SUCCESS - Versli Lietuva

Why Choose Lithuania
• 500 million consumers in one stop: Lithuania is a springboard to the single european market, counting over
500 million consumers as well as to eastern markets.
• Stable political and economic environment: ensured by eU, nATO and WTO membership
• Europe’s prime transport centre: two Trans-european transport corridors crossing the country
• Innovation-driven knowledge economy: global laser, biotech and IT leadership
• Top-quality talent pool: one of the best educated human resources in the world
500 mn
• Competitive business operation costs:
productivity-driving profit tax incentives for r&d,
tax “holidays” in free economic zones; competitive
wages and rent rates
Our Customers
Market Leaders
In November 2007, CIE Automotive launched a major expansion of its manufacturing
operations with a new hot forging and machining facility of over 12000 square meters,
based in Marijampole, Lithuania. This modern metal working facility is equipped with
state of the art equipment and has a staff of professional, experienced engineers and a
thoroughly trained forging and machining personnel.
UAB CIE LT Forge provides precision steel and steel alloy parts and components to close
tolerances for all applications where forged and machined parts are used in automotive
industries. CIE LT Forge takes pride in being able to produce parts completely, from
forging to machining the final details. All of CIE’s production is tailored to the demands
of customers throughout Western Europe and the United States.
UAB Stansefabrikken Automotive is a subsidiary company of the STAFA group,
established in 2006, operating in newly renovated facilities located in STAFA’s Industrial
Park in Ukmergė, Lithuania. The company’s objective is to gain a competitive edge in
component and Tier 2 supply within the automotive business, where stamping is the
base process. The company is an extension of the Norwegian long-standing Tier 2
supplier, Stansefabrikken Lillesand, which provides production to large customers in
Sweden, Germany and Poland. UAB Stansefabrikken, a sister company located at the
same site, has a top quality powder coating department, available for the unit also.
Yazaki Wiring Technologies Lietuva is a subsidiary of the Japanese company Yazaki, and is
the largest electric wiring enterprise in Lithuania. Employing 1,300 workers, the company
manufactures the latest generation electrical wiring assemblies (ignition system wires)
for Renault passenger cars. Since the establishment of its assembly plant in the Klaipėda
Free Economic Zone in 1993, Yazaki has invested a total of EUR 30 million into its activities.
In 2007, Yazaki Wiring Technologies Lietuva turnover reached EUR 96 million.
Schmitz Cargobull Baltic is located in Panevėžys, and belongs to the Schmitz Cargobull
group, whose central headquarters is based in Germany. The Schmitz Cargobull group
is a European market leader in the production of transportation devices. The company
in Panevėžys manufactures thermo-insulating FERROPLAST panels and isothermic
transportation equipment. Schmitz Cargobull Baltic has significantly invested to assure
quality, optimize production optimization, and train employees. In 2007, its production
area in Lithuania was expanded to 15,000 sq. m , with a total of 300 employees, and
its annual turnover grew by 27%, reaching EUR 63 million. Part of the company’s
production is sold to clients in Lithuania; the rest is exported to Germany, Denmark,
the UK, and the Russian market.
consumers in one stop
By establishing your business in Lithuania, you instantly get access to the single
European market, counting 500 million consumers
Facts and Figures
LAND AREA
65,300 km²
POPULATION
3.4 million
ETHNIC COMPOSITION
Lithuanian – 84% of the population,
Polish – 6.1%, Russian – 4.9%
MAIN CITIES
Vilnius (capital): 556,000
Kaunas: 358,000
Klaipėda: 186,000
Šiauliai: 128,000
Panevėžys: 115,000
CLIMATE
Moderate Continental, with average temperatures ranging from - 5 C in January to 23 C
in July
MEASUREMENT SySTEM
Metric
TIME
Lithuania is in the Central European Time zone: GMT+2 hours
CURRENCy
The national currency is the Litas (LTL or LT), comprised of 100 centas. Litas is pegged
to the Euro at the rate of 3.4528 LTL/EUR
FISCAL yEAR
Calendar year
NATIONAL HOLIDAyS
• January 1 st (New year‘s Day)
• February 16 th (Independence Day)
• March 11 th (Restoration of Independence)
• Easter (Sunday and the following Monday)
• May 1 st (Labour Day)
• 1 st Sunday in May (Mother‘s Day)
www.businesslithuania.com
• June 24 th (Midsummer Festival)
• July 6 th (Coronation of Mindaugas,
King of Lithuania)
• August 15 th (Assumption Day)
• November 1 st (All Saints’ Day)
• December 25-26 th (Christmas)
one STEP
FOR YOU ....
... one giant
leap for YOUR
SUCCESS
The AUTOMOTIVe
IndUsTry
In LIThUAnIA

Market Opportunities
• Competitive and qualified labour force
• Long-standing metal processing traditions
• Highly competitive logistics from Lithuania to Central Europe, a major European automotive industry cluster
• Highly effective industry work expenditure
• Experience in international production chains, and recognition of large international companies
• Reserves for increasing labour efficiency
• Possibility to make use of financial support to increase labour force productivity, and for the development of
the high technology industry
• Market expansion potential: Lithuania may be of considerable interest to Western
companies trying to penetrate the vast Russian market, or the markets of other CIS
countries Highly competitive logistics
from Lithuania to central Europe,
in terms of both time and cost
Industry Overview
The automotive industry generates about 6% of the total added
value created by manufacturing companies and accounting for
around EUR 271 billion per annum. The sector is largely oriented toward
specialist component production, with a particular focus on
wiring devices (there is a strong electronics specialization within the
Lithuanian workforce).
Small but Cascading Forward
In 2008, the transport equipment industry demonstrated excellent
growth as its value added at constant prices rose by almost 18% compared
to the previous year. In 2004–2006, the automotive industry grew
at the fastest pace compared to most economic activities. However, in
2007 the sector experienced some fluctuation due to a decrease in the
production of electronic equipment for transportation devices.
Growth of Gross Value Added
%
45
40
35
30
25
20
15
10
5
0
19.4 19.6
10.7
13.0
14.9
4.8
14.0
5.7
2000 2001 2002 2003 2004 2005 2006 2007 2008
Manufacturing of transport equipment
Manufacturing
Source: Lithuanian Department of Statistics
38.6 38.8
11.8
23.0
8.6 9.5
7.7
4.8
17.7
1.6
The volume of sales increased by almost 20% in 2008 compared to
2007. Despite the global economic downturn, the industry retained its
growth in the first half of the year, in contrast to the majority of industries.
Various transport parts for Volkswagen, Mercedes, BMW, Renault,
Volvo, SAAB, Dacia, etc., have been produced by the Lithuanian automotive
industry. Therefore, over two-thirds of automotive output has
been sold on foreign markets. Exported growth in value for 2007-2008
accounted for 9%. In 2008, more than a half of exports went to the CIS
as a result of the eastward re-export of second-hand cars. However,
the bulk of transport (mostly automotive) components of Lithuanian
origin goes to EU-15 member countries (particularly Germany, Sweden,
Denmark and the UK) and the markets of new EU countries. Since
2008, new export markets – Azerbaijan, Afghanistan, Turkmenistan,
Iraq, UAE, Bosnia and Herzegovina, Bolivia, and Thailand – have been
discovered by Lithuanian transport equipment producers.
Sales of Motor Vehicles and Other Transport Equipment
EUR M
500
450
400
350
300
250
200
150
100
50
0
114.1
17.4
108.6
30.4
123.7
52.4
91.8
118.7 130.6 147.1
2002 2003 2004 2005 2006 2007 2008
Source: DnB NORD Bank
157.6
Exports Domestic sales
214.6 264.1
324.1
Components Predominate
The sector is largely oriented toward component production, with a
particular focus on wiring devices as there is a strong electronics specialization
within the Lithuanian workforce. Within the components
sector, the main segment is the wire and cables industry, accounting
for 77% of output. There are several key players in the sub-sector, producing
components for Volkswagen, Renault, Volvo Trucks, Dacia, and
SAAB. Moreover, the newest models of Mercedes and BMW will soon
be provided with parts made in Lithuania.
Aside from automotive wiring, the components sector also includes
specializations in the following segments: electronics, oil and air filters,
brake systems, air compressors, diesel engines, windows and hitches.
Market Share by Auto Components
Wires & cables
Market Share
79%
Bodies of motor vehicles 8%
Engine parts 2%
Laminated glass 3%
Fuel, oil & air filters 2%
Compressors 3%
Other motor vehicle components 3%
Productivity on the Rise
There were 37 manufacturers of motor vehicles and 48 manufacturers
of other transport equipment in Lithuania at the beginning of
2009. While there are a few large employers, the industry is generally
dominated by small- and medium-sized players, with most companies
employing up to 50 workers. While the number of workers in the
manufacturing industry has continued to decline, the workforce in the
motor vehicles and manufacturing sector has increased by almost 8%
to 8.4 thousand.
Labour productivity in the transport equipment sector was approximately
one fifth above the manufacturing industry average in 2008,
although the annual growth of this indicator was much smaller than
across the manufacturing industry. Value added per worker increased
by about 14%.
For a third year in a row, the average profitability of automotive companies
has been higher than the manufacturing industry’s average. It
remained quite respectable in the second half of 2008, when profit
margins across the manufacturing industry shrank dramatically.
Gross Profit Margin
%
Source: BMI
30
25
20
15
10
5
0
16.7
19.3
21
16.2
18.1
25.4
16.9
19.6 18.3 17.8
3.1
17.4 16.7 17.2
14 16.7 14
7.8
13.9 16.2
17.6
15 15.3 15.6
22
24.7
19.3
12.6 12.1
10.6
6.2
21.7
26.4
27
22.8
21.1 20.3
18.7 18
28.4
24.4
20.3
2006
Q1
2006
Q2
2006
Q3
Manufacturing
2006
Q4
2007
Q1
2007
Q2
Source: Lithuanian Department of Statistics
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
Manufacture of motor vehicles, trailers
Manufacture of other transport equipment
Investing in the Long-term
FDI has been a key driver for the growth of automobile manufacturing
in Lithuania. Scandinavian countries like Denmark and Sweden
as well as Western European countries like Germany and France
have been the largest sources of FDI for Lithuania. Manufacturing
transport equipment is one of the dominant sectors, which has been
witnessing an appreciable level of FDI in the past few years.
At the beginning of 2009, the value of accumulated FDI accounted
for EUR 111 million and increased by 13.3% when compared to 2008.
The bulk of investment came from Estonia (34.2% of total FDI), Germany
(33.2%) and Denmark (25.9%). Some of the major European
automotive industry players from Germany, France, Spain, and Norway
have already invested in Lithuania and moved their production
facilities here.
Currently, the majority of Lithuanian automotive companies are lower
level suppliers internationally of major OEMs, cooperating with Tier
1 or Tier 2 suppliers. However, there are some positive trends associated
with the transfer of greater responsibility to local producers.
Among the new EU countries, Poland, Hungary, and the Czech Republic
are clearly in the lead in terms of automotive industry magnitude,
and have taken in significant foreign investment. In spite of
its considerably smaller automotive industry production, Lithuania
exceeds the average of the new EU member states according to the
effectiveness of the labour force cost.
FDI Trends
EUR M
160
120
80
40
0
76
3188 3334
273926712474
2583
2524
2098
4000
3000
2000
1594
1000
3515
3789
3428
3323
3693 3645 2824
81
83
2630
80 85 83 84 2122 2157
92 94 90 99 122
111106 93 98 104 110 108
2005
Q1
2005
Q2
2005
Q3
2005
Q4
2006
Q1
2006
Q2
2006
Q3
2006
Q4
2007
Q1
Manufacturing Transport equipment
Source: Lithuanian Department of Statistics
2007
Q2
What Makes Us Competitive?
� Although small, Lithuania has a good reputation for quality work at
affordable prices, due to its highly skilled (but cost-efficient) workforce.
However, the country’s gross average monthly wage is still
considerably lower than that in Western Europe countries and even
some of new member states (EUR 620).
� Lithuania has an advantage in that its membership in the EU and its
proximity to Scandinavia and Russia assures flexibility to satisfy small
and custom orders while making it an ideal manufacturing hub for
supplying the region’s auto plants.
� Seeking to increase the automotive industry’s competitiveness,
companies are working in the same direction as the entire engineering
industry to improve their activities: the creation and production
of goods and services with higher added value, implementation
of new business models, modernization of production, human resource
development, and R&D expansion.
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
0