Worrying developments are gathering over Dunaújváros’ Dunaferr steel works, the most important employer and economic player of the city and surrounding areas. After production had slowed down, ISD Dunaferr Ltd. delayed employee salaries and terminated the collective agreement. In the latest turn, trade union leaders have been fired and barred from the premises.
The steelworks, in operation since 1954 (first as Stalin Steelworks), currently employs around 4,500 people. Before the factory construction during the communist era, Dunapentele was only a small village by the Danube that was later renamed Stalin City, then Dunaújváros. The city and its surroundings largely hinge on the steelworks, as estimations put the total number of those depending (sub-contractors, employees’ families, etc.) on the factory one way or another, to around 25,000.
Clouds over the iconic factory
While ISD Dunaferr was profitable both in 2017 and 2018, problems arose years ago that can be attributed to, among other things, the world phenomena of the steel industry and Dunaferr’s market positions. The coronavirus pandemic only made things worse, resulting in production having to be cut back, according to an earlier letter from CEO Evgeny Tankhilevich.
The Trade Union was first targeted in August when Tankhilevich terminated the collective agreement, saying that cooperation with them is impossible because the trade union is ‘divorced from reality.’ So far, the management refused to go into talks about a new one. Then in October, salary payments were also delayed and rescheduled, a problem that is still not resolved, the CEO blaming the harsh drop in production.
Also in the latest turn of events, the Russian CEO unilaterally fired the union leaders, accusing them of taking part in a background takeover and attacks, originating in the confusing ownership that resulted in a power struggle.
Russian-Ukrainian fight for power
Following Dunaferr’s privatization by the left-liberal governments, Ukrainian ISD (huge net of industrial companies from the Donbass) took over ownership; after a while, however, due to unpaid loans, Russian Vnesheconombank (VEB) gained possession too.
As a consequence, reportedly there are two groups: a Ukrainian (consisting of Sergei Taruta and his daughter Tatyana), and that of Russian CEO Evgeny Tankhilevich’s (of VEB) aiming for the leadership, while the third owner, Russian-Ukrainian-Armenian Oleg Mkrtchan is currently jailed in Russia.
According to the Ukrainian party, it isn’t lawful for Tankhilevich to manage the company anymore after his mandate expired in September, while Taruta is the only one rightful member on the board. At this point, the two groupings, instead of negotiating, are blaming and accusing each other for the situation.
Problematic legal matters
The company’s legal status is also unsettled. This could even result in deletion from the official Registry, making finding a solution even more difficult.
In addition, the Vasas Trade Union (and all the relevant trade union organizations) consider ousting the leaders unlawful and will challenge the decision in court.
Vasas Trade Union’s vice president, Zoltán László, explained that for now the union will wait and see until its tug-of-war within the company management ends, to see who they should and can negotiate with. The registry court has already called on Dunaferr ISD to restore the legal status as there is no sufficient number of executives on the company’s board of directors and supervisory board.
Gov’t help needed?
Moreover, the government also apparently took up a hesitant position on this matter, while the city (both the constituency and city are at the hands of the opposition) stands by the workers and urge employers to cease infringements.
The Dunaújváros mayor also urged the government for intervention. Pointing out that the steelworks incomes are more than 13 times more than that of the city, Tamás Pintér (of Jobbik) wants the government to secure workers’ salaries until the end of the year out of the economic protection fund.
Although Dunaferr is a private company that limits the goverment’s room for maneuvering, there have been examples of the state’s involvement in such cases in the past (for example in connection with the Mátra Power Plant). In addition, the state-of-emergency’s legislation makes it possible for the government to draw companies under temporary state control as it did in the case of Kartonpack. Earlier, the Hungarian state did attempt to buy back the factory- the owners, however refused to sell it.
featured image illustration via Zoltán Máthé/MTI