P&G's investment in Urlati to pose problems

If in late September the fast moving consumer goods producer Procter & Gamble announced a nearly 100 million dollars in the plant in Urlati, the company considers at this point that investment size depends on authorities disposition in sealing partnerships and finding solutions to allow the company achieve the objective, said Ramona Brad, external relations group leader at P&G.

“Initial plans consisted in our attainability of investment to mount to 100 million dollars, as this effort will be backed by Romanian state – this way we can achieve our objectives much sooner,” added Ramona Brad, stressing that value of initial investment may be even lower if talks with Romanian authorities will fail.

She also explained the P&G’s decision to open the first Greenfield in Romania was influenced by the region’s development potential and company’s expectations to be endorsed by the state into investment and region development.

“P&G decided to invest in Romania in a time when most of the companies chose to close upstream units in here or to downsize workforce or cut production costs. This is why the risk that we take upon ourselves needs to be compensated by an effort from Romanian state,” continued Ramona Brad.

P&G: Romanian authorities have wide range of “instruments” to bolster investment

Furthermore, P&G considers that Romanian authorities, namely Ministry of Economy and Finances or Romanian Agency for Foreign Investments have many financial strings than can be used in purpose of bolstering investments. For the aforementioned investments blueprints consists in state aid, up to 50% contribution of the direct investment value in capital, in case the project is emplaced in an underprivileged area.

“Romania benefits of legislative framework according to European legislation and communitarian acquis designed to back up foreign investments and development of underprivileged areas. Urlati is an area where no investments have been made and underdeveloped both economically and socially,” Ramona Brad stated.

Another investment draft, outlined by P&G representatives regards the regional development from European structural funds – 2007-2013 Regional Operational Program, axis “Supporting regional and local business environment” – with projects that can be frame between 500,000 and 25 million euros.

The third area regards subventions in investments on local infrastructure and utilities.

“Another option may be the problems of training workforce by the same European structural funds – with projects that can mount up to 2 million euros”, external relations group leader at P&G said.

Romania – strategic location for P&G investments

As for potential measures that the company is likely to adopt in case talks with Romanian state fail, Brad says P&G objective eyes no extreme measure, but turning Romania into a strategic location to Procter & Gamble investments.

The center in Urlati (Prahova county) will cover 25 hectares, enough space for a potential further increase in production capacity. The land parcel was leased for 45 years.

The units is scheduled to start operating as of first half 2010, the plant being specialized in shampoos and conditioners segment.

90% of the production of Urlati-based plant will be designed for exports, the actual plan including regions in Central and Eastern Europe.

The project of the plant in Urlati started in 2007, selecting Romania over Turkey, Russia, Poland, and Ukraine.

The opening of the factory will create 300 new jobs, and the growth pace of number of employees being determined by possible partnerships with Romanian state on workforce training.

15% minimum overall business growth at Urlati factory, in the forthcoming years

P&G had a 40% market share in 2007 in detergents and beauty products, over 60% for baby care products and persona care and approximately 20% for oral care products.

The company forecasts 15% overall business growth in the period following the opening of factory in Urlati.

With nearly 170 years history, Procter&Gamble was founded in United States, now active in over 180 countries.

Translated and adapted by Camelia Oancea.

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