company/Organisation:
Vipap Videm krško

Geographic Location

Country: Slovenia
Region: Slovenija
Location of affected unit(s): Krško

Company

Sector: Manufacturing
Manufacture of wood and paper products, and printing
17.11 - Manufacture of pulp
Number Employed: 806
Group: Češkoslovenska obchodni banka

Employment Effects

Announcement Date: 30-03-2006
Planned Job Reductions min: 366
Planned Job Reductions max: 366
Type of Restructuring: Bankruptcy/Closure
Employment Effect Start: 31-05-2006
Foreseen End Date: 31-10-2006

Additional Information

Vipap is Slovenia's largest paper manufacturer. In 2006, the company will close its cellulose pulp unit for environmental reasons. Background to this decision is a sharp increase in taxes on environment-intensive production a number of years back. The unit was to be closed already two years ago but after negotiations with the owner and trade unions, the government granted the company a two year grace period and an environmental tax break, up to the enforcement of European Directive 96/61/EC concerning integrated pollution prevention and control (IPPC). The intention was to enable restructuring of production in line with environmental standards and to resolve the problem of redundant workers. Whereas the company now claims it never received the promised government assistance, the government claims that the owner did not show a real interest in solving the problem. The company will offer about EUR 8 million in compensation to dismissed employees. However, the trade unions are demanding much more. Employees have sued the company for higher compensation. The exact number of redundant employees will be known by the end of April 2006. The lay-offs will begin by the end of May. On June 9, 2006, the management board announced that the cellulose pulp unit will be closed down already by the end of August 2006, not in October as originally planned. The reason is the lack of raw material and negative impact of the cellulose pulp unit on the performance of the whole company. The latest numbers about the surplus employees are the following: By closing down the cellulose plant 366 jobs will be lost. Of that, 191 employees with permanent contracts will lose jobs, for another 34 contracts are terminated with the closing down of the unit. For the remaining 141 employees, who will also be dismissed (the exact modalities are not yet clear), it is expected that about 116 will be re-employed elsewhere in the region, while 25 not. Therefore, the assessment is that the local town of Krško will face an altogether net loss of approximately 250 jobs.