Axioma Metering opens second factory, able to produce 3 million metering devices per year

The second automated Axioma Metering factory to produce smart ultrasonic metering devices started operating in the territory of the Kaunas Free Economic Zone (FEZ). The opening of the second factory expands the company’s annual production capacity from 2 to 3 million metering devices. The new factory, built next to the first factory, expands the total manufacturing area from 7,200 to 17,000 square meters.   

“A made-in-Lithuania high-value-added product, an ultrasonic water meter, can directly contribute to solving the global ecological resource-saving problem. We offer companies trying to reduce water wastage an effective, durable and affordable product, which creates great value for water supply companies on different continents and outperforms the products made by global manufacturers,” says Andrius Janukonis, Chairman of the Board of ICOR, the company which owns Axioma Metering.

According to Ignas Vosylius, CEO of Axioma Metering, the examples of projects that have already been implemented show that the practical and durable made-in-Lithuania metering devices promote the transformation of water supply companies. Companies are able to reduce wastage in water supply networks from 30 per cent to 9 per cent or even less. This not only enables more efficient use of water, but also allows suppliers to offer better prices to their customers. 

“Last year, Axioma Metering manufactured 1 million metering devices that allowed 1 million households to consume water more responsibly. We estimate that this saves about 10 million cubic meters of water per month, which is a huge contribution to more efficient consumption,” says Vosylius.

According to Janukonis, the fact that the company exports 90 % of the metering devices and wins more than 50 % of public procurement tenders in which it participates can be seen as a success story that directly contributes to Lithuania’s economic growth. 

According to Janukonis, different engineering companies of the ICOR group – KatraLimatikaAxis Industries, whose meter-making experience was taken over by Axioma Metering – have gone far in the past 30 years, from the development and production of huge industrial meters to the development and production of state-of-the-art metering devices equipped with Internet of Things technology.

“Although metering devices have been shrinking in size every year, we have continuously expanded their capabilities. Our Qalcosonic W1 product now ranks among the most advanced ultrasonic metering devices, now replacing outdated mechanical meters in different markets,” says Janukonis.

According to Vosylius, the development of meter production is planned in advance and is carried out consistently. 

“We bought both plots for the construction of the factories in one go. In the first factory we started with one production line, to which we later added a second line. The new factory opens today with one production line. We monitor the market and its needs, so if necessary, we are ready to install an additional line. This will allow the production of meters to grow to 6 million units per year,” says Vosylius. 

The number of employees at the company is now close to 500, and in the long term it is planned to create another 300 jobs. “Under one roof, we combine all production operations, we not only produce, but also develop new meters. With each stage of development, we implement new technological ideas and raise the level of automation, using robots. These are serious competitive advantages for us as an employer,” says Vosylius. 

Currently, exports account for over 90 % of the company’s total sales. The Lithuanian manufacturer supplies most of its water metering appliances to households in Italy, Germany, India, Scandinavia, Chile and Israel. The meters have also begun to be installed in households in the city of Vilnius.  

“We will continue to strengthen our position in these countries this year. We are also entering the markets of Saudi Arabia and Oceania, where water management processes are developing,” Vosylius said. 

Axioma Metering’s sales volume in 2023 grew 2.2 times – to 59 million euros. “This year we aim to increase revenue to 95 million euros,” Vosylius said.

94% of investors recommend Klaipėda FEZ

The absolute majority of investors operating in the Klaipėda Free Economic Zone (FEZ) would recommend their experience to other businesses, according to the latest client satisfaction survey conducted by the strategic management consulting company Smart Continent LT.

According to the survey conducted at the end of 2023, the Klaipėda FEZ is highly rated by 94.3% of investors, with an additional 5.7% rating their experience positively. There were no so-called “detractors” among the respondents – dissatisfied or non-recommending clients.

Therefore, the Net Promoter Score (NPS) index, indicating the level of organization’s customer recommendation and loyalty, currently stands at 94.3%.

“A very good NPS index is considered to be 70%, while a result of 80% or higher indicates that the company meets the highest standards and customers gladly recommend it to others,” comments Ieva Girdvainienė, Managing Director of Smart Continent LT.

According to the survey, Klaipėda FEZ investors rate most highly the image and communication of the FEZ management company, the physical environment of the territory, the business community and municipal services. In the opinion of FEZ clients, the most effort should currently be put into improving transportation and accessibility, as well as socialization and green spaces.

In the survey, the majority of respondents positively commented on the conditions in Klaipėda FEZ for progressive business development and employee safety, as well as the friendly, collaboration-oriented business community. The Klaipėda FEZ management company itself received almost the highest possible scores from investors in terms of service quality, transparency, reliability, and professionalism.

Among the desirable aspects, Klaipėda FEZ investors most frequently mentioned the need for more diverse catering, transportation, leisure, and other services. Childcare, daily goods trading, equipment rental, sports, and even accommodation and other services are becoming increasingly relevant for FEZ companies and employees.

Eimantas Kiudulas, the CEO of Klaipėda FEZ, states that the very high satisfaction of current clients creates opportunities for both the expansion of existing companies in the territory and new investments. In turn, the increasing need for social environment development illustrates the ongoing transformation of the FEZ into a vibrant and multifunctional high-value-added territory.

“Even in the challenging year 2023, expansion projects were implemented or initiated by such longstanding residents of our territory as Klaipėda Business Park, Retal Baltic Films, Albright Lithuania, Mestilla and other companies. We also attracted several new investors, and continued our FlexStart projects. None of this could happen without high satisfaction of existing clients, ensuring the resilience of our business community in the face of challenges and laying stronger foundations for even greater breakthroughs in the future. The FEZ territory continues to transform into a high-value-added community that requires appropriate functions and services,” says E. Kiudulas.

According to him, companies operating in the FEZ are increasingly interested in the well-being of their employees, so they need diverse social and recreational opportunities near workplaces, and they increasingly value a quality and comfortable environment.

“Therefore, we will strive for Klaipėda FEZ to become not only a good place to work but also to be and spend time. In the near future, we hope to announce several pieces of news related to active lifestyle in the FEZ territory, we also working on more retail and social service diversity. Our vision for the near future is a deeper and higher quality integration into the urban fabric,” says E. Kiudulas.

According to Arvydas Vaitkus, Mayor of Klaipėda, investments creating added value for the city and its residents are important and necessary not only for Klaipėda or the coastal region but also for the whole of Lithuania.

“I often communicate with investors in Klaipėda FEZ, and I don’t know of anyone who is not pleased to be located here. It is gratifying that in Klaipėda, companies using the latest technologies are emerging, we increasingly observe companies paying more attention to ecology, and FEZ activities are building trust among investors. This is the result of long-term and consistent work, which brings benefits to the entire region,” says Arvydas Vaitkus, Mayor of Klaipėda.

According to Marius Stasiukaitis, Strategy Manager at Invest Lithuania, the country has taken several important steps in recent years to improve the investment environment for existing and potential investors.

“Laws have been proposed to expand the corporate income tax exemption and increase land supply for investors, defense industry projects have been allowed in FEZ areas, a financial instrument has been created to encourage the construction of typical production buildings in FEZ and industrial park areas, a risk-sharing model has been agreed to expand flight offerings, and more. In such an environment, it is critically important for Lithuania to discover and exploit new growing sectors and areas, such as MilTech, green technologies, micromobility, and pay more attention to the East Asian region, where countries are increasingly investing globally and in Central and Eastern Europe,” says M. Stasiukaitis.

The customer satisfaction survey was conducted in October-November 2023, with 34 executives – directors, their deputies, department heads, or human resources managers of 34 Klaipėda FEZ investor companies being directly surveyed.

Currently, about 2800 employees work in Klaipėda FEZ companies, and about 5000 throughout the territory. More than 45 foreign investors operating in Klaipėda FEZ paid over EUR 107 million in personal income, VAT, and social security taxes in 2022, and purchased goods and services worth more than EUR 500 million in the Lithuanian market. Since its inception in 2002, Lithuanian and foreign-capital companies have implemented or planned investments of EUR 778 million in Klaipėda FEZ.

Klaipėda FEZ: half a billion in taxes for the city and the state

Over the last 10 years, investors operating in the Klaipėda FEZ have paid EUR 66 million in personal income tax, the majority of which has gone to the city budget. During this period, FEZ investors also paid EUR 500 million in VAT and social security taxes for the state budget.

In 2022 alone – the latest year for which detailed data is currently available – Klaipėda FEZ investors paid EUR 12.9 million in personal income tax. As the majority of Klaipėda FEZ employees are Klaipėda residents, the majority of this tax went to the Klaipėda City Municipality budget.

In addition, in 2022 alone, Klaipėda FEZ investors paid EUR 80 million of value added tax and another EUR 14 million of social security taxes to the state budget. The total tax contribution of Klaipėda FEZ companies to the city, state and social security budgets over the last 10 years amounted to almost EUR 567 million.

In comparison, the total state aid to Klaipėda FEZ companies over the last decade amounted to EUR 53 million. In other words, the direct tax value of investors’ activities alone has exceeded state support by more than 10 times over this period. And in 2022 alone, Klaipėda FEZ investors have paid twice as much tax as they have received in support over the last decade.

According to Eimantas Kiudulas, the CEO of Klaipėda FEZ, free economic zones are a great example that investments made by the state and the cities in the creation of businesses and new jobs pay off several times over if such projects are implemented professionally. According to him, another interesting detail in the Klaipėda FEZ figures is the consistently improving ratio of support received to taxes paid. For example, in 2016, FEZ companies paid EUR 32 million in taxes and received five times less, i.e. EUR 6 million in state aid. In 2021, the ratio was already 8 times and in 2022 it was 13 times. In other words, while Lithuania and the municipality continues to provide various subsidies to FEZ investors, the “return” on these investments in the form of taxes constantly improves.

“High and growing taxes, which outstrip state support by a factor of several times, prove that establishing and maintaining free zones was the right choice for Lithuania. On the other hand, tax incentives have not been a priority for investors around the world for some time now – they are looking first and foremost for talent, expertise, infrastructure and business community. Lithuania is no longer a country of cheap labour, and the fact that investors still choose to create and grow value here is a great achievement for the state, our city and for each and every citizen of Klaipėda,” comments E. Kiudulas.

The claims regarding the labour cost factor are also illustrated by the latest detailed wage statistics, according to which the average salaries in the FEZ investors’ companies in 2022 were 26% higher than in Klaipėda County as a whole and 17% higher than among the county’s manufacturing companies. Moreover, the average salaries of Klaipėda FEZ investors were even a few euros higher than the overall average in Vilnius, Lithuania’s capital and business hub.

E.Kiudulas also points out that the figures mentioned above refer only to direct taxes of FEZ investors, although the real impact of the territory’s business community on the economy and the state is even greater. For example, in 2022 alone, FEZ investors purchased more than EUR 500 million worth of goods and services on the Lithuanian market, and as much as EUR 2.7 billion in the last decade. All of this translates into orders, wages and taxes for hundreds of other businesses in the coastal region and across the country – suppliers of a wide range of goods and services to the FEZ companies.

“Klaipėda FEZ’s ongoing transformation from a traditional manufacturing area to an ecosystem of R&D, product development, innovation and high added value is yielding obvious results for the city and the country. But the biggest challenge of this development is further nurturing, attracting and retaining talents. Over the last decade, we have seen a number of established FEZ companies start innovative activities, and we have also attracted some high value-added companies, but it is the supply of talent and the quality of life in Klaipėda that will determine whether we will be able to maintain a similar pace in the next decade”, says Kiudulas, noting that the Klaipėda FEZ is home to investors from both foreign and Lithuanian capital.

Reducing the value-added gap

Attracting new investment remains critical to the country’s development – the Lithuanian economy is still 2-3 times behind the leading EU countries in terms of both gross domestic product per employee and salaries. Therefore, free economic zones, which help to attract higher value-added industries than the overall national average, are important to narrow this gap as soon as possible, says Marius Stasiukaitis, Head of Strategy at Invest Lithuania, the national FDI agency.

“Klaipėda FEZ is one of the longest and most successful industrial territories in Lithuania, with a concentration of high value-added industrial businesses. The chosen direction of developing an ecosystem based on advanced manufacturing competences and innovation is also important for Lithuania’s overall competitiveness. Competing on low costs alone is a road to nowhere. There is more than one country in the CEE region that can offer significantly lower costs than Lithuania.

Klaipėda’s strategic position is also important, as it has great potential to be one of Lithuania’s green technology hubs. This is due both to the strategic position of the seaport and to the potential of the Baltic Sea for renewable energy development. However, this requires decisive steps by both the state and the region – a clear vision and strategy on how we plan to become a centre of green competences. The country’s generic strengths – infrastructure, talent or business environment – will not be enough to attract innovative, strategic green technology and manufacturing companies,” comments M. Stasiukaitis.

Arginta Engineering UAB operations in the Panevėžys Free Economic Zone

According to Arginta Engineering UAB’s estimates for 2023, consolidated income of its factories in Vilnius, Lithuania and Outokumpu, Finland would reach EUR 61 million, and EBITDA (earnings before interest, tax, depreciation and amortisation) would be EUR 4.5 million. 

In 2024, the company will focus on its new factory in Panevėžys FEZ the opening of which will take place in March. It plans to employ and train over 50 people at the enterprise in the free economic zone. According to Tomas Jaskelevičius, Arginta Engineering’s CEO, in recent years the company increased its production volumes considerably including the largest order in its history – an equipment sale to a major liquefied gas project at the shores of Western Australia. 

Tomas Jaskelevičius notes that the last year also saw significant challenges due to rising interest, which has had a direct impact on the company’s development.

In January 2024, the company moved to new premises within Panevėžys LEZ after investing over EUR 8 million in the first construction phase and employing over 60 people. 

Upon split-up of Arginta Group in April 2023, Arginta Engineering became an independent group with operations in Vilnius, Panevėžys and Finland. Tomas Jaskelevičius is positive that 2024 will bring even better results, with the projected EBITDA growth of about 10%, and an approx. 15% increase in value added.

The year of resilient Klaipėda – Eimantas Kiudulas

Dear colleagues and friends,

A year ago, many of us rightly feared 2023: while the energy and inflation crises had already peaked, the interest rate and geopolitical environment that restricts business and consumption were and still are worrying. The challenges are far from having disappeared over the year, but I venture to cautiously welcome the fact that we are entering 2024 with a little more good energy. And this is not only due to slightly more positive global economic forecasts, but above all, because of the people of Klaipėda.

We do not yet have the final business figures for 2023, so I can only speak about early indications: we will probably not post new records. But in such periods, resilience, continuity and sticking to the long-term strategy are the real strengths and victories that lay the foundations for the future.

In the Klaipėda FEZ business community, resilience meant not only retaining jobs or increasing average salaries, but also investing in advancements, including developments by companies such as Klaipėdos verslo parkas, Retal Baltic Films, Albright Lietuva, Mestilla. We even welcomed several new investors. Also, the Klaipėda FEZ management company was true to its long-term strategy: we have officially completed the second FlexStart building, started the development of the third one and are even gradually preparing for the fourth one.

From the outside, all this may sound like not a huge deal – just a few names, steps and facts. But each step forward further strengthens the economic resilience of the Klaipėda FEZ and the city. And this has real results for everyone. For instance, in the middle of last year, we announced the record-breaking taxes paid by Klaipėda FEZ investors, or the half-billion annual purchases on the Lithuanian market. And recently we received numbers showing that the average salaries paid by investors in the Klaipėda FEZ surpass the Klaipėda county statistics by as much as 26%. Moreover, this “good” gap has only been widening over the last few years. Also, our analyses show that although Klaipėda FEZ investors’ companies employ about 3% of Klaipėda city workers, they generate four times more, i.e. about 12% of the city’s added value.

All this shows that in more than two decades of operation, we have managed to attract not “just anyone” to the FEZ, but high value-added enterprises. Therefore, even if we have not been able to enjoy the largest new investments in a rather difficult year, every investor retained or, even more so, expanding under such circumstances is a great victory for the whole city.

By the way, at the end of last year we conducted a new survey of investors and tenants of Klaipėda FEZ. We will share the data separately, but I would like to point out now that our investors give the highest scores to their experience, which is in many cases determined by the people of Klaipėda themselves: employees, partners, municipality, as well as the academic, resident and other communities. Simply put, Klaipėda FEZ businesses are happy and proud to operate in Klaipėda, recommend and trust our city and want to continue to contribute to its success and growth. Although this is not directly reflected in business indicators, the opinion of investors at such a time is also a victory for me, creating both real value today and the preconditions for new great success stories in the near future.

For me personally, the past year has also been marked by constructive dialogues – with the new city government, the port, the business, academic and resident communities. The biggest needs of residents and businesses are known and addressing them requires an often difficult consensus on priorities. I am pleased that we all agree that Klaipėda has distinct strengths that have shown their resilience to various challenges.

So this year, I will first and foremost wish our business community and every citizen of Klaipėda courage. 2023 proved that we have a lot to be proud of and a lot to stand up to, and I wish that 2024 will be a year of bold, strong, determined and new steps.

Eimantas Kiudulas and
Team Klaipėda FEZ

Axioma Metering plans to increase its production volume to 6 million meters per year

The smart water meter manufacturer Axioma Metering, having opened a second factory at the Kaunas Free Economic Zone (FEZ), plans to increase its production volume to 6 million meters per year.

The company’s products are made in Kaunas and exported to countries such as India. The company is considering opportunities for exporting to Saudi Arabia. Despite challenges arising due to the disrupted supply chain for semiconductors, company CEO Ignas Vosylius emphasises that the decision not to halt investment during a difficult period has proven to be the right one, allowing the company to finish 2023 with a growth in sales volume of two and a half times, that is, about €15 million.

In 2024, Axioma Metering has even more ambitious plans, seeking to increase sales to the symbolic €100 million mark.

CEO Vosylius focuses on the uniqueness of the company’s production, highlighting the fact that all processes are performed in the factory, in order to maintain the company’s quality parameters. The company seeks to maintain complete control over the production process and preserve its knowhow in-house, despite the higher expenses such control requires.

On the other hand, in 2024 the company’s success will also depend on what kind of administrative and bureaucratic decisions will be taken in other countries. Although the company has a record of succeeding in competitive tenders, there are still challenges due to administrative and bureaucratic procedures. Axioma Metering encourages traditional municipal utility companies to become data-driven organisations. If these processes move ahead rapidly, the company plans to build another factory.

Klaipėda FEZ solutions that increase city’s and Lithuania’s attractiveness for investment

As businesses increasingly compete for the attention of consumers, the ability to move into industrial or office premises at lightning speed and quickly adapt them to their own needs is becoming an important competitive advantage. The Klaipėda Free Economic Zone (FEZ) management company, which noticed this trend some time ago, was quick to take advantage of this insight and focused its attention on a quick launch strategy. The best proof of this is the FlexStart 2 project, completed at the beginning of this year, which is increasing the investment attractiveness not only of Klaipėda but also of Lithuania. INVEGA writes about it in an article in Verslo žinios.

According to Darius Urbonas, Head of Real Estate Project Development at Klaipėda FEZ, the FEZ management company has been developing a quick launch and expansion strategy for almost a decade, which consists of ensuring smooth processes of business settlement in the FEZ territory and taking care of the relevant physical infrastructure.

“Fast and consistent settlement procedures are a key factor influencing the decision of businesses to locate and expand in one or another location. Naturally, a week, a month or two saved in buoyant markets allows users to offer or test new products more quickly, and in quieter times, this allows to streamline operations and prepare for the future. That’s why, back in the middle of the last decade, we noticed the growing need for such infrastructure and decided to invest in pre-prepared, tenant-specific premises that could be adapted to a specific tenant in a short period of time,” says Urbonas.

According to him, the first result of this strategic direction was the completion of the first FlexStart about five years ago, which is a segmented infrastructure of 8,000 sqm for manufacturing, administrative and warehousing activities.

“After leasing the project to foreign investors, we knew we were on the right track, especially as we received international accolades – FlexStart was awarded the world’s first FDI Intelligence Award for quick investor launch. This only served to highlight our speed-oriented strategy – we help businesses get established much faster than elsewhere,” he says.

Responds to the economic interests of both the region and the country

D. Urbonas goes on to say that once the importance of FlexStart in attracting significant investment was established, it was immediately decided to invest in a second similar project. Especially since the success of the first project meant that tenants were interested even before the development of FlexStart 2 had started.

According to him, when looking for potential partners to help realise the vision of FlexStart 2, it was decided to turn to the Public Investment Development Agency (VIPA), which granted a loan of almost EUR 5 million to Klaipėda FEZ.

“One of INVEGA’s functions is to strengthen the strategic development directions of the state and increase Lithuania’s competitive advantage through various financial instruments. Of course, FlexStart projects have a clear business model and a high degree of competitiveness, but the fact that INVEGA can also view them through the lens of Lithuania’s interests helped us to quickly find common ground. In addition, the loan terms offered were more competitive than the alternatives available on the market,” says Urbonas.

He also points out that the granting of this loan has only confirmed the strategy chosen by the company managing the territory almost a decade ago and the financial sustainability of this type of projects.

“The Klaipėda FEZ investor community is a significant part of the coastal and Lithuanian economy. Last year alone, the turnover of all Klaipėda FEZ investors reached EUR 1.76 billion, purchases of goods and services from Lithuanian suppliers exceeded EUR 500 million, and VAT, income and social taxes paid exceeded EUR 100 million. This shows our importance not only in the Klaipėda region, but also at the level of the whole country,” he says.

According to Rūta Mickevičienė, INVEGA’s Head of Private Clients, the FlexStart projects initiated by the Klaipėda FEZ have a great potential, which gives us no doubt about their success.

“FlexStart 2 was the first project we financed under the typical manufacturing building scheme, and it was also the first project to be completed. We are confident that this solution will contribute not only to the prosperity of the Klaipėda FEZ, but also to the strategic interests of the country – increasing Lithuania’s attractiveness to investors and creating the image of a country that is integrating businesses at a very fast pace. And the success of the first projects has led us to finance the third FlexStart building as well, for which we have granted a loan of EUR 5.12 million,” says R. Mickevičienė.

FlexStart 2 – more modern and efficient than the first

According to Urbonas, FlexStart2 is nowadays already enabled as a manufacturing, administrative, warehousing and even commercial infrastructure that can be adapted to the individual tenant’s needs in a matter of weeks or months. He says it is only natural that, with more than five years of experience since the first FlexStart, the second project has been improved even further.

“The development and implementation of FlexStart 2 itself went extremely smoothly, thanks to the smooth, professional and constructive cooperation with INVEGA. We have applied the lessons learned and the second project is more modern, more efficient and more aesthetically pleasing than the first. However, its main function and the value it brings to businesses remains the same – the project creates the conditions for new investors to join our business community at lightning speed, and for existing investors to expand even more quickly,” he emphasises.

The FlexStart 2 building has been fully leased for some time. Among the companies located in the building is UAB Albright Lietuva, a British-based manufacturer of electrical switches, which has been operating in the Klaipėda FEZ since 2007 and has moved its entire soldering activity for electrical contacts to the premises, as well as established a new stamping department. The packaging manufacturer UAB Retal Baltic Films has also already moved into the building, having moved part of the bottle cap production lines to the second FlexStart, thus implementing the expansion plans already envisaged earlier.

However, FlexStart 2 has also attracted new investors, such as Pod Furniture, a furniture manufacturer, and Memel Biotech, a company specialising in research and the production of advanced therapeutic drugs.

“We are extremely pleased with the smooth tenant move-in processes, and internal research shows that the investors themselves feel the same way. Surveys show that absolutely all the businesses operating here would recommend Klaipėda FEZ to their colleagues and business partners, and the overall recommendation index scored 9.4 out of 10 a few years ago,” says Urbonas.

Reliable stepping stone to the market

Agnė Vaitkevičienė, Director of Memel Biotech and Vice President of the Lithuanian Biotechnology Association and one of the companies located in FlexStart 2, also confirms the smooth settlement in the Klaipėda FEZ.

“Our decision to locate in Klaipėda was influenced not only by the excellent conditions offered by the Klaipėda FEZ, but also by the attitude of the company that manages the territory towards cooperation, its well-developed infrastructure, and its ability to attract foreign investments, as we are an American capital company. At present, we have already set up our administrative premises in the Klaipėda FEZ and have adapted them to our work, as well as started the installation of a pharmaceuticals factory, which should be completed by the middle of next year,” says Vaitkevičienė.

According to her, Memel Biotech is the first company that will produce medicines for clinical trials not only in Klaipėda, but also in the whole Baltic region.

“We can see that Klaipėda has untapped potential in the field of biotechnology – Klaipėda University is located here, which is able to prepare talents needed for this field of activity, and Klaipėda FEZ is a very attractive place for foreign investments. We are already seeing a lot of interest in our company, and not only the Klaipėda FEZ, but also other companies and educational institutions operating on the seaside are actively seeking to contribute to our successful launch. This makes us feel even more confident about our move to the port city”, says the company’s director.

The new phase of the development of the Baltic FEZ (Marijampole FEZ)

The Baltic FEZ (BFEZ), which marks its 10th anniversary this year, is entering a new stage of development: it will build manufacturing facilities. New investors planning to produce higher- and medium-value-added products, whose objective is to focus on their manufacturing business, not on building design, real estate development and other construction activities, will be able to rapidly set up operations in these facilities. The first such BFEZ building has already received a building permit and construction works are planned to start early next year.

“We plan to offer investors a turnkey manufacturing building, which we will be able to adapt to the specific needs of the investor,” says Simonas Petrulis, CEO of the Baltic FEZ. “In this way, we will create significantly higher added value for the investor as well as for ourselves, as developers of this territory. In the future, we plan to gradually offer more such buildings, or even larger manufacturing facilities, for rent.”

Higher added value under the 3P Model

One of the first projects to construct a manufacturing building of the highest energy efficiency class (A++), is partially financed by UAB Investicijų ir verslo garantijos (INVEGA) under the financial incentive measure “Construction of manufacturing buildings in free economic zones, industrial parks and other industrial areas”. The project is funded by INVEGA using national budget funds of the Republic of Lithuania.

According to Petrulis, what BFEZ is now doing provides to an investor the highest added value: the opportunity to rent a completed industrial building with fully-installed engineering infrastructure, hard-surface entrances, parking places for cars and bicycles, and charging stations for electric vehicles. In addition, the project foresees installation of smart controllers for energy equipment and of solar power generation capacity, which will generate electricity for use in the building. The Administration of Marijampolė City Municipality, warmly welcoming the development of MFEZ, works together with MFEZ on issues such as coordination of public transport routes according to the needs of the investor, development of public streets and roundabouts, the future need for electricity substations and an increase in their capacity, and issues regarding the coherence of the network of paths for pedestrians and cyclists.

Marijampolė’s vision – 3M development

“Marijampolė is a medium-sized industrial city, where investors of good repute and great ambition are very welcome. Therefore, forward-thinking investors who respect the environment are met here especially warmly, the doors of the municipal government as well as businesses that already operate here are open to them, to help them bring their ideas to life. Both BFEZ and the city government deal with all issues in a very expeditious manner,” says the CEO and owner of Baltic FEZ.

Petrulis emphasises that Marijampolė has a vision for the next several decades. The vision foresees the further development of businesses that have been successfully developed for several decades and continue to grow internationally.

“We call it 3M, based on the Lithuanian words for our main industries: maistas (food), metalas (metal) and mediena (wood). It is these industries that are particularly strong in the region, have expanded to international markets, have put down deep roots here and already have strong traditions. The best-known companies in Marijampolė include Dovista, the leading manufacturer of wooden windows in Europe; the wooden pallet manufacturer Juodeliai, which is now building a second factory; the Spanish car parts manufacturer CIE LT Forge; major food producers, such as Lietuvos cukraus fabrikas, Marijampolės pieno konservai, Mantinga, and ICECO; and the high-tech biotechnology food production company Divaks, which is being set up in the Baltic FEZ, to produce insect proteins, fats and other innovative products for the food industry,” says Petrulis.


A genuine “land port” is being established

According to the CEO of MFEZ, it is also important to the business community that Marijampolė is the “land port” of Lithuania or perhaps even of the wider region: the Rail Baltica railway line and the Via Baltica highway, connecting Western Europe to Scandinavia, run past the city, the Kaunas and Vilnius airports are quite close, and the Klaipėda seaport is easily accessed. “You won’t enter or leave Lithuania without having some contact with Marijampolė, where the FEZ is being developed. Paraphrasing that saying about Rome, we joke that in Lithuania all roads pass through Marijampolė,” says Petrulis.

It is believed that Marijampolė can become an even more significant city for high-value-added production.

“Particularly in areas where an even more educated and highly-qualified employee or specialist is needed now or will be needed in the future. Even a digitalised, automated and robotised industry will need professionals who are capable of managing and overseeing it all. Our region, located in the triangle formed by Vilnius, Kaunas and Warsaw, is ready for these challenges. And not only because universities and other institutions of higher education are located in nearby Kaunas and Vilnius, but also because one of the largest vocational training centres in Lithuania is located in Marijampolė, meeting the need for trained specialists and professional talent. The number of students enrolled there speaks for itself. In the 2023-2024 academic year, 2,146 students are enrolled at Marijampolė Vocational Education and Training Centre. 97 different vocational training programmes are available to applicants, i.e., applicants can choose from 40 professions. Municipalities and companies in the region have established stipends and scholarships for the best students and teachers. Initial and continuing vocational education and training are available. Training on the basis of partnership has been chosen by 96 students. In 2023, 818 qualified specialists graduated from the Centre. The Centre has two sectoral training facilities, equipped with modern equipment. In 2023, the facilities were updated with the installation of laboratories for practical training in mechatronics for automated systems and metalworking technologies,” says Petrulis, the CEO of MFEZ.

He emphasises that the speed of all processes is very important to businesses today: from taking a decision to starting operations. The Marijampolė municipal government and the MFEZ matrix team have always cooperated and will continue to cooperate in this way: local government expeditiously provides solutions for issues faced by an investor, and MFEZ serves as the management company, walking an investor through the process, from an investor’s first visit to the city, arranging for a hotel stay and lunch at a good restaurant, to thorough consultations on the exceptionally attractive tax environment, to visiting the Marijampolė Vocational Education and Training Centre, to the handing-over of industrial buildings and the maintenance and installation of manufacturing equipment, all in the shortest possible length of time.

“The new generation of local government leaders in Marijampolė is well aware that exceptionally convenient and safe conditions for investment must be created first, and only after that can one expect attention from investors,” concludes Petrulis, CEO of the Marijampolė FEZ.

“Kormotech” invests over 60 million euros in the Kedainiai FEZ

The Ukrainian company specializing in pet food, “Kormotech,” unveils an ambitious plan to expand its manufacturing capabilities in the Kėdainiai Free Economic Zone (FEZ). The company aims to hire 200 specialists additionaly and invest over 60 million euros in four new production lines, scheduled to be operational by 2028.

“Kormotech” started its operations in 2020, opening a 4500 sq. m. factory in the Kėdainiai FEZ. Despite the initial plan to employ a team of 70 individuals, the company quickly exceeded expectations by hiring over 170 specialists. With this new expansion project, “Kormotech” plans to double its current workforce in Kėdainiai over the next five years.

Founded in Ukraine in 2003, “Kormotech” specializes in the production of wet and dry food for cats and dogs. The LEZ factory in Kėdainiai, equipped with high levels of automation and advanced machinery, currently produces 20,000 tons of the pet food annually.

The expansion plan of “Kormotech” envisions the launch of the first production line in the new factory in 2025, with one line added each year until all four lines are operational by 2028. The company will be searching for qualified engineers, food technologists, and other specialists to ensure the success of the project.

Including its headquarters in Lviv, the company currently employs more than 1,200 people globally. “Kormotech” is recognized as one of the top 50 employers in Ukraine and is known for its active participation in various social projects. The company promotes a humane approach to animals, supports the development of veterinary medicine in Ukraine, and provides assistance to animal shelters across the country.

Baltic Sea Properties will expand business park in Klaipėda FEZ

Publicly listed Baltic Sea Properties has recently entered into a land lease agreement with the Klaipėda Free Economic Zone (FEZ). This strategic partnership will facilitate the expansion of Klaipėda Business Park by up to 16,000 sqm in two phases over the coming years. The planned expansion will extend the 24,000 sqm integrated park complex’s total leasable area to over 40,000 sqm.

First established in 2003, Klaipėda Business Park (“Klaipėdos Verslo Parkas”) is the leading business park in Western Lithuania, with more than 30 companies leasing production, logistics, commercial, and office space in flexible units ranging from 50 to 8,000 sqm.

“We are happy to announce our expansion plans for Klaipėda Business Park, while also celebrating 20 years of cooperation with Klaipėda Free Economic Zone. Our strategy is to grow with our clients in a long-term partnership, and we look forward to providing additional high-quality serviced space for their business,” commented James Andrew Clarke, Chairman of The Board of Baltic Sea Properties.

The development of Klaipėda Business Park will be carried out in two stages. The company is currently starting to prepare the technical project of the facility. The company does not publicly state the size of the investment, but it will be one of the most significant recent development projects for customers of the Klaipėda FEZ.

According to Klaipėda FEZ manager Eimantas Kiudulas, Baltic Sea Properties has been offering its clients the opportunity to grow their business in one of the largest business communities in Western Lithuania for the third decade.

“We are happy about this 20-year-long strategic partnership with Klaipėda Business Park, which has led to 3 completed development stages and is starting two new ones today. Klaipėda Business Park successfully complements the strategies of flexibility, rapid establishment and development of Klaipėda FEZ, and the implemented development project will offer even more quality diversity to existing and new investors”, says E. Kiudulas.

Baltic Sea Properties, the owner and manager of Klaipėda Business Park, is listed on the Oslo Stock Exchange and is a major real estate developer and investor in the Baltic region.

© LAFEZ visos teisės saugomos 2021