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Softex has closed down after 79 years of existence

18 January 2016 / 19:01:59  GRReporter
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Perhaps it is a tragic irony but the closure of the once powerful company Softex at a time when the Greek government has undertaken to recover the Greek industry is a reminder that the problems with domestic production are deep, very complex and do not depend on taking individual measures, undertaking initiatives and composing commissions.

Softex is a company with a real business, which until 2014 reported a significant turnover: in 2014 it amounted to 44.3 million euro, in 2013 to 49.29 million euro and in 2012 to 39.47 million euro (it is expected that its indicators for 2015 will be worse because of the summer fire that led to the closure of the factory in Votanikos).

However, there was no development in the end results of the company, as it had been reporting losses for years, as follows: in 2014 they amounted to 4.98 million euro, in 2013 to 1.4 million euro and in 2015 they will probably be even greater in view of the fire in the summer and the cessation of production. This permanent downward move indicates the final decision of the multinational Bolton Group to close its subsidiary in Greece, which the company management also stressed during its meetings with representatives of the union of workers.

And how could it be different since the three large companies in the paper industry were forced to close down because of persistent losses - Diana Panos Zeritis last year and Delica (SCA or the former Georgia Pacific) in 2013. Now with the closure of Softex, the branch that once met the demands of the entire Greek market will no longer have a measurable production activity in the country and imports will have to satisfy market demands.

A simple but inexorable reality in the business world hides behind this closure of companies, namely that when competitive production is cheaper, inevitably you will be forced to put up the shutters. A typical example is Panos Tseritis who developed his paper producing company in Egypt in a normal manner, taking a leading position in the local market at that. One finds such cases in Bulgaria, Hungary and other countries. Another company producing paper and packaging, BIS, owned by the family of Ioannis Filippou, last year also announced the termination of its activity, stating that importing paper pulp and finished packaging products was more cost-effective than maintaining its own production factory.

Bulgaria at the core of events

According to some sources whose information has soon to be confirmed or refuted, the Italian multinational Bolton Group that owns the Greek Softex is planning to move the production of Softex branded products to Bulgaria. The official position of Bolton Group and its subsidiary company Bolton Hellas is that the reason to terminate the activities is the summer fire that destroyed the factory in Votanikos. Moreover, according to information from the Ministry of Labour, the company, as it claims itself, is dissatisfied with the incomplete insurance compensation. Sources from the insurance industry, however, state that the four particular insurance companies paid in mid-December compensation amounting to 8.5 million euro and describe as unfounded the allegations referred to in the notice of the Ministry of Labour.

The history of a former industrial giant

For those who remember the long history of Softex (or the Athens paper mill), this is not the first time in the history of the company, once leader in the Greek market for paper production, that a crisis is the result of a devastating fire in its factories. In the mid 1990s, the Softex plant was again destroyed by fire and the money from the compensation was used to renovate the equipment. This was the time of the second collapse of Softex (1997) which was founded in 1937 by Konstantinos Kefalas. In 1984 it became a state company due to the problems following a turbulent development in which not only the Athens paper mill itself played a major role, but also the political and publishing elite of that time. Underhand dealings were in full swing and the battles between politicians and publishers probably played a role in the decline of the company, although it had other problems too, such as the huge loan used to be included in the group of problematic companies and transferred to the public sector. Characteristically, the Kefalas family tried to appeal the decision and sought their rights not only in the Greek courts, but also in the Court of Human Rights.

In the organisation for the recovery of companies, the Athens paper mill followed the fate of troubled companies, while the numerous favours and political and trade union bribery presented the company with another impasse. In 1999, the control of the company was transferred with a commotion to an investment group involving investors such as Bolton Group, Goldman Sachs, Lochridge, Bain and Forlin, Bolton and subsequently Bolton acquired the full control of the firm, as the management of many shareholders totally failed.

Implementing a generous rescue plan, combined with the closure of the plant in Drama in 2002, but with a drastic staff reduction (from 1,275 in 2000 and 2,250 in 1999, the employees were reduced to 300), the new shareholder managed to return the company to profit in 2004, albeit with a reduced turnover. This rise, however, was clearly temporary, as the Athens paper mill had problems again in 2006.

Tags: SoftexCompany closureBolton GroupPapermaking
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