Egyptian Factories' Crisis and its negative Impact on the EGP

We are here is describing the awful conditions that the Egyptian factories are currently suffering, for instance Abu al-Makarim factory, which was once busy with staff carrying Egyptian carpets for export, are now rust-encrusted and totally closed after worker strikes and financial problems forced the plant to go out of business eight months ago.

This deserted facility in Madinat Elsadat, near Cairo, is one of thousands that have fallen victim to the Economical instability of the Egyptian revolution.

On the other hand, the remaining factories are suffering by power cuts, strikes, insecurity, and difficulty securing loans in credit markets where they are squeezed out by an indebted government.

The plight of Egypt's industrialists points to the wide range of ways which the economic environment has deteriorated in the two years since Hosni Mubarak was toppled.

As a result for the political conflict, the foreign investments have shrunk and foreign currency reserves have slid to critically low levels as President Mohamed Mursi's Muslim Brotherhood prepares for parliamentary elections starting in late April.

At Madinat Elsadat, 75 of the 525 factories that once operated in the complex have shut down since the revolution, according to a report by the Centre for Trade Union & Worker Services. Up to half of the factories are struggling.

Also, the report estimates over 4,500 factories have shut since the revolution, swelling by hundreds of thousands the ranks of unemployed in a nation where two-fifths of the people live on or around the poverty line. The unemployment rate reached 13%, according to official data, but analysts believe the actual rate is much higher.

The Abu al-Makarim Group, which had employed more than 4,000 workers at seven factories, had been struggling even before the uprising against Mubarak erupted in January 2011. The wave of industrial action that ensued was the final nail in its coffin.

The risks of doing business are heightened by a security vacuum which the police have been unwilling or unable to fill since Mubarak's rule ended.

In Madinat Elsadat, set up in the 1980s to shift population out of Cairo, police are few and far between. Gangs intercept shipments and steal goods on their way out of the industrial area.

Some investors closed up and left because of the lack of security and stability, and for some business owners, the security risks come from their own employees and according to their announcements There is no control over workers anymore. They were under a lot of pressure before the revolution so when everything became so loose, they became people who do not want to be controlled, asking for their rights.Workers demanding better salaries barricaded the gates of their cement factory with concrete blocks during one recent burst of industrial action.