CAIRO: Thousands of pounds are being lost daily at El-Herafeyeen, a spare parts market in northern Cairo. Several shops have shut their doors and the rest are struggling to weather the current financial storm.
The worst hit by the slowdown are the market’s workers. Hesham El-Sayed, a handyman, considers himself lucky to still have a job, and said that the current crisis is the worst he has ever witnessed in the area.
“Many of our colleagues are now jobless after the stores they worked for were forced to shut down. Our weekly salaries have not changed, but we used to count a lot on tips from customers, he said.
“I make around LE 150 a week, and this can barely feed my family. We used to make the same sum from tips, but these days we don’t get many customers and I’m lucky if I collect LE 3 or LE 4 a day, added El-Sayed, father of two.
Ahmed Asran, another handyman, echoed the same sentiment. “My basic salary has always been enough for my personal expenses, and I used to save what I made from tips for marriage obligations. Now I’m still single, and without these tips I don’t think I’ll be able to get married even 10 years from now, Asran said.
Although oceans apart from the center of the global economic crisis, the spare parts market has not been spared.
The market’s traders and workers don’t know much about global finances.
Unlike Egyptians who work in construction or banking, they would never have imagined that a credit crunch overseas would heavily affect their modest businesses. Yet they can feel the consequences of the crisis as much as people who work on Wall Street.
One of the main factors affecting business in El-Herafeyeen (which means technicians in Arabic) is the change in people’s spending habits. Many Egyptians in various fields are dealing with salary reductions, and the idea of replacing their old cars or refurbishing existing ones is the least of their priorities.
“Most people now have a growing feeling of insecurity. Some have traffic accidents but can’t afford to repair their cars, let alone buy new ones, said Mohamed Ali, who owns a car accessories store.
Despite facing their toughest challenge ever, people at the market are trying to keep a spirit of optimism.
“We can’t stay at home and cry over spilt milk. We show up to work everyday and do what we have to do, and we are sure that business will step up soon and God will come to our rescue to reward us for our patience, El-Sayed said smiling.
Businesses in El-Herafeyeen mainly depend on importing spare parts from Europe and Asia. Recently, fluctuating currencies and liquidity problems in Egypt and the world have taken a toll on shops in the area.
Exchange rates for the Euro fell from LE 7.9 to LE 6.9 between August and November 2008, and the difference resulted in significant losses for El-Herafeyeen’s shop owners.
“At the end of 2008, I imported two German trucks at a price of LE 450,000. Before the crisis I could resell both for LE 540,000, but the difference of currency prices and lack of liquidity in the market forced me to sell them for LE 360,000. Rather than making a profit I ended up losing LE 90,000, said Moheb Mikhail, a store owner and importer.
The vicious cycle continued as the auto industry in Europe was hit by the global recession. Last month, car sales plunged 18 percent with registration falling to 968,159 vehicles from 1.19 million a year earlier.
Governments around the old continent had to pump billions of Euros to aid the failing factories. The latest was the French government’s ?6.5 billion loan to save the country’s struggling auto industry on the condition that no more sites close and no more employees are laid off.
“One of France’s biggest car factories is now in debt as a result of the crisis. Consequently they fired large numbers of their workers and reduced their production.
“The rule is that spare parts’ prices increase whenever production decreases, and that’s what we are all suffering from at the moment, another Herafeyeen trader said. People are simply less likely to buy at these higher prices.