Saw the below article in the Prague Post and thought it was worth posting. Full disclosure: I'm not a dealer or a Petrof owner!
Piano maker to get help from U.S.
Petrof strikes deal with largest buyer to keep company alive
By Zuzana Kawaciukova
Staff Writer, The Prague Post
(May 6, 2004)
Troubled piano producer Petrof got some relief after the company's largest trading partner agreed to continue purchasing pianos from the Hradec Kralove company.
U.S.-based Geneva International Corp. (GIC) agreed to buy pianos worth 200 million Kc ($7.4 million) per year until 2012, Petrof legal executive Zuzana Ceralova-Petrofova said after the companies finished negotiating the details of the contract.
Although the announcement of the deal has calmed the tense atmosphere at the well-known piano manufacturer, the unions are not optimistic that the agreement alone will bring plant manufacturing to full capacity, according to Alex Chvojka, union leader. Chvojka said that an agreement must be made between Petrof and its banks about unblocking accounts and funding production. Ceralova-Petrofova said management believed it could reach an agreement with the banks.
But the unions said that a strike alert that was declared in April after management failed to pay its employees their wages for March would remain. The workers received their salaries in two installments April 16 and 22.
The company's financial troubles began after GIC opted not to buy pianos from Petrof, and subsequent talks failed. Petrof's business is heavily reliant on GIC, its largest partner in the United States. Sales to GIC account for 30 percent of Petrof's output. The company sells as much as 95 percent of its pianos abroad to 60 countries worldwide.
The crown's exchange rate to the dollar and cheap competition from China intensified the firm's problems, management said. Petrof forecasts sales this year to reach 840 million Kc, compared with 880 million Kc in 2003.
To cut costs, the company closed its plant in Ceska Lipa, north Bohemia, and dismissed 44 workers in March. To save further, the company plans to downsize from its current 931 employees to around 680 employees by the end of August. The company also plans to close factories in Moravsky Krumlov and Jirikov by late June and to centralize production in Hradec Kralove, east Bohemia, where the company has its headquarters.
Ceralova-Petrofova took over control of the negotiations May 1, following the departure of Petr Moucka, the company's former CEO and crisis manager who arrived in early January. Moucka left because of differing views on how to solve Petrof's present problems, Ceralova-Petrofova said. Petrof, the largest Czech piano maker, does not plan to appoint a new CEO.