Four fifths of Czech companies have seen a decline in commissions in the second quarter of this year, and 23% of them are considering halting production if the situation does not improve, according to a survey conducted by the Confederation of Industry of the Czech Republic.
“The survey does not indicate any positive changes at the moment that might suggest that the recession is nearing an end,” said Boris Dlouhý, head of the confederation’s economic policies section.
Aside from stopping production, some companies are also planning to make other future changes. Five percent of companies are not ruling out moving production abroad. At first glance this might not seem like many, but the confederation notes that “when it comes to the impact on the local economy, it is a negative signal, especially in light of the fact that a number of companies might halt production”.
Thirteen percent of Czech companies are considering selling parts of the business, and 12% are considering mergers. According to Dlouhý, the companies most at risk are those oriented at export – the automobile industry, machineworks and smelting plants. Michal Mejstřík, an economist with the National Economic Council, expects that carmakers will be able to get by thanks to the scrapping fees introduced abroad. But he says exporters will experience the biggest problems.
Aleš Bartůněk, president of the American Chamber of Commerce in the Czech Republic, says the only chance of glassmakers, which have already halted production, is in the proper implementation of the insolvency law. “That would enable firms to be not only liquidated, but also revitalised,” he said.