Workers prevent factory takeover after losing state-employee status

Workers, angry at losing their employees-of-the-state status, have torpedoed the successful takeover of their factory by a private firm, putting the entire workforce of nearly 1,500 on the streets.

The Workers Daily yesterday reported the case of a rubber-goods factory in the northeastern city of Maanshan, which is being closely watched across China as an example of the pitfalls for a private company acquiring a state enterprise.

The Maanshan Rubber Plant was set up in 1961, with annual production of 3.5 million car tyres and four million pairs of rubber shoes. Ageing products and antiquated equipment drove it into debt so that by 1996 its nominal assets were 85.29 million yuan (about HK$79.89 million), debts were 100.47 million yuan and it had accumulated losses of 34.2 million yuan.

In October 1996 the city's Intermediate Court declared it bankrupt.

This left the city government to pay five million yuan a year in minimum living allowances to its workers.

The government urgently searched for a white knight and decided on a private firm, the Haitian group of Anhui province, a national producer of rubber products.

Haitian had extensive talks with the management and workers of the plant who agreed at a mass meeting to the takeover.