Crown cuts into Czech glass sector

The Jihlava company, which employed 1,200 after dismissing 220 staff over the last two months, is one of the most extreme examples in a sector that has been rapidly transformed from riches to rags by the strong crown and a sharp decline in exports.After the car industry, the glass sector has traditionally been the second biggest exporter in the country with foreign sales of Kc 35.9 billion or around 70 percent of total production."The Czech glass industry, which was speeding ahead like a Japanese express train until now, has clearly had its growth braked by last year's stagnation in the U.S. and in Western Europe," said Stanislav Kasa, a lecturer at the Vysoka Skola Chemicko Technologicka in Prague and a member of the Czech Glass Association. "The ever-firming Czech crown has contributed as well."

Jihlavske Sklarny Bohemia CEO Radomir Matejcek echoed the complaint about the crown. "We did not count on the dramatic fall in demand for handmade crystal products or the unprecedented firming of the Czech crown," Matejcek said. He added that the company is still seeking ways to continue following last Monday's bankruptcy decision.

Jihlavske Sklarny Bohemia is far from alone among glass producers that have folded or are struggling to survive.

The producer of glass for lighting, Osvetlovaci Sklo-Lares in Valasske Mezirici, North Moravia, was declared bankrupt in mid-June, after a petition was filed with the court by company executives due to mounting financial problems. Most of its 350 employees are now at home taking a forced holiday. For the moment, the company is only able to finance production of glass for car reflectors. "The company exports 70 percent of output, and the strong crown alone causes a loss of Kc 1.5 million a month," executive director Jaromir Zurek said.

Another reason for the problems is a significant reduction in purchases of reflectors by a French buyer, which supplied the U.S. following Sept. 11. Last year the company's sales reached Kc 160 million. Nearly 60 percent came from lighting glass sales with the reflector business responsible for the rest.
The largest domestic producer of heat-resistant glassware for cooking, Sklarny Kavalier in Sazava, wants to scale back its production at Hostomice, North Bohemia, with the likely loss of 50 jobs. It too blames the strong crown.