The German truck and bus manufacturer MAN was forced to send about 11,000 employees on unpaid leave due to the Russian military invasion of Ukraine.
The Volkswagen Group-owned company said on Wednesday that its facilities in Munich and Krakow, Poland, have been halted since March 14 due to the cessation of supplies of electrical wires produced at Ukrainian factories. At three other MAN sites, production volumes have been reduced, including at the engine plant in Nuremberg.
“Suppliers of electrical wiring for trucks cannot produce it at Ukrainian enterprises or can produce it in very limited quantities,” MAN said in a statement. “As a result, we could lose production for several weeks, which will sharply reduce output figures in the second quarter.”
The company said it has already started looking for additional sources of truck wiring harnesses in other countries.
“However, this will take several months,” said Alexander Vlaskamp, chief executive officer of MAN.
The company notes that its employees will be transferred to a reduced working hours scheme, in which MAN compensates them for 80% of lost income from both its own and state funds.
The problems of Ukrainian suppliers previously led to disruptions in the work of Volkswagen and BMW enterprises.
Most of the Ukrainian enterprises for the production of electrical wiring, located in the western part of the country, have resumed work, the Financial Times newspaper writes, citing representatives of several enterprises.
Thus, the German Leoni, which owns two factories in the west of Ukraine, has already reported that both of its enterprises have returned to work.
Other companies, including Aptiv and Kromberg & Schubert, have resumed production, FT sources say.
Philip Morris Ukraine, British American Tobacco, JTI and Imperial Tobacco in Ukraine are mulling the possibility of decreasing production and later closing the tobacco factories on the territory of Ukraine over the adoption of the legislative requirement on the government regulation of markup on their goods by the Verkhovna Rada.
“The fact of adoption of this bill will have serious consequences for the industry. This is the absence of a transition period and implementation mechanisms. In the near future, this will expose our business to risks. We will be forced to consider the issue of producing our goods at other factories, since we do not even fully understand how to execute this bill,” Director of British American Tobacco Ukraine Simon Welford said at a press conference at Interfax-Ukraine on Wednesday.
He said that bill 1049, passed at second reading, introducing a single account for paying taxes and duties, the single social security contribution, sets a fixed markup for wholesale and retail traders of tobacco products at 7% and 13% of the maximum retail price per package.
General Manager of Imperial Tobacco in Ukraine Rastislav Cernak said that these legislative initiatives could entail an increase in the volume of illegal trade in tobacco products from 8.4% to 20%. At the same time, he said that over the past three years, the volume of the “shadow” tobacco market has grown by about seven times and this annually cost UAH 5 billion the national budget.
At the same time, Cernak predicted a 25% reduction in cigarette production. “Such a 25% drop, according to our estimates, will cost the national budget about UAH 7 billion. Therefore, we urge the Verkhovna Rada to revise bill No. 1049 and remove the amendment that establishes the regulation of the markup. We request that transparent lawmaking in Ukraine along with an open dialogue with major investors start working, as such significant changes in taxation force us to rethink our business in Ukraine,” he said.