Due to the lack of a long-term, strategic and financially sustainable perspective of the company Leoni Bordnetz-Sistem GmnH made a decision to first reduce, and then by the end of 2025, production at its factory in Malošišt in the municipality of Doljevac. Exactly 1.900 workers will lose their jobs by the end of the year, it says Katarina Pantelić in the New Economy.
Reason for shutdown factory in this place is that the factory "operates at a significant loss", which does not allow the company Leoni to continue its manual production in this factory at a profitable level. The situation, they say, is further aggravated by the decline of the European automobile industry.
"Nevertheless, the LEONI Group did not take the decision to close the location lightly. The company and employees took various initiatives to stabilize performance, such as improving efficiency and determining the true capacity of the factory. Unfortunately, these efforts did not bear fruit and there are no prospects for a sustainable continuation of production. The competitiveness of the factory in Malošishte is too low to be able to attract new projects," the company stated.
The company has been operating in Malošishte for 11 years
Aware of the weight that the decision to close brings for the workers who lose their jobs, but also for the local community where the factory operates, the company will pay the employees severance pay which, as they stated, is significantly higher than the legal minimum.
"Employees whose employment contracts will be terminated will be paid severance pay in the amount of 50 percent of the "gross 1" amount of the average monthly salary paid in the last three months for each full year of service achieved in the company. Respecting the contribution of the employees and the seriousness of this change, the company in this way provides support that goes beyond legal obligations," Leoni points out.
Have we become expensive labor?
Slobodan Miladinović, a worker at the Leoni factory and a member of the Nezavisnost trade union, tells Nova ekonomija that Leoni has applied for production projects so far, and that the company has received them so far. However, the situation is different now, Leoni did not get any projects, and the labor force in Serbia has become expensive compared to other countries.
"The decision was made, even though Leoni is 16 years old in Serbia. Whenever Leoni applied for new projects in Serbia, he always got them. We were never in a situation where we didn't get them. Now when we applied, we didn't get any projects. They asked for a meeting with the president of Serbia from the headquarters in Germany, because the increase in the minimum wage was announced. However, the president did not want to receive them for an interview. The projects we are working on are for Mercedes, BMW, Jaguar and Landrover," says Miladinović.
According to him, the Leoni company is looking for places where the investment is safe for the next 10 years, as well as assuming that the company wanted to ask the president again for subsidies as help.
Miladinović notes that there is a big crisis in the auto industry in the world. He adds that many companies operating in Serbia have reduced the number of workers, as Leoni will do by the end of the year. The Serbian labor market currently does not fit into the world market because the minimum wage is increasing, and labor is cheaper in Morocco, Tunisia, Egypt...
Salaries in Leoni at the plant in Malošishte were the same as in other factories dealing with parts for the auto industry, claims Miladinović. This is the amount that the factories commit to paying the workers when they receive subsidies - the minimum plus 20 percent.
Chinese majority owners of Leonia - will Luxshare be a "new" factory?
Leoni operates in 23 countries around the world, and in Malošisht produces wire systems for the European automotive industry, which is currently facing numerous challenges and suppliers with reduced demand.
At other locations in Serbia - in Prokuplje, Niš and Kraljevo, the company is also facing rising costs. Nevertheless, these three factories continue to work on their projects.
Two years ago, in July 2023 to be exact, Stefan Pierer, the owner of the Austrian group Pierer Mobility, bought the shares of Leoni. After that, in September of last year, the Chinese company Luxshare took over a 50,1 percent stake in Leoni AG and thus became the owner of the majority of the shares.
It is also speculated that this Chinese company will become the new owner of Leonija with one hundred percent.
The President of Serbia, Aleksandar Vučić, announced at the beginning of June that five factories will soon be opened in the country, three of which are in Nis.
The question arises whether Luxshare will become one hundred percent owner of the factory and, based on its name, actually become one of the "new factories in Nis" that the president announced last month.
Source: New Economy
