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Electrical machines and appliances industry
(Synthesis of the study drawn up by the Romanian Trade Promotion Centre)

Foreword

The industry of electrical machines and appliances identifies itself with the electro technical industry. It has a major influence on the development of some industrial sectors (energy, metallurgy, machine building and so on).

The sector consists of the following main sub-sectors:

- electrical motors, generators and transformers;

- control and distribution equipment of electricity;

- electrical wires and cables;

- electrical accumulators, batteries and cells;

- electrical lamps and lighting equipment

- other appliances, equipment and electrical materials.

The Romanian industry of electrical equipment and appliances occupies an insignificant place within the national economy but has a sizable share of the foreign trade of the country, as shown by the following indicators:

· 2.1 % of the whole industrial output of the country in 2003;

· 3.7 % of labor force employed by the whole industry in 2004;

· 10.8 % of the country’s exports in 2004;

· 11.1 % of the country’s imports in 2004.

Production potential

The number of the companies acting in the electrical equipment and appliances sector increased constantly; so, in 2003 it reached 749 compared to 509 in 1999.

By contrast, the labor force employed by the sector decreased constantly after 1990 (when numbered 127,000 people) until 1999 when reached the bottom level (50,000 people). Starting with 2000 an upward trend was registered so that in 2004 the labor force reached 64,000 people.

The market value of the electrical equipment and appliances output increased constantly during 2000 – 2003 (see the following table):

Billion RON, current prices

2000	2001	2002	2003
11,953	18,265	26,266	33,314

Source: Statistical yearbook of Romania, 2004

In kind, the main components of the electrical equipment and appliances output registered an upward trend during the analyzed period as presented in the following table:

Groups of products	M/U	2001	2002	2003	2004*
Electrical motors	Thou. kW	2,110	1,865	1,998	1,997
Electrical transformers	Thou. KVA	2,697	1,129	4,164	3,280
Electrical wires and cables	Thou. tons	39	345	11	15
Batteries and accumulators	Thou. kWh	875	844	864	925
Measure and control equipment	Bill. lei	937	632	1,420	…
Automation equipment	Bill. lei	1,168	1,087	1,542	…

Source: Statistical yearbook of Romania, 2004

* Statistical bulletin for industry nr. 1/2005 (provisional data)

The main assets of the electrical machines and appliances industry consist of:

· the high level (about 95 %) of the privatization of the sector, which creates favorable conditions for the improvement of the production efficiency;

· the great number of the small and medium-sized companies, which entails a high level of flexibility and adaptability to the market requirements;

· the highly qualified and experienced personnel employed by the sector;

· the long tradition of some major manufacturers of the sector;

· the complementary character of the Romanian electro technical industry with the homologous one from the European Union;

· the availability of some multifunctional industrial facilities which can be used as premise for further development by division/parting.

The drawbacks of the sector consist of:

· the high degree (over 50 %) of the physical and moral wear of the equipment, which negatively influences the productivity, quality and, consequently, the competing ability of the manufactured products;

· the faulty structure of the sector, which is focused primarily on the production of capital investment goods and neglecting the production of household products;

· the low degree (about 50 %) of the employment of the production capacities.

Investments

The upgrading of the production capacities for their adjustment to the requirements of the European standards needs sizable investments. In 2003 alone the volume of the investments amounted to 3,611 billion lei.

Foreign trade

The foreign trade in electrical machines and appliances occupies a significant place within the whole foreign trade of Romania; for instance, in 2004 the electrical machines and apparatus had a 10.8 % share of the country’s total exports and a 11.1 % share of the country’s total imports.

Throughout the 2000 – 2004 period the electrical machines and apparatus foreign trade balance was negative; the deficit contracted during the first three years and increased vigorously during the next two years, in 2004 being by 22.3 % higher than in 2000, as shown in the following table.

Thou. USD

	2000	2001	2002	2003	2004
Export	817,365	995,554	1,431,556	1,844,355	2,527,989
Import	1,723,883	1,652,785	1,957,688	2,639,221	3,636,899
Balance	- 906,518	- 657,231	- 526,132	- 794,866	-1,108,910

Source: National Customs Administration

The electrical machines and appliances sector consists of a very wide range of items (namely 48 HS positions). The present survey selected only those groups which had a sizable share within the exports and/or imports of the sector during the 2000 – 2004 period.

In case of exports, the prominent groups were the following:

- wires and cables (HS 85.44);

- telephone sets (HS 85.17);

- electro-thermal appliances (HS 85.16);

- electrical motors (HS 85.01);

- transformers (HS 85.04).

During 2000 – 2004 these five groups had an average cumulated share of 62.4 % of

the sector’s total exports.

The following table presents the evolution of the shares of the most five exported groups of products between the 2000 – 2004 period.

Groups of products	2000	2001	2002	2003	2004	Average share
Wires and cables	20.5	27.8	34.8	40.6	42.7	33.3
Telephone sets	11.7	19.8	12.5	7.5	5.1	11.3
Electro-thermical appl.	5.3	6.9	6.2	7.1	7.7	6.6
Electric motors	8.0	7.1	5.3	5.5	5.3	6.2
Transformers	6.1	5.4	3.6	4.8	4.8	4.9
Total	51.6	67.0	62.4	65.5	65.6	62.4

Source: National Customs Administration

During 2000 – 2004 the main export partners for the above-mentioned groups of products were the following:

- wires and cables: Germany (31-52.7 %), Austria (23.5-33.8 %), Great Britain (6.5-16.8 %);

- telephone sets: Greece (20.7-54.4 %), Netherlands (7.9-46.2 %), France (14-40.5 %);

- electro-thermical appliances: Italy (52.9-84.4 %);

- electric motors: Italy (49.2-69.7 %), Germany (10.7-18.4 %);

- transformers: France (29.3-47.2 %), Germany (16.4-19.1 %), Greece (4.6-16.9 %).

In case of imports, the prominent groups were the following:

- integrated circuits (HS 85.42);

- wires and cables (HS 85.44);

- telephone sets (HS 85.17);

- radio broadcasting sets (HS 85.25);

- parts of electrical installations (HS 85.36).

During 2000 – 2004 these five groups had an average cumulated share of 53.7 % of the sector’s total imports.

The following table presents the evolution of the shares of the most five imported groups of products between the 2000 – 2004 period.

Groups of products	2000	2001	2002	2003	2004	Average share
Integrated circuits	19.5	10.4	15.8	13.3	9.9	13.8
Wires and cables	11.3	11.3	11.4	11.1	11.7	11.4
Telephone sets	17.2	14.9	9.3	6.0	7.5	11.0
Radio broadcasting sets	6.3	10.2	10.0	9.8	11.8	9.6
Parts for electr. install.	4.9	7.5	8.4	9.6	9.2	7.9
Total	59.2	54.3	54.9	49.8	50.1	53.7

Source: National Customs Administration

During 2000 – 2004 the main import partners for the above-mentioned groups of products were the following:

- integrated circuits: Taiwan (11.5-29.2 %), South Korea (7-12 %);

- wires and cables: Germany (16.4-41.4 %), Austria (17.7-23.7 %), Italy (6.3-8.5 %);

- telephone sets: Greece ( 11.5-37.6 %), Italy (16.8-20.2 %), France (12-18.7 %);

- radio broadcasting sets: France (15.5-26.7 %), U.S.A. (8.1-25.8 %), Germany (10.6-19 %);

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