SPAIN: Saez Merino goes bust as textile insolvencies rise
Saez Merino, which made jeans for the Lois and and Caroche brands, has been liquidated, ceasing operations and dismissing 350 workers after four years of painful restructuring culminated in bankruptcy court.
An official from a court in Valencia, Spain, where the company is based, confirmed the liquidation proceedings were underway. Creditors have 10 days to present their claims against the company, he said.
According to union officials, Saez Merino's "heavy debts and inefficient management," coupled with plunging sales in Spain's deep recession, forced it to file for bankruptcy in early October.
As assets are auctioned off, leading union CCOO has asked the company to clarify whether Spanish rival Six Valves has bought its Lois, Caroche and Cimarron brands, as it has been reported.
Saez Merino could not be reached for comment.
The company's liquidation comes after four years of failed restructuring initiatives saw the company launch three major redundancy schemes to cut mounting losses.
The first plan threw the axe on 541 workers in early 2004, triggering widespread protests from workers and unions.
Then, later that year, Saez said it would reduce another 427 jobs, down from earlier plans to cut 600, after Valencia officials intervened.
Finally, earlier this year, the firm cut another 126 workers, leaving 350 employed in two factories.
The massive shrinkage came as Saez failed to survive rising competition from Asian producers, soaring raw-material prices and lower demand from key markets, compounded by the global and Spanish recession.
According to unions, Saez failed to properly restructure the business, accumulating too much debt which became unsustainable in the credit crisis.
The failure comes amid the rising spectre of textile bankruptcies in Spain where many small and midsize companies are facing a major liquidity squeeze.
In addition, Alicante-based textiles Belda Llorens said it is seeking ways to survive "a spectacular fall" in sales and could dismiss nearly all of its 200 workers.
Meanwhile, some observers wonder whether Dogi, the struggling Barcelona stretch-fibres maker, will meet its goal to return to profits in 2008 after years of losses.
By Ivan Castano-Freeman.
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