Romanian Economic Environment – 2008 Global Financial Crisis

Business Economics

Business Economics

Unit leader: Dr. Hristos N

Paperwork: Claudiu Bejan

Romanian Economic Environment – 2008 Global

Financial Crisis

SUBMISSION DATE: March 2014

ABSTRACT: European Community faced larger economic decline during 2008-2009

economic crisis consequently bringing unemployment and poverty in Central and

Eastern Europe countries (CEE). With the exception of Baltic countries where the crisis

enters beginning of 2007, the rest of Europe was touch by the crisis in late 2008.

As part of European Community since January 2007, after an important

economic growth during the years up to 2008, Romania faced a difficult period

once the crisis started, big unemployment rate and negative macroeconomics

trends;

One of the most impacted industry sectors due to this crisis was automotive

sector which faced big output declines worldwide.

Since early 21st century, the economy of CEE countries was positively affected by

inflows capital from the West countries. Therefore, private sector, mainly

multinational companies, represents important economic rate in CEE countries.

Private sector faced during the crisis volumes drops, headcount downsize,

relocations, turnover instability…

Claudiu Bejan - Bucharest1

Business EconomicsThe aims of this article are to document above facts and to understand them. It will be

explained how the crisis impacted Romanian economy and how Romanian

government reacts and faced the crisis. Also, we will understand how the

multinational companies in automotive industry fight against the economic crisis,

against downsize and how they protected their employees’ to minimize the

unemployment rate in the area.

KEY WORDS: financial crisis, unemployment, GDP, inflation, output, demand,

government intervention.

Table of contents

1. Introduction – Global Financial Crisis (GFC)

…………………………………...........3

1.1. US – the place where the crisis born…………………………………………...3

1.2. European Community – Crisis impact…………………………………………4

1.3. Romania – economic crisis environment………………………………………5

2. The

crisis…......................................................

.............................................................

6


Business Economics2.1. Romania – How deep the crisis touched Romanian economy?

……..………...6

2.2. Automotive industry and the crisis.……………………………………………9

2.3. How multinational companies faced the crisis? – Yazaki

Romania case…....10

3. The fight against the crisis…………………………………………………………….12

3.1. How Romanian Government react?…..…………………….………………...12

3.2. How Yazaki Romania management react?……………………...……………14

4. Conclusions……………………………………………………………………...……16

5. References………………………………………………………………………….....18

6. Appendix………………………………………………………………………………19

1. INTRODUCTION – Global Financial Crisis (GFC)

1.1. US – the place where the crisis born


Business Economics“The global financial crisis (GFC) was born in the United

States of too loose money and too lax regulation, aided and

abetted by China’s willingness to provide credit to America

seemingly without limit” (Geoffrey Garrett, 2010). Before the

crisis, America was happy to use big amount of money to buy

massive quantities of goods made in China, therefore US was

used to have big trade deficits with China due to lower

interest rate. Many times the economists speak about imbalanced

China – US economy, “but neither China nor the US wanted to

stop the party while the music was still playing – their

economies benefitted too much from

them, in short term at least. Then

the music stopped” as Geoffrey

Garrett statement in Global Policy

(2010). Last decade, US imports

from China increased about 300%

(fig 1.), trade deficit was, of

course, affected proportional negatively and manufacturing job

losses in same trend (fig2.).

In order to avoid such big financial crisis, China should

export less and consume more and vice versa, US should export

more and consume less.

As Olivier Blanchard analyzed in his lecture “The crisis”,

2009, the crisis has 3 amplification mechanisms:

- Banking basis (see Appendix A Table Crisis Amplification);- Uncertainty: bad loans, risk of insolvency,


Fig 1

Business Economicsreluctance of banks to lend to each other, investors taking

their founds out of the country, asset prices fall;

- Why happened: excess of optimism,

incentives and competence of rating agencies and, the most

important is the complex security as Mortgage-Backed Security

(MBS) which were financial products used by Wall Street banks

that initially provided more funds for homeownership.

1.2. European Community – crisis impact

The crisis starts in US and rapidly becomes the most severe

recession in decades worldwide. European Community was

drastically affected. “One of the risk is that the US is very

connected to the rest of the world, most of which is in severe

recession. The global economy could be a significant drag on US

growth.” (Martin Neil Baily and Douglas J. Elliott, 2009).

Therefore, it was easy to understand early 2008 that the crisis

will enter in Europe maybe even deeper than in US. “Emerging

Europe suffered larger output declines during 2008-09 than any

other region in the world.” (Erik Berglof et al, 2009). Still

in 2008 some countries resist against crisis (see Appendix B.

for Table 2008 Account Balance) but, very fast, output growth

early 2009 becomes negative double

digit range in several countries in

Europe. Still some countries have

single digit negative growth during

full year 2009.


Fig 2

3

Business Economics

In the early stage of the crisis, the

economists believed that Europe will be

less affected than US, but, in fact,

except France, most of important European

economies were strongly hit as we can see

in fig. 3. Also the recovery will be much

slower than the crisis installed because

the companies should use fresh investment

which, in a non-healthy economy, will be difficult to find.

“Banks and financial institution are recovering, as witnessed

by the normalization of interbank markets in terms of volumes

and spreads….Investment by firms is not to be expected to

strongly recover in the short-to-medium run either, since even

if credit conditions will revert to normal again, the crisis

has left many firms with excess capacity, and bankruptcies

offer the possibility to acquire capital at low cost without

fresh investment.” (Jean Paul Fitoussi and Francesco Saraceno,

2010).


Germany, France,

UK, the engines

of European

economy, were

facing big output

Business Economics1.3. Romania –economic crisis environment.

Romania is an ex-communist country,

situated in Eastern Europe, the

neighbors being Ukraine and Moldavia

in Nord-East, Hungary in West, Serbia

and Bulgaria in South-East (fig. 4).

The population is about 19 million

inhabitants in 2011. Romanian

speakers are about 86%, the rest are

Hungarians, Germans and other neighbor nations. Romania is

parliamentary republic, democratic rights and freedom being

granted by constitution. The country is well geographically

positioned related

transportation. Romania is

the connection between CIS

countries and EU through

European corridor no. IV,

they are the connection

between North and South

Europe through corridor no. IX and

also the connection through Danube

River - corridor no. VII.

As part of European Union (EU)

since January 2007, after an

important economic growth the years

before 2008, Romania faced a difficult period once the crisis


Fig. 4

Source: Eurostat, 2013

Fig. 5

Rom ania Inflation Trend

4.4

7.6

6.25.7 5.3 4.9 4.6

6.3

4.53.5 3.2

2.6 2.3 2

012345678

2,008 2,009 2,010 2,011 2,012 2,013 2,014-5

0

5

10

15

20

Fig. 6 Source:Eurostat,2010

0

100

200

300

400

500

600

2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

563 520

487 457 432 416 457 428

326 267

204

Rom anian Average Gross Salary - eur

Business Economicsstarted. The unemployment was the most important economic

parameter which negatively impacts the economy. If in 2008,

before the GFC the unemployment was stable around 4.4%, after

the crisis never back to the same low level with 4.6%

expectation in 2014 (fig. 5). Also, the gross salary average

has a negative impact in quality of life by decreasing during

the crisis about 8% with recovery back only in 3 years’ time

(fig.6). Romanian government should hardly work to take strong

actions to keep the economy to a survival level in order to

successfully face the 2008 crisis. Political stability is one

of the most important variables to sustain the difficulties

which each CEE countries will meet. Last decade, Western

countries invested in CEE area in order to decrease their

production costs and to improve profits.

2. The crisis

2.1. Romania - How deep the crisis touched

Romanian economy?


Business Economics“Since 1990 rapid changes have taken place in Romania. As in

other transition economies, state-owned companies have been

privatized and a financial market created. Several economic

reforms were also undertaken to attract foreign investment,

comply with the requirements of the International Monetary Fund

and prepare the accession to the European Union.” (Andrei Filip

and Bernanrd Raffournier, 2010). Therefore, last day of 2006

and first day of 2007, was a very noisy day in Bucharest due to

Romania joining European

Union (EU).

As recognized by the

economists, Romania had

important economic growth

last decade, as we will see

in the below study. The 2008

financial crisis could be

considered by Romanian

government as unlucky due to

stopping Romanian economy

growth and not easy to recover soon. The GDP growth 4% to 8%

year by year before 2008 crisis was

just stopped and moved to a negative

growth of 6.5% as we can see in the

fig. 7; three years later still not

recovered. The unemployment, after

many years in continuously decreasing

trend, start to increase 3rd and 4th


Fig. 7 source: Eurostat, 2014

Fig. 8 source: Eurostat, 2014

Business Economicsquarter of 2008 and since then, never reached the same value as

middle 2008 (fig. 8). “This recession has caused a lot of jobs

losses and more are to come. Past experience tells us that many

of the jobs lost in a recession do not ever return.” (Martin

Neil Baily and Douglas J. Elliott, 2009). To be able to create

new jobs, the government needs a healthy economy first, new

investment and new firms.

The private sector credit flow represent

the net amount of liabilities in which

the sectors Non-Financial corporations,

Households and Non-Profit institution

serving households have incurred along

the year. Unfortunately, after Lehman

Brothers collapse, private sector was

not so excited to invest and for couple

of years the investments were at insignificant value (fig. 9).

During the years, Romanian economy was fighting to increase the

domestic goods exports and year by year new contracts and

continuously exports growth were supported also by becoming EU

member. But, once the crisis starts, the exports were not

increasing and still suffering. As we can see in fig.10,

exports 2012 remain at the same level as 2008 and still

difficult to recover.


Fig. 10

Source: International Monetary Fund (IMF)

Business EconomicsAll this factors impacted negatively Romanian economy and

directly impacted the life quality.

After some years with good

improvements, decreasing from about

4% to almost 2% in 2008, long time

unemployment rate goes back to more

than 3%, the value from 2001 (fig.

11).

The people losing jobs will have

difficulties in finding new once in short time. For older

employees’, 55-64 age, the employment rate of their category

decreased from 42.5% to 40%, the level of 2005. All this facts

were having also negative impact in overall unemployment ratio.

Labor productivity (GDP per no. of employee), has negative

figures during the crisis (fig. 12).


Fig. 9 Source: International Monetary Fund (IMF)

Fig. 11


Fig. 12


Business EconomicsThe market demand drastically decreased. Construction segment,

which used to be one of the largest

output increases last decade with

3.25% of GDP, lost about 25% of

demand, representing only 2.75% of

GDP (fig. 13). The banks become

reticent to the loans, the rates

increased and, of course, the demand

for residential constructions market

decreased. “In every market there

must be a buyer and a seller. The seller

is on the supply side of the market; the

buyer is on the demand side.” (Schiller

et al.2013). Considering the above

comments, we are in the position to have

less and less buyers in residential

construction sector. Looking to the fig.

14 representing house inflation, we will

understand that, during the crisis, house inflation decreased

to half in yearly bases in order to get back the buyers. “A

demand exists only if someone is willing and able to pay for

the good” (Schiller et al., 2013).

Due to high inflation rate during 2008-2009 crises and gross

salary diminished, we have a decrease in product quantity

demand which affect almost all industries. As we learned, the

law of demand represent “as price falls, the quantity demanded


Fig. 13


Fig. 14


Business Economicsincreases” as Schiller mention in “The Economy Today” (2013),

fig.15.

Of course, during the crises, the

market should find equilibrium between

demand and supply in order to have the

most efficient economy. For this, we

will need to clearly understand market

demand and market supply. According

Schiller (2013), market demand

represents “the total quantity of a

good or service people are willing and able to buy at

alternative price...” and market supply means “the total

quantity of a good that seller are willing and able to sell at

alternative price…” Therefore, in order to have an equilibrium

market, we need to have equilibrium price (see Appendix C

Table: Equilibrium Price). During the crises we should not have

market shortage or market surplus which represent

disequilibrium.

According above comments about some

specific financial parameters, we

understand that Romania entered in

declined economy mainly due to lower

demands and lower production outputs

which means also less exports. In the

same time, lower private capital

investment reached Romania and soon all

the industries were touched. Residential construction sector


Fig. 16Olivier Blanchard

Fig. 15

Business Economicsdeclined due to lack of buyers which had no investments from

banks. The banks became less attractive due to interest rate

increasing, the confidence decreased and the risk increased

naturally. This is the direct effect of financial crisis

described in fig. 16 by Olivier Blanchard, 2009 in “The

Crisis”.

2.2. Automotive industry and The Crisis

Automotive industry was one of the industries which “rings the

bell” about the crisis start. “The collapse of credit markets

for major industrial borrowers hit all auto companies and their

suppliers, with the drop in consumer borrowing leading to

massive declines in sales” mentioned Herman Rosenfeld in his

article “The North American Auto Industry in Crisis”, (2009).

The “Big Three” from Detroit, Ford, GM, Chrysler going very

close to bankruptcy. “Their problems are rooted in the

particular strategic choices they made in the pursuit of

profits, in the uneven impact and failures of the privatized

U.S. welfare state, in the destructive dynamics – to workers

and their communities – of the intensified global competition

that now characterized capitalism, and in overcapacity in the

auto industry.” (Herman Rosenfeld, 2009).


Business EconomicsObama administration rejected initially restructuring plan of

“Big Three”. But, “the North American auto industry is not only

just an industry, but also a symbol of the nation. The industry

holds the ultimate responsibility to the American society”, Yu

Xia and Thomas Li-Ping Tang (2011). Obama and his auto

commission requested to the “Big Three” to align their

production methods and policy as

“Big Three” Japanese car makers,

Honda, Nisan, and Toyota. To be

able to be more productive and

cost efficient, they were

obliged to cut the overcapacity

they have, meaning to cut jobs,

to close plants. “According to

CSM Worldwide, an automotive

market consultancy firm, the world could produce about 94

million cars a year – about 34 million more than it is buying”,

The Economist, 2009. Therefore, as we cited in previous chapter

“US is very connected to the rest of the world” meaning that,

soon after Big Three collapse, entire world felt the automotive

crisis. Automotive industry in Europe was declined by 12%

during the crisis and still in 2012 not reached the volumes

from 2007 before the recession (fig.17).


Fig. 17

Data from ACEA Pocket Guide 2013

Business Economics2.3. How multinational companies faced the

crisis? – Yazaki Romania caseMultinational companies’ represents one of the important

sectors which contribute to the GDP’s of the countries. Due to

their worldwide network, some

companies felt the crisis harder

than others. According previous

chapter analyze, automotive

multinational companies suffered

too much during the GFC.

We will study in this chapter

the case of Japanese multinational company, Yazaki, which is an

independent automotive component manufacturer founded in 1941.

As automotive wire harnesses, their core product for which they

command a top share in the global market, they develop also

manufacture meters, electronic components and a host of other products for automotive use.

The Yazaki Group comprises of 215 companies in 43 countries and

employs approximately 220,000 employees. (http://www.yazaki-

group.com/global/network/).

In 2003, due to favorable conditions on the labor market,

Yazaki decided to establish first manufacturing unit in Romania

– YRL (Yazaki Romani Limited), specialized in wire harnesses

production for two strategic customers: Toyota and Ford.


Fig. 18

2008

Forecast

2008

Business EconomicsYazaki Romania grows quickly, being able to reach an EBIT of

15% from sales in 2007 before the crisis. As we can see in

fig.18, after the crisis the EBIT % fall down to less than 8%

from sales and with a forecast that shows an EBIT % never back

to 2007 financial results. Also the plant cost increased (fig

19) during the crisis due to volumes drop but fixed cost

remains almost the same. The management of the company reacts

to adjust man-power capacity according new volumes (see

Appendix D Table Yazaki Headcount Evolution). About 500

employees were released in order to decrease the financial

impact of the company results. Equipment capacity remained the

same but the usage was less, depreciation of the equipment

could not be frozen due to some

specific equipment that should

be used in two working shifts

instead of three.

The management of the company

should find solution to

increase the volumes to use

fully the space and equipment capacity and to reduce the fixed

cost in order the company to be competitive on the market. In

chapter 3.2 below, we will understand what the management did

to face the crisis and how the results turn back to positive

trend.


Fig. 19

2008

Business Economics3. The fight against the crisis

3.1. How Romanian Government react?

“The potential micro and macro failures of the marketplace

provide specific justifications for government intervention.”

(Schiller et al., 2013). The government intervention is needed

any time when the market is close to fail. The main reasons

that the market could fail

are:

A) public goods – a good

which can be consumed

not only by one person;

B) externalities (fig.20)

– the difference between

the social and private cost of a market activity;

C) market power – the ability to alter the market price of a

good/service;

D) inequity – fail to reach optimal mix of output;

By looking to above main reasons for market failures we can

understand the main government economic roles:

A) proper allocation of resources;

B) micro and macro stability;

C) distribution of income and wealth;

According to his role, the government should keep the

unemployment at acceptable level, take care about equity,

smoothing booms and recessions, keep inflation under control.


Fig. 20, Schiller, The Economy Today, 2013

Business EconomicsOnce the crisis start, Romanian government was mainly looking

to three main areas to support the crisis fight:

A) Taxation;

B) Public sector;

C) Private sector investment.

Taxation

One of the important actions that Romanian government did was

to increase the VAT from 19% to 24%. Romania becomes one of the

countries with biggest VAT in EU. They were able to bring more

money in the budget in order to sustain less productive

sectors, “the tax-and-transfer system is the principal

mechanism for redistributing income” as we learnt from

Schiller, (2013). Also personal income tax and corporate income

tax is 16%; for nightclubs or gambling operations cannot be

lower than 5% from the total revenue obtain from such

activities; micro-companies can apply for a fiscal regime with

a tax of 3% from their revenue, doesn’t matter the expenses.

(Source: PFK, Doing Business in Romania). The minimum tax was

introduced starting May, 2009 by “Boc Government”.

Public sector

The public sector, administration and staff was and still is

too crowdie in Romania. The government has two options to

reduce the cost of this sector:

A) To reduce the staff’s in public sector and to adjust

according budget needs;

B) To keep the staff’s and reduce the wages according budget;


Business Economics“Boc Government” decided that, instead of increasing the

unemployment and having no solution for new working place it

will be more benefit for budget to cut 25% of public sector

wages and to keep all the staff. As we can see in fig. 21,

government gross debt was in good trend during the years before

crisis, but, after the crisis, in correlation with negative GDP

grows, it was never back to the good trend (see Appendix E

Table Real GDP Grow Rate).

Private sector

Considering that private

sector is the one of the

biggest contributor to the

budget, Romanian government

started different projects to

reach private companies to invest in Romania. Therefore, in

2008 the government created a list of grant schemes and other

incentives in order to support and stimulate the investment in

the country. (Government Decision no. 753/2008)

Also, in 2009, “Boc Government” signed the contract with Ford

Motor Company by selling old Daewoo plant in Craiova, creating

almost 10.000 working places in Ford plant and to affiliate

suppliers. The government promised infrastructure projects in

order to attract the investors in Romania, but, unfortunately,

still the projects are too slow moving and the investors loose

the credibility of improving infrastructure in Romania.


Fig. 21- Source Eurostat, 2014

Business Economics3.2. How Yazaki Romania management react?

As we mention chapters above, Yazaki Romania was impacted by

the crisis: volumes decreased, plant cost increased, employees’

released and productivity decreased. In order to recover

financial results, Yazaki Romania management decides to work

harder in below topics:

A) New projects awards;

B) Outsourced production;

C) Productivity

improvement projects;

New projects awards

Looking to the automotive

market, team management

decided to apply for the

new Ford Craiova plant

quotation in order to

increase company volumes and by default to improve financial

factors. They started to prepare a clear overview of all costs

which usual the customers need to choose a supplier (fig.22).

Also, by planning a good process overview, efficient equipment,

they were able to commit for a good efficiency during the life

time of the new Ford project in Craiova (see Appendix F Table

Direct Productivity). Having good efficiency and new technology

equipment, the company was able to commit very good plant cost

also (see Appendix G Table Plant cost). In 2010 Yazaki

Corporation was awarded with Ford Craiova project due to very


Equipment Investment 5,495,591 €Ramp up cost 1,470,150 €IT Investment 100,000 €

Floor Space 10,347 m2

Fix cost Prod Space 3.47 €/m2/MonthMaintenance cost 0.40 €/HrSG&A fixed & others 0.45 €/HrNon operating expenses 0%

Fig. 22

Business Economicsgood results of YRL, therefore, new volumes are coming for the

next years for Yazaki Romania.

Outsourced production

Even the company decided to release employees’ to be in line

with new capacity required, the fixed cost remained almost the

same. The management decided to relocate production in cheaper

area. Considering that Yazaki just been awarded with new Ford

project in Craiova they decided to establish the second

manufacturing unit in Romania, working for Ford Craiova and

also to relocate some production there in order to decrease the

cost. Considering Ford located in Craiova city, Yazaki decided

that the best location it will be Caracal city, 45 Km to

Craiova, Ford manufacturing plant. Below, we will explain how

Yazaki Romania choosen Caracal city as production relocation

and new project ramp-up.

First, they looked to the unemployment rate in each area in

Romania (fig. 23) in order to be sure that the area can sustain

the manpower needs (see Appendix H and I related Unemployment

rate). According this study, south side of Romania was chosen

to relocate production being the second area as unemployment

rate in Romania. Also, the wages are less than other regions

being the second place from the bottom (fig. 23).


Fig. 23

Business EconomicsBy using cheapest work force, moving more than to 30% of the

production in the new location, Yazaki Romania turned the plant

cost from increasing trend to decreasing trend as we can see in

fig 24. In the same time, Yazaki Romania outsourced some

inefficient processes to a third party. As strategy, since

2010, Yazaki Romania is working with an average 15% outsourced

manpower in order to be more flexible in case of volumes drop

and in order to decrease the fix cost (the outsourced

employees’ doesn’t have all the benefits as Yazaki employees’).

Productivity improvement

As productivity improvement,

the management realized that

the indirect jobs (which in

principle are not bringing

added value to the final goods)

represent too big share in

plant manpower. Therefore, by

outsourcing indirect jobs

(material packaging, building maintenance staff, material

transporters…), the

direct/indirect ratio increased

from 5 in 2010 to 5.9 in 2011

and 6.3 in 2012 (fig. 25). This

cost improvements were bringing

productivity increase.

As results, Yazaki Romania

management, focusing in cost


Fig. 24

Production relocation

Fig. 25

Business Economicsreduction (production relocation or outsourcing), focusing in

new projects award (volumes increase, investment in future

business) and in productivity improvement, was able to improve

the plant cost, to support employment rate in the area by

hiring more people (as we can see in Appendix D. Table YRL

Headcount Evolution) and to assure automotive business survival

for the following years.

4. Conclusions

Based on all above study, we could understand that the Global

Economy is not mature enough to recover quickly such Lehman

brothers collapse.

Also, the governments are not prepared to face this kind of

quick expansion of the crisis. The signs of the crisis (output,

unemployment, inflation), were seeing too late by the

governments and the actions taken were inefficient to stop the

decline. The history we learned is showing that the capitalism

has periodically a systemic crisis. We can see “the great

depression of the 1930s”, also the crisis of regulated

capitalism of the 1970s. A systemic crisis means that we can go

out faster from the crisis only by major restructuring the

system. In Europe, some countries react faster in front of the

crisis turning back to positive GDP in only 2-3 years. The

Romanian government took the strongest action in public sector,

this sector being the non-profitable sector. By this systemic

countermeasure against the crisis, we could see that in 3


Business Economicsyears, Romanian economy was back to positive trend, but still

not back to 2007 figures. By VAT increase, Romanian government

managed to bring more money to the budget but, in the same

time, affected some industries, mainly “luxury industry”, e.g.

automotive industry; this action contributes to the global

trend of decreasing sales in automotive market.

Multinational companies were affected by different economics in

different countries. Being “multinational” could be an

advantage due to flexibility of production in different

economic environments. By production relocation in cheaper

countries or areas, the multinational companies could be able

to recover faster the loses due to crisis. But, even they are

producing cheaper, the output should be according demand. As we

learned, one of the first sign of the crisis is the

output/demand factor. The companies should adjust their

production capacity according with market demand.

Overproduction is not helping during unhealthy economy.

As main conclusions, we should learn to “read” the crisis signs

and also we should learn to react faster when the signs appear.

The governments should have a quick intervention when the

output is much higher than the demand, they should react when

the imports are much higher than the exports in order to

protect their employment. The governments should keep the

balance of local products consumption versus imports and to

keep acceptable taxation for local products. Therefore, to

avoid the crisis, the economy should be well “in-out” balanced,

and production versus consumption ratio should be in very close


Business Economicsrelation. The governments intervention is mandatory when market

fall dawn. The governments should take care about market

monopoly, price equity, mix of output… By all this factors, the

government will be able to protect their countries against

inflation and unemployment, against future economic crisis.

5. References


Business EconomicsA. Garret, Geoffrey (2010). G2 in G20: China, the United States and the

World after the Global Financial Crisis. Global Policy Volume 1. Issue 1. January,

2010.

B. Blanchard, Olivier (2009). The Crisis. Lecture GWU. August, 2009.

C. Neil Baily, Martin and J. Elliott, Douglas (2009). The US

Financial and Economic Crisis: Where Does It Stand and Where Do We Go From

Here? Business and Public Policy. June, 2009, p2.

D. Berglof, Eric, Korniyenko, Yeveniya, Plekhanov, Alexander

and Zettelmeyer, Jeronim (2009). Understanding the crisis in

emerging Europe. European Bank for Reconstruction and Development,

November, 2009, p1.

E. Fitoussi, Jean Paul and Saraceno, Francesco (2010). Europe:

How Deep Is a Crisis? Policy Responses and Structural Factors Behind Diverging

Performances. Journal of Globalization and Development, Vol. 1, Issue 1, 2010,

article 17.

F. Filip, Andrei and Raffournier, Bernanrd (2010). The value

relevance of earnings in a transition economy: The case of Romania. The

International Journal of Accounting, 2010, p77-103.

G. Neil Baily, Martin and J. Elliott, Douglas (2009). The US

Financial and Economic Crisis: Where Does It Stand and Where Do We Go From

Here? Business and Public Policy. June, 2009, p2.

H. Schiller, Bradley R., Hill, Cynthia D. and Wall, Sherri L.

(2013). The Economy Today, Thirteenth edition, p49.

I. Schiller, Bradley R., Hill, Cynthia D. and Wall, Sherri L.


J. Rosenfeld, Herman (2009). The North American Auto Industry in Crisis.

Relay, April-June, 2009, p18-24.


Business EconomicsK. Xia, Yu and Li-Ping Tang, Thomas (2011). Sustainability in supply

chain management: suggestions for the auto industry. Management Decision,

Vol. 49, No. 4, 2011, pp. 495-512.

L. Schiller, Bradley R., Hill, Cynthia D. and Wall, Sherri L.


6. APPENDIXA. Crisis amplification – Banking basis, by Olivier

Blanchard, “The crisis”, 2009,

B. 2008 Account Balance


Business Economics

Source: Blanchard, The Crisis, 2009

C. Equilibrium Price

Schiller, The Economy Today, 2013

D. YRL Headcount Evolution


crisis

Production relocation, new projects award

Business Economics

Source: internal Yazaki Romania

E. Real GDP Grow Rate - Romania


Business Economics


F. Direct Productivity

2010 2011 2012 2013 2014 2015 2016Direct Productivity 67.8% 85.4% 100.0% 105.0% 105.0% 105.0% 105.0%Num ber of Direct people 1372 1546 1238 1120 1120 1120 978Num ber of Indirect people 274 263 198 179 179 179 156Num ber of Salaried people 96 93 62 56 56 56 49Indirect/Direct Ratio 20% 17% 16% 16% 16% 16% 16%Salaried/Direct Ratio 7% 6% 5% 5% 5% 5% 5%


G. Plant cost

1. Vertical Project P&L: Full Cost Basis2010 2011 2012 2013 2014 2015 2016 Total

1 Total Sales 0 0 0 0 0 0 0 02 M aterial Cost 30,947,936 75,263,449 70,573,717 67,056,418 67,056,418 67,056,418 24,384,152 402,338,5103 Labour cost ( Direct ) 4,389,334 8,810,502 7,337,972 6,909,081 7,191,359 7,473,636 2,825,220 44,937,1043.A Suncontractors 1,343,798 3,268,034 3,064,400 2,992,554 2,992,554 2,992,554 1,117,612 17,771,5054 Labour cost ( Indirect ) 1,037,304 1,772,117 1,387,976 1,305,467 1,357,083 1,410,850 533,370 8,804,1685 Fixed cost ( Equipm ent & IT) 548,137 939,663 939,663 939,663 939,663 939,663 391,526 5,637,9806 Fixed cost ( Building ) 325,931 558,738 558,738 558,738 558,738 558,738 232,808 3,352,4287 M aintenance cost 748,198 1,819,571 1,706,192 1,621,158 1,621,158 1,621,158 589,512 9,726,9468 Salaried 741,577 1,276,503 886,053 834,063 867,668 902,616 341,422 5,849,9019 SG&A Fixed & Others 884,234 2,150,402 2,016,409 1,915,914 1,915,914 1,915,914 696,696 11,495,48210 Start-up Cost 1,338,49611 Corporate O/H 1,348,866 3,056,403 2,820,846 2,682,529 2,694,247 2,706,076 991,997 16,300,96212 Logistics & Packaging 0 0 0 0 0 0 0 013 Total M anufacturing Cost 42,315,316 98,915,381 91,291,965 86,815,585 87,194,801 87,577,623 32,104,315 527,553,48218 Plant Exw orks Labour Rate (€/Hr) 8.36 7.15 6.68 6.70 6.83 6.96 7.20 7.08



Business Economics

H. Unemployment rate

Source: Grafton (2013)

I. Unemployment map

Source: Grafton (2013)


Business Economics


Romanian Economic Environment – 2008 Global Financial Crisis

Documents

Transcript of Romanian Economic Environment – 2008 Global Financial Crisis