CAIRO: Egyptian manufacturers have cut output because banks are closed while labor unions have taken the country’s revolution as a cue to stop work and demand better pay and conditions, industry managers said on Wednesday.
The military-backed government has slashed its forecast for economic growth and the army urged Egyptians on Monday not to strike, appealing to their sense of national duty. Military officials say stoppages would be disastrous for the economy.
But unions, emboldened by the overthrow of president Hosni Mubarak last week, are still pressing their demands. More than 12,000 workers at state-owned Misr Spinning and Weaving went on strike on Wednesday. In the coastal city of Damietta, about 6,000 spinning and weaving workers were also striking.
Eleven flights were cancelled at Cairo airport as customs officials and maintenance staff stepped up industrial action. Airport officials said they were looking into demands for better health, transport and other benefits.
In sectors not hit by strikes, the central bank’s decision to keep banks closed was forcing many to scale back production because clients were unable to pay for the goods.
The political instability has prompted many buyers of industrial goods to close for business, said Mohamed Said Hanfy, general manager at the Chamber of Metallurgical Industries.
Hanfy said the group’s members, which include leading heavy industrial firms, were forced to operate at between 20 and 50 percent of capacity and employ extra security to protect stocks which are piling up.
"When the banks open again I think that the utilization rate will rise to 50-60 percent," he told Reuters. "But until security is assured and the police are in control of everything, a lot of people will be afraid to work."
‘Reviewing demands’
Some food and textile producers are suffering strikes or have sent workers home for fear that industrial action will spread. Companies such as ceramics maker Lecico have already bowed to some union demands.
Textile manufacturer Arafa closed its garment making plants in Tenth of Ramadan City until Saturday after a quarter of the workforce went on strike.
"The demo was absolutely peaceful," said Chief Financial Officer Ahmed Kamal Selim. "We are reviewing the demands and some will be met but, for others, we need to run the figures."
He said he expected some impact on the company’s results but played it down, saying five to seven days of disruption would not have a major impact for a firm operating 320 days a year.
Sinai Cement said earnings would be affected by the bank shutdown and ASEC Cement, a unit of private equity firm Citadel Capital, said contractors were having trouble due to strikes and this was affecting its work schedule.
"If strikes are for a day or two we won’t be affected but (for) 10 days or more there is worry," said Israa Gabr, a senior financial analyst at the company. "So far we don’t know the affect on earnings … It should be clear in two weeks or so."
The careful wording of the army’s plea for union restraint marked a change of tone from the more dogmatic official style of the past and has raised some eyebrows in industry.
"The army must use stronger language to the people," said Hanfy at the metal industry association. "A lot of them don’t have a problem but want to seize the opportunity presented by the political situation." –Additional reporting by Sarah Mikhail, Marwa Awad and Patrick Werr
