ANALYSIS: Thermal insulating joinery dilemma - insolvency or export?

An aphorism which recently started to circulate states that the domestic companies active in the windows industry fall into two main categories: firms already involved in export activities and companies which are dreaming to sell their products on foreign markets. No doubt, it is an exaggeration, but the extent to which that assumption is based on an objective reality is worth being explored. A degree of uncertainty regarding the absolute truth of the previous statement is induced by the high levels of instability characteristic for this field. We are probably speaking here about the lethargy of the domestic market which became the main impetus for producers in their quest to access the Western European markets. The question in this approach is related to the qualitative aspects of the finished product, not the quantity, as local manufacturers have been accustomed in their relationship with the Romanian users. Probably the main determinant of a possible "drain" consists in the low level of the local demand. Basically, after a long period of financial relaxing, when the loans criteria were among the least restrictive in history, the economic crisis has led to the imposition of overly strict rules, the main effect being the total obstruction of the lending process. Lack of liquidity has led, inevitably, to a dramatic decrease in the use of existing capacities at the end of 2008 (which were already oversized). As an immediate effect, the most important companies in the industry became unprofitable. Also, another issue which has exercised a decisive influence on the subsequent activity was the massive degree of indebtedness of many competitors in the market, caused by acquisitions of technology, achieved within the "boom" period of the economy. In short, many companies were forced to hold active extremely expensive equipments with an almost zero degree of exploitation. Moreover, pressures from banks have increased amid devaluation of collateral (usually real estate liabilities) that facilitated the grant funding lines. The situation has, therefore, become extremely tough and, beginning   With the first year of the recession came the first wave of insolvencies, this sign indicating what was to happen in the next interval.