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. Last Updated: 07/27/2016

Moscow City Hall Announces Plan to Close Ailing Factories




The Moscow government announced Friday that 30 percent of the capital's factories were insolvent and pledged to initiate bankruptcy proceedings against some of them.


Yevgeny Panteleyev, the city government minister in charge of industry, said at a news conference that Moscow has prepared a program to support "selectively chosen" plants, but other ailing factories would be shut down. He refused to identify which of the capital's 21,000 industrial enterprises, representing some 600,000 jobs, face closure.


Industry officials expressed outrage at the plan, saying the city should focus on rescuing all of the plants for the health of Russian industry.


Thousands of city factories hovered on the brink of bankruptcy even before the ruble's fall in August, but the resulting crisis coupled with dropping output levels is prompting their largest creditor, the city of Moscow, to take action.


Panteleyev said the city will help out some factories by allowing them to restructure tax debts. Moscow will provide funds to relocate some from downtown to make better use of the land, he added.


He said rescue efforts would be directed toward enterprises that are important to the municipal and national infrastructure, including defense plants, consumer goods manufacturers and food producers.


But as industrial output falls, the most sickly factories must go, he said.


Panteleyev said the volume of the industrial output in Moscow in the first nine months of 1998 totaled 46.6 billion rubles, down 5.2 percent from the same period in 1997. Profits fell 20.7 percent to 3.9 billion rubles.


Industry officials said they were dismayed at the city's plan to close down weaker enterprises. "Bankruptcy is an artificial thing," said Izrail Kremenetsky, head of the Moscow Industrialists Guild, which unites 260 major Moscow-based enterprises. "It will be turning the industry into a graveyard while we must concentrate on its revival."