The Mika-Cement company said its factory located in Hrazdan, an industrial town more than 40 kilometers north of Yerevan, will not function at least until next spring because of a more than 50 percent contraction of the Armenian construction sector. It also blamed the shutdown on this year’s sharp increase in the price of Russian natural gas heavily used in cement production.
According to Naira Martirosian, Mika-Cement’s director general, domestic demand for cement has halved this year, resulting in 32,000 metric tons of unsold cement stored at the Hrazdan plant. She said the company hopes to unload the excess inventory “by the spring.”
“When demand recovers, when cement sells and when we run out of cement stocks, the plant will start working again,” Martirosian told RFE/RL. That would enable the company to recall 350 or so Mika-Cement workers that were involved in manufacturing operations and will be out of work during the stoppage, she said.
Martirosian insisted that they have been sent on indefinite leave and, in accordance with Armenian law, will get the minimum national monthly wage of 30,000 drams ($80) until returning to work.
However, some of the affected workers interviewed by RFE/RL claimed to have been formally fired. “They fired us, saying that they will recall and rehire us later on,” said one middle-aged man. He said he therefore does not expect to be paid in the coming months.
Mika-Cement, which is owned by Russian-Armenian businessman Mikhail Bagdasarov, exported up to a third of its production to neighboring Iran and Georgia in 2008. Martirosian said the company has had virtually no exports this year not only because of the economic crisis but also the rise in the gas price.
Like the other Armenian cement plant based in the southern town of Ararat, Mika-Cement greatly benefited from a construction boom that fuelled Armenia’s robust economic growth from in the preceding decade. However, profits posted by the company were remarkably modest.
It paid only 180 million drams ($480,000) in various taxes and occupied 191st place on the list of Armenia's largest corporate taxpayers in the first half of 2008. The Armenian economy was still expanding at a double-digit rate during at the time.