Arj Home Appliances Company has reopened after five years after 2 trillion rials ($7.6 million) were invested to get it back on its feet mainly by Social Security Investment Company, according to CEO of Tamin General Industrial Holding Company, affiliated with SSIC.
“Plans are for Arj to manufacture 228,000 items of household appliances within the next four years. The manufacturing methods will be SKD [semi-knocked-down kit] and CKD [complete knocked-down kit]). The company is also looking to become self-sufficient in producing 60% of the required parts,” Mohsen Mohammadi was quoted as saying by IRNA.
The reopening of Arj, according to the official, will create around 800 direct and more than 2,500 indirect jobs.
Arj was established around 70 years ago and is one of the oldest producers of home appliances in Iran. It went bankrupt in the fiscal 2016-17, according to bne IntelliNews.
The company’s officials were quoted as saying at the time that the main reason for its going bust was increasing competition from foreign brands, including the onslaught by Chinese and South Korean brands.
Arj originally began with a small factory that manufactured metal products. Gradually, it broadened its range of products by increasing the number of employees to eight in the 1940s. On expanding the company, the brand moved to Tehran-Karaj Road – the main industrial area to the west of the capital – where it broadened its range to include several household appliances.
It originally started as a highly profitable private enterprise, where it began offering shares to its workers in 1973 and was one of the first companies to list on the relatively new Tehran Stock Exchange.
But in 1979, like with many of its competitors, Arj was nationalized. By 1995, the majority of its shares were then sold off to Iran’s largest state bank, Melli (National) Bank, which sold them on to different private shareholders.
Since the liberalization of Iranian state companies in 1990s, which was a policy pursued by late former president, Akbar Hashemi Rafsanjani, for shifting inefficient companies to semi-governmental ownership, the company suffered from gross mismanagement.
Tasnim News Agency explained that by putting government officials into comfortable jobs with no prior experience in that sector, they rung the death knell for the company.
Social media reports said the company was also struggling with new low quality items being shipped to them. The cooling compressors, which were placed at the rear of their refrigerators, were in later years shipped in from China due to their low cost, which had a detrimental effect on their sales leading to the breakdown of hundreds of fridges.
With public opinion of the brand at an all-time low, the company over the past decade had to resort to other measures to fund itself, including renting their large surplus property to other semi-state companies like the country’s largest car producer Iran Khodro, which had a glut of vehicles waiting to be sold next door.
According to Eghtesad Online, the company lost its way during the administration of ex-president, Mahmoud Ahmadinejad, when 70% of its staff were laid off, falling from a high of 1,030 workers in 2006 to 306 by 2016.
At present, the production line of swamp coolers has resumed manufacturing, creating 70 direct jobs that are expected to increase to 400 by the end of the second year of its operation.
Yadollah Tahernejad, the head of the board of directors of the company, says the company plans to manufacture nine types of home appliances within the next three years.
SSIC is the investment arm of Social Security Organization, the biggest insurance company in Iran that offers policies to private sector workers as well as voluntary coverage to the self-employed.
The government owes huge debts to SSO and the organization is struggling to meet its commitments to employees.
