Leoni Says Egypt, Tunisia Unrest Disrupts Its Cable Production

Leoni AG, Germany’s biggest maker of electrical cables for cars, said unrest has disrupted production at its four plants in Tunisia and a factory in Egypt.

In Egypt, rattled by protests demanding the ouster of President Hosni Mubarak, only one in five employees showed up for work on Sunday and Monday, spokesman Sven Schmidt said by telephone today. Some were afraid to go and others assumed the factory would be closed, while two-thirds made it into work today, he said.

Leoni started using a private bus service in Tunisia last month to get employees to work safely and has adjusted the times when shifts start and end so that employees can be either at home or at work during curfews, Schmidt said. Of the company’s 55,000 employees, 12,000 work in Tunisia, and 4,000 in Egypt.

"For now, in Tunisia, both deliveries and production are back in normal territory," Schmidt said.

Leoni has moved employees to Africa, the lower cost-regions of Eastern Europe, Asia and Latin America to benefit from lower wages. The company said it had 88 percent of employees in low-wage countries at the end of September. The Nuremberg-based manufacturer supplies carmakers such as Daimler AG, Volkswagen AG and Bayerische Motoren Werke AG.

Daimler suspended production of Mercedes-Benz luxury vehicles at its Egyptian joint venture for two days, a spokesman for the carmaker said yesterday. Volkswagen yesterday said it suspended auto deliveries to Egypt, and VW’s local distributor closed its business temporarily.

Leoni ramped up production in Egypt during the days before the turmoil to have a buffer of products, which helped mitigate disruptions, Schmidt said. “Production is almost back to normal,” he said, as employees who make it to work do longer shifts. “We have only a slight restraint to production left.”

So far, there have been no large-scale obstacles to Leoni’s output in Egypt, Schmidt said, and "we are confident that production will be back to a normal state fairly quickly." He said he sees no material impact on company’s financial results.

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