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The eBearing News
August 27, 2004
Bosansko Grahovo Petitions
to Rescind Bearing Factory Privatization
copyright © 2004 eBearing Inc.
The government of Bosansko Grahovo, in western Bosnia and Herzegovina, has petitioned the nearby
Livno Canton Privatization Agency to rescind the sale of a former UNIS bearing factory, along with
five other businesses.
UNIS was set up in 1968 to integrate several state-run military equipment manufacturing operations
set up in the cold war era. Several UNIS bearing factories were slightly different because they
also produced some bearings for non-military rail and automotive uses.
UNIS bearing manufacturing facilities, for example, until then had also produced mortars, artillery
and rocket-propelled ammunition, and some auto parts.
In the early 1970's, as UNIS began to shift manufacturing toward more non-military goods, SKF became
a bearing business partner and adviser, sharing manufacturing know-how in exchange for better
access to the region's insular but growing non-military markets.
Although production and quality generally improved, the bearing factories were inhibited by lack of
funds for investment, lack of raw materials or proper training, and chronic lack of foreign exchange
funds to buy proper bearing steel and manufacturing equipment.
In July 1991, the Bosnian conflict began. By August 1995, officials estimate 65% of the region's
manufacturing operations were wiped out, and virtually all of Bosansko Grahovo's. What plants remained
standing were in poor condition.
Restarting manufacturing anywhere was more difficult than anticipated. Poor morale among what workers
would return fed low quality output and few sales opportunities. Privatization audits also turned up
the inability of what few plants could operate to think in market terms -- rather than produce what
would sell, they often manufactured what was easiest, at random, with no demand, often until a particular
weight had been achieved. With no knowledge or methods to measure costs or productivity, bearings and
other products were sold as massive losses. Foreign aid did little to offset the increasing
liquidity problems.
UNIS itself was restarted, although as only a small fraction of the various manufacturing operations
and facilities formerly scattered throughout the region.
Most of the other manufacturing facilities have been involved in privatization efforts, in many
cases funded by grants and loans from the World Bank.
One bearing factory, UNIS Tok in Kalesija was a rail bearing manufacturing site. Privatization buyers
saw value in its assets -- land and infrastructure -- but not in the rail bearing business. Consequently,
it was outfitted to produce windows and doors while the former employees never returned to work.
The buyers of the former UNIS bearing factory near the decimated town of Bosansko Grahovo reportedly agreed
to a variety of capital investment obligations and employment guarantees.
In its compliant, Bosansko Grahovo told the Privatization Agency that the former bearing factory, along
with five other business locations, had not met a single obligation under the privatization buyout agreements.
They want the agency to rescind the sales, charging the buyers only saw these as shell businesses for
get-rich-quick schemes, never having any intention of running them properly or living up to the buyout
agreements. They also charge Livno is continuing to run roughshod over the Bosansko Grahovo region,
including making these privatization sales behind closed doors to individuals tied to the Livno government.
The situation in Bosansko Grahovo is particularly grim; estimates put the destruction in the area at
95% or more, with little rebuilding in the intervening years. In 2003, a delegation from Canada reported
the area looks like the war, "ended yesterday," with only a tiny fraction of the former inhabitants
returning to their property. Unemployment still hovers near 100%, while key forestry, agriculture and cattle-raising
efforts are unable to properly rebuild due to lack of funds and support from the government. International aid
has proved important but not enough to provide more than just basic needs.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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