Steady growth anticipated for industrial production

• The main branches of Latvia’s industrial production are mechanical engineering and metalworking (45%), chemical industry (17%), light industry (19%), electrical engineering (9.9%), printing and publishing (8%), scientific research and production (1.8%).

• There are 1,261 companies with annual turnover of more than EUR 145,000, their aggregate turnover is EUR 2.81 billion, aggregate profit – EUR 99 million, and the total number of employees – 34,000.

• Mechanical engineering and metalworking sector is very export-oriented as around 80% of mechanical engineering and metalworking output is exported to more than 100 countries around the world. Most exports, 73% go to the European Union countries, including 17% to Denmark, 13% to Sweden and 11% to Germany. 

• The industry accounts for 21% of total export of goods. 

 

 

Latvia’s industrial output rose 4.9 percent in 2016 year on year, according to the Central Statistics Bureau’s data. Industrial production volume grew in most of the manufacturing sectors, including the proportionally largest ones – in manufacture of fabricated metal products (19% increase), production of wood and wood articles (8.9%) and food production (1.9%). The growth of production output was mainly facilitated by a 10.8% increase in the turnover of exported products, including 26.1% increase in exports to the euro area. Two thirds of all manufacturing products were sold on external markets. Steady growth is anticipated for industrial production in Latvia this year as well thanks to companies’ increasing competitiveness and external factors – growth in the EU countries and improving economic situation in the C.I.S. countries.

 

Latvia reported the third steepest annual drop of producer prices in the European Union for December 2016, according to Eurostat data. Producer prices in Latvia declined 1.5% year-on-year in December, while the fastest drop, 6.1%, was recorded in Luxembourg. Also, producer prices declined 1.8% in Slovakia, 0.3% in the Czech Republic and Slovenia each.  In Lithuania producer prices rose 1.6%, while Estonia recorded 3.2% increase.  The biggest rise was recorded in Belgium – 8%, Great Britain - 7.2%, and the Netherlands – 5.5%.

 

Investments in 2016-2017 are planned into purchasing new equipment, modernization of the current technical and technological solutions, and new product development with the aim to increase the group’s production capacity. To that end, and to meet the increasing demand for fiberglass products, two major investment projects were implemented at the group’s parent company Valmieras stikla šķiedra in the third quarter of 2016. One glass furnace was reconstructed to increase its output 30%, and a new glass furnace was built to make the unique patented HR-glass with thermal resistance of 800°C, enabling the company to expand its range of products for the thermal insulation market. Since September, the two furnaces have been producing glass according to the targets projected in the company’s budget. Valmieras stikla šķiedra Group posted EUR 98.887 million in turnover in the first nine months of 2016, which is 0.6% percent less than in the respective period of 2015, while the group’s profit decreased 32.4% to EUR 4.495 million. For the entire 2016, the company expects its turnover to reach EUR 134 million to EUR 138 million.

Valmieras stikla šķiedra Group is made up of Valmieras stikla šķiedra and its three subsidiaries: Valmiera Glass UK Ltd. in Great Britain, Valmiera Glass USA Corp. and Valmiera Glass USA Trading Corp. Valmieras stikla šķiedra shares are listed on the Nasdaq Riga stock exchange’s Second List. The company’s majority shareholders are P-D Glasseiden Oschatz GmbH and Vitrulan Internetional GmbH.

 

Swedish company Trelleborg Wheels Systems has decided to move all of its wheel rim production and development operations to one location in 2018 – Trelleborg Wheel Systems Liepaja that is located at the Liepāja Business Center. Regardless of the past efforts to achieve higher efficiency, the current production facility in the Swedish town of Savsjo is not very cost efficient and unlikely to remain competitive in terms of meeting the demand in the long run. Liepāja City Council emphasizes that it is very hopeful about the company’s plans to expand operations in Liepāja and create new jobs. 

Trelleborg AB first announced its plans to expand operations in Liepāja in the spring of 2016. Trelleborg Wheel Systems Liepaja then informed the board of Liepāja Special Economic Zone that it was planning to implement a EUR 965,000 manufacturing development and modernization project in Liepāja by the end of 2017. Liepāja Special Economic Zone’s board proceeded to sign an agreement with the company. Trelleborg AB operates in 44 countries, the company is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments in various industries, automobiles, oil and gas extraction, transport equipment, infrastructure development and aviation.

 

The joint-stock high and intellectual technology company HansaMatrix launched two investment projects in 2016, with total investment amount at EUR 1.15 million. One is a EUR 800,000 convertible loan for the high technology developer Zinātnes parks Ltd., and the other EUR 350,000 will be invested in installation of additional printed circuit board assembly line at the company’s production facility in Ventspils. Zinātnes parks is a developer of high technology infrastructure, which has begun developing a science and high technology industrial park in the Riga International Airport’s territory. The science and high technology park will house research and development equipment and laboratories, as well as office and apartment buildings for foreign scientists, researchers and engineers who will, together with local experts and engineers, develop new products, innovative technologies, and do research. The complex will also include a restaurant, a fitness center, a conference hall and an exhibition gallery.

 

The Central Finance and Contracting Agency (CFCA) at the beginning of 2016 invited projects to compete for the Cohesion Fund’s financing for increasing energy efficiency at production facilities, under a program devised by the Ministry of Economics. The total amount of financing under the program is EUR 38,300,036, including the Cohesion Fund’s financing of EUR 32,555,030 and private financing of at least EUR 5,745,006. Projects are accepted from companies whose main business line is in manufacturing industry.

 

Source: Firmas.lv

 

Useful websites: 

Investment and Development Agency of Latvia www.liaa.gov.lv

Ministry of Economics www.em.gov.lv

Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv

Central Statistical Bureau www.csb.gov.lv