Wednesday, October 22, 2014

Dawn of the Dacia: how Romania’s no-thrills car maker raced ahead

Once the butt of car jokes, demand for cheap, reliable vehicles have helped Dacia become Europe’s fastest-growing brand

Kit Gillet in Mioveni
The Guardian, Tuesday 21 October 2014


Walking through the assembly plant at Dacia’s sprawling factory complex in Mioveni, 80 miles north-west of Bucharest, Cristian Negoita talks proudly of the factory’s output.

“We make about 65 cars an hour, 1,389 a day,” says the 25-year company veteran and deputy chief of the assembly plant. “Before we joined Renault we were making 110,000 cars a year here with 30,000 workers, today it’s 340,000 cars, with 14,000 workers.”

Nearby, new cars roll off the assembly line, destined for showrooms across Europe. In recent years, as other car manufacturers have lost billions of euros in sales in the aftermath of the global recession, Romania’s Dacia has seen sales soar.

The former communist state-owned company, bought by Renault in 1999, is Europe’s fastest-growing car brand, with sales on the continent rising 35% in the first six months of this year, according to the European Automobile Manufacturers Association, fuelled by a high demand for cheap but reliable cars.

Last year, in its first 12 months in the UK market, Dacia sold 17,146 cars, a record for a UK car brand launch, with its entry-level Dacia Sandero – the butt of so many Top Gear jokes – selling for £5,995.

Dacia’s success in recent years has raised its already considerable profile in Romania: its €4.48bn (£3.5bn) turnover in 2013 represented about 2.9% of the country’s GDP, with the company responsible for an estimated 130,000 jobs in Romania across its supply chain and 8% of the country’s total exports.

All of which is impressive for a car brand that few in Europe had heard of until recently and that was failing badly just a decade and a half ago.

“Dacia has found a space in the market, it was the first to see and exploit this low-cost sector,” says Tim Urquhart, principal analyst at IHS Automotive, who predicts that Dacia will sell 461,000 vehicles this year, and 604,000 by 2021.

Dacia was founded in 1966, in the first years of the CeauČ™escu regime. It was meant to be a powerful symbol of the country’s industrial strength, named after the Dacians, the early inhabitants of the region.

During the 1960s-90s, the company primarily launched licensed versions of cars such as the Renault 12, renamed the Dacia 1300. Though they were notoriously unreliable, Dacias were often the only cars on the Romanian market, so locals eventually became adept at roadside fixes.

After the 1989 revolution, Dacia struggled against the tide of foreign cars entering Romania, with the brand failing to improve on outdated designs, equipment and working conditions. “We didn’t have heating or hot meals. I worked without heat in the winter for nine years between 1990 and 1999,” says Ionela Ghenescu, 43, taking a break from her morning shift in the stamping department.

Like many in Mioveni, population 32,000, the company is a family affair for Ghenescu: her husband and son also work at the factory. “Most people in Mioveni work for Dacia,” she says.

Sitting in his office on the outskirts of Bucharest, Nicolas Maure, the French chief executive of Dacia Romania, explains Renault’s decision to buy the company. “Dacia had an ageing lineup and couldn’t export any more. Volumes were falling and they were looking for a way to recover.”

At the time, Renault was considering setting up a factory in the region, to tap into the growing markets. After failing to buy Skoda in a joint bid with Volvo, Renault bought Dacia and invested €2.2bn in updating its facilities and product line. “Originally the idea was to use the platform to deliver to the Romanian domestic market and central and eastern Europe.”

Renault’s ambitious goal was to create an entry-level car for developing markets that would retail for about €5,000, and the company focused its energy on keeping costs to a minimum, while maintaining the reliability of the final product. In 2004 it launched the Dacia Logan, which retailed for about €6,400.

“The initial concept was perhaps a bit dull and boring, but it did the job,” says Philippe Houchois, an analyst at UBS.

Between September and December 2004 Dacia sold 40,000 Logans, with Romania representing 60% of sales. However, in 2005 the company started exporting to western Europe and has seen sales grow more than 10% a year since, with Romania now representing only 5% of Dacia sales, though this is also due to a weak domestic market.

In the first eight months of 2014 sales of Dacia cars grew in France by 18.9%, Italy 46.4%, Germany 7.7% and Britain 69.7%, the company says, with new markets opening in Malta, Cyprus and across Scandinavia last year.

Since 2004 Dacia has introduced seven new vehicles, including the Sandero, Sandero Stepway and Duster. “The Dacia Duster is the number one selling car for Renault worldwide,” says Maure. “And Mioveni is the biggest vehicle plant for Renault in terms of output.”

However, there are clouds on the horizon. “There is a risk of new entrants in the low-cost market,” says Houchois. “Dacia is quite critical to Renault – 45%-50% of Renault is driven by their entry-level programme, and Renault can’t believe how long it’s been without competition.”

Wages are rising in the company’s Romanian facilities. This month a new round of pay negotiations is due to begin between Dacia management and the workers’ union.

In the past, relationships have been fractious: in March 2008, workers demanded a 50% rise, finally agreeing to 28% after a 20-day walkout.

“In seven years, we have increased the wages threefold for blue-collar workers,” says Maure. “We are paying them twice as much as the average of the country; there must be a kind of slowdown on this.”

In recent months management has suggested that if wages cannot be kept down in Romania Dacia will be forced to move more of its operations to Morocco, where it set up a factory in 2012 to handle increasing demand.

“It is key for the Mioveni plant to remain competitive. One way is to keep the employment level, but to do so we have to moderate the wage increase. The other way is a combination of reducing output and greater automation. Option two would lead to thousands of job losses,” says Maure, who expects it to be a difficult negotiation process.

In the meantime, Dacia’s Romanian workers are enjoying the rebirth of their national brand. “Romanians have always been proud of Dacia,” says Ion Manu, 45, a maintenance worker at the Mioveni plant. He joined the company in 1987, back when Romania was still behind the Iron Curtain and Dacia cars were rarely found outside the roads of Romania. “We are really proud now it is successful overseas,” he says.

Top Romanian lawmaker in corruption probe resigns

BUCHAREST, Romania (AP) — A key lawmaker in Romania has quit Parliament after prosecutors announced they are seeking his arrest on suspicion of influence peddling two weeks before a presidential election.

Viorel Hrebenciuc, deputy speaker and a senior member of the governing Social Democratic Party, stepped down Tuesday, saying he wanted to maintain his "dignity." He said he would run for Parliament again.

Party leader and Prime Minister Victor Ponta, who is favorite to win the Nov. 2 election, praised the move, saying he had taken "the justice (system) out of the electoral campaign."

Ponta later summoned a party meeting saying the party needs to clean up its image ahead of the elections. Three key party members who are embroiled in public scandals were suspended, including party spokesman Dan Sova whom prosecutors want to arrest on suspicion of trying to pass an amnesty law that would benefit politicians convicted of corruption.

Prosecutors want to investigate Hrebenciuc on suspicion he used his influence to propose the amnesty law that could benefit him in another case where he is suspected of using his influence in the illegal restitution of land seized by communists.

Another party member who apparently threatened journalists who approached him at a restaurant was also suspended as was an aide who publicly criticized the party.

Tuesday, October 21, 2014

Romania starts corruption investigation of ruling-party bosses

By Radu-Sorin Marinas

BUCHAREST, Oct 20 (Reuters) - Romania's anti-corruption prosecutors said on Monday they had begun a criminal investigation of two prominent Social Democrat party lawmakers suspected of collaborating to produce a bill on amnesty and pardons in criminal cases that would benefit one of them.

The investigation of Senator Dan Sova and Viorel Hrebenciuc, the vice president of the lower house, by the Directia Nationala Anticoruptie (DNA), emerged two weeks before a Nov. 2 presidential election. Prime Minister Victor Ponta is widely expected to win and consolidate the position of the Social Democrats as the ruling party.

On Oct. 17, Hrebenciuc used his influence to prompt Sova to propose a bill on amnesty and pardoning of sentences, the DNA said in a statement. If passed into law, it could have have protected Hrebenciuc from prison in another case.

"In exchange, Hrebenciuc promised Sova he would persuade some members of his party in his 'spheres of influence' to back him (to get the party's head post)," the prosecutors said.

Neither Hrebenciuc nor Sova were immediately available when Reuters placed calls to their mobile phones. Local television Realitatea TV showed Sova saying he "would not comment for the moment" and Hrebenciuc saying "I just took note" of the investigation.

Influence peddling is a criminal offence under Romanian law. It can carry penalties of up to seven years in prison.

The prosecutors were already investigating another case involving Hrebenciuc, related to recovering forest land seized under the communist dictatorship. Last week, prosecutors widened that investigation to include Ponta's father-in-law, Ilie Sarbu.

These officials were accused of supporting an organised crime group in a case where roughly 43,000 hectares (430 sq km) of forest land was illegally granted to third parties in 2012.

Thousands of Romanians are still waiting for compensation or the return of property seized under communism before Stalinist leader Nicolae Ceausescu's violent overthrow in 1989. Disputes over land ownership, inefficiency and red tape have hampered efforts to return land to their rightful owners.

On Monday, prosecutors said the two lawmakers, Sova and Hrebenciuc, had allegedly "discussed in detail" accusations brought against Hrebenciuc in the forest land investigation, and about "the risk of (Hrebenciuc) being convicted."

There have been no suggestions that Ponta - a former prosecutor himself - is involved in any of the cases. He told reporters: "Everyone is equal before the law."

Analysts have said such allegations are unlikely to harm Ponta's performance in the upcoming elections. The latest opinion surveys give him a strong lead over his top challenger in the first round and a winning majority in the Nov. 16 runoff.

The European Union has raised concerns about a failure to tackle rampant high-level graft in Romania and Bulgaria, its two poorest members. Both have been kept outside the passport-free Schengen Zone since entering the EU in 2007.

Romania ranks behind only Greece and Bulgaria in perceptions of corruption in the 28-nation EU, according to Transparency International. The European Commission has its justice system under special monitoring.

Ponta has weathered several political storms since coming to power. Shortly after he became prime minister in 2012, he faced down calls to resign over accusations he had plagiarized his doctoral thesis. He said the charges were politically motivated. (Editing by Larry King)

Friday, October 17, 2014

Romanian prosecutors investigate prime minister's father-in-law

By Luiza Ilie

BUCHAREST (Reuters) - Romanian prosecutors have opened a criminal investigation into the father-in-law of Prime Minister Victor Ponta as part of a wider case related to recovering land seized under the country's communist dictatorship, the prosecutor's office said on Wednesday.

Ilie Sarbu, himself a powerful figure in the ruling Social Democrat party and a senator since 2004, is accused of abuse of power and supporting an organised crime group in a case where roughly 43,000 hectares (430 sq km) of forest land was illegally granted to private third parties in 2012.

The allegations have erupted during campaigning for a presidential election that Ponta is widely expected to win, and just two days after a row broke out about Ponta's alleged role as a spy in the late 1990s.

Neither may fatally wound him and the latest poll gives Ponta a 10-point lead over his nearest rival in the first round on Nov. 2.

Sarbu and others involved in the case were called in for hearings at prosecutors' offices in the central city of Brasov. Sarbu declined to comment to reporters waiting outside. Calls by Reuters to the ruling party's press office and to its senate group were not answered.

Viorel Hrebenciuc, another ruling party lawmaker named in the statement as being under investigation, told reporters he had been informed of the charges brought against him. He declined to elaborate before he had consulted his lawyer.

There was no suggestion that Ponta himself is involved in the Sarbu case.

Romania joined the European Union in 2007 but remains one of its poorest and most corrupt member states, although anti-corruption prosecutors have won praise from Brussels for their efforts to combat high-level graft. The European Commission has the country's justice system under special monitoring.

Prosecutors said that in addition to Sarbu and Hrebenciuc, they were also investigating one other lawmaker as well as the head of the state forest administration agency Romsilva. Romsilva officials were not immediately available for comment.

"The damage that was created through Romsilva is worth 303.9 million euros ($390 million)," the statement said.

Thousands of Romanians are still waiting for compensation or the return of property seized under communism before Stalinist leader Nicolae Ceausescu's violent overthrow in 1989. Disputes over land ownership, inefficiency and red tape have hampered efforts to return land to their rightful owners.

Ponta has weathered several political storms since coming to power. Shortly after he became prime minister in 2012, he faced down calls to resign over accusations he had plagiarized his doctoral thesis. He said the charges were politically motivated.

Later in 2012, he drew a severe rebuke from the European Union over his efforts to impeach President Traian Basescu in a national referendum, raising concerns over the rule of law.

Earlier this week, Basescu accused Ponta of serving as an undercover intelligence officer between 1997 and 2001, charges he dismissed as "all lies" to smear him.

"I think neither will have a major impact on Ponta's campaign," said political commentator Mircea Marian.

"His type of electorate wouldn't necessarily believe that being an undercover spy is a bad thing. In the case of his father-in-law, it will be some time before details of the case emerge and the public understands the depth of it."

Romania says received 26.7 pct less gas than asked from Gazprom

BUCHAREST Oct 15 (Reuters) - Gas deliveries from Russia's Gazprom on Tuesday were 26.7 percent less than asked for by Romania's pipeline operator Transgaz, the energy ministry said on Wednesday.

Russian gas volumes to Romania are currently low, at roughly 0.2 million cubic metres per day, the ministry said.

"The Russian ambassador sent us yesterday ... an official response according to which the drop in Russian gas deliveries is caused by certain technical malfunctions as a result of Gazprom actions to fill its gas deposits to get ready for winter," Energy Minister Razvan Nicolescu said in a statement.

Romania imports a fifth of its gas needs from Russia. (Reporting by Luiza Ilie; editing by Matthias Williams and Louise Heavens)

Romanian politician calls for the army to help control bear population

Csaba Borboly has called for military assistance and for culling quotas to be lifted following a spate of cases involving brown bears damaging property in Romania

The Guardian,
Thursday 16 October 2014

In the depths of Transylvania, Romania, a war against one of Europe’s largest brown bear populations is looming.

Following a string of cases involving damage to private property from bears in recent months, Csaba Borboly, a senior politician from the Transylvanian region, has called for the army to be brought in. “The [bear] problem needs the involvement of specialised state institutions such as the police, the paramilitary and even the army.”

Borboly’s remarks follow on the heels of a decision made in late September by the Romanian government to raise the bear hunting quota by the largest margin in recent history. The new quota allows for 550 bears to be killed over the next 12 months, up two-thirds from the 2012 quota.

At present, hunting is the key method in “controlling” the bear population. It acts both as a lucrative business and, according to hunters, a means of removing specific bears who have been shown to be particularly dangerous to humans and their property.

However, this is no longer considered to be enough. With support from the hunting lobby and egged on by the increasingly bear-wary Romanian media, Borboly is calling on the Romanian government to amend a European treaty which limits the number of bears that can be culled each year.

“Bears need to be considered in line with other natural disasters, such as floods and forest fires,” Borboly said. “They are out of hand and something needs to be done.”

Attila Kelemen is a Romanian MP and eastern European representative of Brussels-based lobby group the Federation of Associations for Hunting and Conservation (FACE). “We have very big problems with bears. Bears are everywhere now in Romania. The French have three bears and they are pushing in parliament to get rid of them as they cause problems for farmers. But they won’t let Romania do anything about our bears, and we have 8,000.

The numbers, however, are open to debate. Csaba Domokos is a bear specialist with Milvus Group, a Transylvanian wildlife protection organisation. “The reality is that no one knows how many bears there are in Romania. The official number is around 6,000, but to know that we need three numbers: How many bears are being born, how many are dying from all causes – not just hunting – and how many are currently alive. And we know none.”

The counting system is fundamentally flawed, conservationists claim. Romania hosts hundreds of hunting associations, and each one is responsible for counting the bears in a particular area on the map, using the animals’ footprints as gauges of their numbers.

“Of course bears don’t respect these areas,” explains Domokos. “They wander in and out of different hunting areas. Each one can certainly be counted more than once. This could put the total number up by thousands.”

Another issue causing conservationists concern is that the bears most feted by hunters are the alpha males, for which foreign hunters often pay up to €10,000 (£8,000) to shoot a single specimen. It is these large males, however, who usually keep populations in check by committing infanticide – the killing of the offspring of other males – in order to be able to mate with their mothers, an evolutionary trick designed to ensure the continuation of individual bears’ genetic codes.

With the alpha males dwindling in number, the young can proliferate rapidly.

“These young bears are more adventurous,” explains Domokos. “They are the ones who are more prone to enter towns and so, even though the population could be falling as a whole, we are seeing more and more bears in human habitats. The last few months were particularly disastrous as there was almost none of the bears’ normal food – beach nuts and acorns – available. As a result, in the run up to winter, they are getting desperate.”

The danger is that, with the Romanian media becoming increasingly frenzied about the ‘bear problem’, people will take the issue into their own hands. In the last few weeks, Domokos has found four bears trapped in poachers’ snares along just a 25-mile stretch, and believes there are many more which he doesn’t see.

“Once the population turn against bears, we have a serious problem,” says Domokos. “The hunting lobby can get away with raising the quota in the name of social protection. And once the quota goes up, it is very unlikely it will come down again.”

Wednesday, October 15, 2014

Romania president says PM was an undercover spy

By Luiza Ilie

BUCHAREST (Reuters) - Romania's outgoing President Traian Basescu has accused his bitter rival and likely successor, Prime Minister Victor Ponta, of serving as an undercover intelligence officer between 1997 and 2001.

Ponta dismissed the charge as "all lies".

The latest row between the two leaders has flared in the midst of a presidential election campaign, which Ponta is expected to win. Basescu, who has served two consecutive terms, cannot run again and has thrown his weight behind a right-wing ally.

"Victor Ponta must admit that he was an undercover officer of SIE (Romania's Foreign Intelligence Service), between 1997 and 2001," Basescu told private television channel Realitatea late on Monday. "This isn't a bomb, it is ... a reality which I am ready to prove."

Espionage was already a talking point during the campaign for the Nov. 2-16 vote. Teodor Melescanu, who ran the Foreign Intelligence Service, resigned in September and joined the presidential race as an independent candidate one day later.

Around the same time, Robert Turcescu, a popular television anchor, confessed live on air that he had been an undercover lieutenant-colonel for a spy service and resigned his post. Under Romanian law, outing oneself as a spy is illegal, but prosecutors did not press charges.

"From 1995 when I graduated from law school and until today there are 20 years during which I have respected this country's laws," Ponta told reporters while attending a religious ceremony in the eastern Romanian city of Iasi.

The justice minister in Ponta's government said Basescu's statement appeared to be a campaign ploy.

A former prosecutor and amateur rally driver, Ponta has been prime minister since 2012 and his leftist alliance commands a large majority in parliament. The office of president is largely ceremonial but would give Ponta considerable power at key moments, including appointing a new prime minister.

When he first came to power, Ponta drew a severe rebuke from the European Union over his efforts to impeach Basescu in a national referendum, raising concerns over rule of law.

Romania has a record of colorful revelations during election campaigns. In 2009, media outlets hostile to Basescu leaked footage of what they said was him punching a child. Basescu denied the allegation and supporters variously said the footage showed a push not a punch, or said it was faked.

Friday, October 10, 2014

AFP: Record million-euro payout for Romania child AIDS victim

A Romanian woman who contracted HIV as a baby in hospital in 1990 will receive one million euros in compensation after a landmark court decision in the country with Europe's highest number of child AIDS victims.

Bacau Hospital in northeast Romania has been ordered to pay 4.6 million lei (1 million euros, $1.3 million) to the unnamed woman on Friday following an unprecedented 10-year trial, a judicial source told AFP.

The woman is one of more than 13,600 AIDS cases in Romania, of which more than 8,000 were children under 14 when they were diagnosed.

Activists say thousands caught the virus as a result of blood transfusions in hospitals where blood was not tested and needles were not sterilised.

"This is an important moral reparation for all of us," said Iulian Petre, president of the National Union of Organisations of Persons Infected/ Affected by HIV/AIDS in Romania.

"For the first time, the courts have recognised that these children were contaminated in a hospital, something the health authorities have always refused to admit," he added.

The pro-life politics of dictator Nicolae Ceausescu, who was overthrown in 1989, meant tens of thousands of children were abandoned in orphanages.

With the Communist country mired in poverty, many orphans suffered from malnutrition and doctors were often brought in to carry out "fortifying" transfusions.

The blood was rarely tested for AIDS and often the same syringe was used for several children.