Basque white goods maker Fagor calls in the receivers

Electrodomestic equipment maker Fagor Electrodomésticos, the flagship of the Basque cooperative group Corporación Mondragón, said Wednesday it had decided to call in the receivers after failing to find financing to service debts of 800 million euros.

Mondragón has booked losses in the past four financial years, while sales have fallen sharply. The company, which has a workforce of 5,700, 1,600 of whom work in its five factories in the Basque Country, in May received an injection of 70 million euros from other cooperatives in the Mondragón group.

The spokesperson for the Basque regional government, Josu Erkoreka, described the development as “the worst economic news” this year for the region. “Everything possible will be done to ensure the viability of the company and minimize its impact on the economy as a whole and the interests of all the cooperative members,” Erkoreka told a news conference.

Fagor had been in talks on a possible injection of 120 million euros from fellow cooperative member Mondragón Inversiones, but the deal fell through.

Fagor booked a loss of 60 million euros in the first half of this year. The company’s revenues have fallen by 600 million euros, or 37 percent since 2007 due to lower consumption of white goods because of the crisis in Spain and the appearance of new low-cost competitors in China, Turkey and South Korea.