In the past months, Latvijas Finieris’ Estonian subsidiary, Kohila Vineer OÜ, took on 39 new workers and is aiming to hire a further 110 employees next year at its factory in close proximity to Tallinn, Estonia.
With this plan, Latvijas aims to raise the facility’s production capacity. With this in mind, the plywood manufacturer is currently constructing a new production hall which is to have a total floor space of about 17,000m2.
Latvijas Finieris says it is currently expanding the operations of its Estonian offshoot “by developing full cycle production of plywood and related products,” according to senior company representatives.
“The new factory will feature the wooden load-bearing structural elements manufactured by Peetri Puit OÜ, being one of the few examples in the construction of industrial facilities in the Baltics.
The general contractor, Estonian company Maru Ehitus OÜ, will be responsible for the design and construction works,” said Jolanta Medne, the supervisory board office manager at Latvijas Finieris. “All building activities are done in accordance with our wooden building concept, combining historical achievements of woodcraft with modern industrial production using the diverse potential of wood. It is a long-lasting, strong, ecological and renewable material.”
Mr Medne told WBPI that the company is currently in the process of recruiting new personnel for the facility, with particular emphasis placed on specialists.
These will go through intense training “to quickly take over the work, with equipment specially ordered and manufactured according to the latest technology standards and global best practice,” said a company representative.
New investment to raise capacity
The Estonian subsidiary, Kohila Vineer, is based in Kohila, a municipality located about 34km from Estonia’s capital, Tallinn. The firm was set up in 2011 and will fit out the production hall with new equipment.
Mr Medne said that this would be manufactured by the leading companies focused on the birch plywood industry, in Finland, Austria, Germany and Latvia. “Preparatory work is on schedule and the project is to be implemented by the end of 2016,” he said. “Further information will follow after the project is completed.”
Under the plan, the expanded factory will reach an output capacity of some 45,000m³ of of birch plywood per year and will be operated by an aggregate workforce of about 230 employees.
With this project, Latvijas Finieris’ total investment at the Estonian plant will total €80m in the 2011-16 period, according to figures released by the firm.
Based in Riga, the capital of Latvia, Latvijas Finieris says that, in addition to its foreign-based manufacturing activities, it produces custommade birch plywood at its Lignums, Furniers and Verems mills, all of which are located in Latvia. The company’s facilities are ISO 9001, 14001 and OHSAS 18001 certified.
In addition to plywood, the manufacturer's product range includes furniture, rocking horses, traffic signs, skateboard ramps and other products. The company’s core business comprises the development, manufacture and sale of birch plywood. It exports its output to more than 60 markets worldwide.
Global expansion
Latvijas Finieris says that Latvia’s plywood industry is well-established and has played a key role in the country’s economy. In 1928, Latvian output represented some 7.1% of global plywood production, ranking Latvia as the world’s fourth largest plywood producer.
“During the first period of Latvian independence, plywood manufactured in Latvia … was well-known throughout the world, and it represented a considerable share of the [global plywood] market,” Latvijas Finieris said in a statement.
In 1909, plywood production began at the Latvijas Berzs plant, and 14 years later, a second plywood production facility was established in Furniers, which shortly afterwards became the country’s largest exporter of plywood. In 1929, a third Latvian plywood plant was launched in Lignums, initially with an output capacity of about 15,000m³ of plywood per year.
By 1931, Latvia was the world’s third largest plywood producer – preceded by Finland and the Soviet Union – and local plywood manufacturers were responsible for as much as 10.4% of the global plywood output, according to figures released by Latvijas Finieris. Latvia’s annexation by the Soviet Union did not halt the development of the country’s plywood industry.
The 1970s marked a particularly profitable period for local plywood producers, as in 1970 Latvia’s total plywood output reached its record level of 139,000m³. In 1975, the three production facilities were merged, and a state-run company, Plywood Production Union of Latvia, was established by the country’s authorities to integrate the industry into one entity.
This said, according to Latvijas Finieris, in the late 1980s Latvia’s plywood production began to gradually decrease in relation to the gradual collapse of the Soviet economy.
The revival of the country’s plywood industry began in 1991, when Latvia separated itself from the USSR and regained independence. One year later, Latvijas Finieris was set up with the aim of replacing the stateowned Plywood Production Union of Latvia, thus paving the way for the industry’s further expansion, both in the domestic and foreign markets.
Since its establishment, Latvijas Finieris has continually expanded: The company’s production volume has increased fivefold since 1992 and the value of its annual sales reported a tenfold increase, the firm said in a statement.
Estonia on growth path
The company’s Estonian subsidiary could benefit from the positive economic outlook for that Baltic state as Estonia’s economy is poised to expand in the coming years, as confirmed by figures from the EU’s statistical office Eurostat. Last year, the country reported a gross domestic product (GDP) growth of only 0.9%. This said, in 2016, Estonia is expected to expand its GDP by 2.1%, and in 2017 the country could reach a GDP growth of 2.3%.
Moreover, estimates by the European institutions are in line with the optimistic forecasts by the World Bank, which expects that the country’s economy will expand by 3% in 2016; and by 3.5% in 2017. Should these estimates prove to be correct, Estonian companies could be facing a period of accelerated growth in the coming years. Since the country regained its independence in 1991, Estonia has maintained strong economic ties with the neighbouring Baltic States and Scandinavian countries.
In 2015, the main trade partners of Estonian companies included Sweden, responsible for 18.8% of Estonia’s exports; Finland, with a 16% stake; and Latvia, with a 10.3% share of the country’s total export sales.
These were followed by Russia, with a 6.7% stake; and Lithuania, which was responsible for 5.8% of Estonia’s exports last year, according to data from the state-run Statistical Office of Estonia.
Among the country’s customer countries, Finland is ranked first, with a 14.5% share of Estonian imports, followed by Germany, Lithuania and Latvia, with stakes of 11.1%, 9.4% and 8.7%, respectively.
What is noteworthy is that Estonia’s wood based output represents a significant share of the country’s exports and is responsible for 9.9% of its total export sales. Among all Estonia’s exports, this category of products is only preceded by machinery and appliances, which hold a 28.5% share of the total, according to data from the Statistical Office of Estonia.
In 2015, local companies exported a total of €11.6bn worth of products to various foreign markets. Of these, exports of Estonian wood based products generated close to €1.15bnworth of products.