Flex Start Three, a real estate development company established by the Klaipėda FEZ, has received a construction permit for a 8.8 thousand square meter area production building, divided into six segments, designed for rapid adaptation to the needs of tenants. This marks the third building in the internationally acclaimed FlexStart family, facilitating businesses to launch production within weeks or months.

Construction itself is scheduled to commence in the near future, with completion expected in the first half of 2025. Approximately EUR 8.5 million will be invested in the building, of which EUR 5.12 million constitutes a loan from INVEGA.

The total area of the building complex will be around 8.8 thousand square meters, developed on a 1.7 hectare site.

FlexStart 03 will distinguish itself from its predecessors with greener spaces, more natural daylight and recreational areas. Additionally, in line with Klaipėda FEZ’s aim to promote the local economy, many of the building’s structural solutions will be sourced from local manufacturers.

The new facility will meet A++ energy efficiency standards, featuring smart heating and cooling systems utilizing heat generated during the production process. Furthermore, solar panels will be installed to fulfill part of the energy requirements, and both indoor and outdoor areas will be equipped with LED lighting and electric vehicle charging stations. The architectural design of the new FlexStart project was developed by the WALL architecture studio.

Darius Urbonas, Head of Real Estate Development Projects at Klaipėda FEZ, states that the third FlexStart building will become the most modern continuation of a successful strategy for rapid investor establishment and expansion. In the coming period, the FEZ management company intends to initiate negotiations with potential tenants from Lithuania and abroad.

“Swift investor establishment and expansion are relevant at all times. During prosperous market conditions, companies seek to commence production quickly to secure stronger initial positions or swiftly enter attractive sectors. However, speed and flexibility prove beneficial even in cooler economic climates: the first two FlexStart buildings have been utilized for existing investor expansion, temporary or permanent relocation of production lines, and various other scenarios. Both the FlexStart building family and other processes or decisions made by our team have long been associating Klaipėda FEZ with extraordinary speed and flexibility throughout the region,” affirms D. Urbonas.

Asta Gladkauskienė, Head of the Customer Service Department at INVEGA, previously noted that typical production purpose buildings are favorable for production expansion, as investors or manufacturers can establish themselves in an already constructed building and commence operations in a very short time.

“The existing Flex Start Two building, standing and operational within Klaipėda FEZ, was the first building financed by INVEGA’s managed funds, for which INVEGA provided a loan at the end of 2022, and which is currently fully leased to investors. This clearly demonstrates the need, benefits and importance of such buildings, not only in attracting investors who receive fully prepared building infrastructure but also in creating new job opportunities. We are pleased to finance the new Flex Start Three building which will further alleviate the shortage of such buildings in the market and undoubtedly attract new investors, directly contributing to the growth of the Lithuanian economy,” comments A. Gladkauskienė.

For some time now, the first two FlexStart buildings have been home to investors such as Werner Wirth Baltic, Etman, Glob-El, Pod Furniture, Memel Biotech, Albright, Retal Baltic Films and others. In 2017, the first FlexStart won the first-ever Quick Launch award from FDI Intelligence.

Klaipėda FEZ received construction permit for the third FlexStart iteration

Flex Start Three, a real estate development company established by the Klaipėda FEZ, has received a construction permit for a 8.8 thousand square meter area production building, divided into six segments, designed for rapid adaptation to the needs of tenants. This marks the third building in the internationally acclaimed FlexStart family, facilitating businesses to launch production within weeks or months.

Construction itself is scheduled to commence in the near future, with completion expected in the first half of 2025. Approximately EUR 8.5 million will be invested in the building, of which EUR 5.12 million constitutes a loan from INVEGA.

The total area of the building complex will be around 8.8 thousand square meters, developed on a 1.7 hectare site.

FlexStart 03 will distinguish itself from its predecessors with greener spaces, more natural daylight and recreational areas. Additionally, in line with Klaipėda FEZ’s aim to promote the local economy, many of the building’s structural solutions will be sourced from local manufacturers.

The new facility will meet A++ energy efficiency standards, featuring smart heating and cooling systems utilizing heat generated during the production process. Furthermore, solar panels will be installed to fulfill part of the energy requirements, and both indoor and outdoor areas will be equipped with LED lighting and electric vehicle charging stations. The architectural design of the new FlexStart project was developed by the WALL architecture studio.

Darius Urbonas, Head of Real Estate Development Projects at Klaipėda FEZ, states that the third FlexStart building will become the most modern continuation of a successful strategy for rapid investor establishment and expansion. In the coming period, the FEZ management company intends to initiate negotiations with potential tenants from Lithuania and abroad.

“Swift investor establishment and expansion are relevant at all times. During prosperous market conditions, companies seek to commence production quickly to secure stronger initial positions or swiftly enter attractive sectors. However, speed and flexibility prove beneficial even in cooler economic climates: the first two FlexStart buildings have been utilized for existing investor expansion, temporary or permanent relocation of production lines, and various other scenarios. Both the FlexStart building family and other processes or decisions made by our team have long been associating Klaipėda FEZ with extraordinary speed and flexibility throughout the region,” affirms D. Urbonas.

Asta Gladkauskienė, Head of the Customer Service Department at INVEGA, previously noted that typical production purpose buildings are favorable for production expansion, as investors or manufacturers can establish themselves in an already constructed building and commence operations in a very short time.

“The existing Flex Start Two building, standing and operational within Klaipėda FEZ, was the first building financed by INVEGA’s managed funds, for which INVEGA provided a loan at the end of 2022, and which is currently fully leased to investors. This clearly demonstrates the need, benefits and importance of such buildings, not only in attracting investors who receive fully prepared building infrastructure but also in creating new job opportunities. We are pleased to finance the new Flex Start Three building which will further alleviate the shortage of such buildings in the market and undoubtedly attract new investors, directly contributing to the growth of the Lithuanian economy,” comments A. Gladkauskienė.

For some time now, the first two FlexStart buildings have been home to investors such as Werner Wirth Baltic, Etman, Glob-El, Pod Furniture, Memel Biotech, Albright, Retal Baltic Films and others. In 2017, the first FlexStart won the first-ever Quick Launch award from FDI Intelligence.

Pon.Bike, one of the largest bicycle manufacturers in the world, began construction of a factory in Kėdainiai in February of last year. Construction was completed in one year. The size of the facility is impressive – almost 40,000 m2, with an A++ energy efficiency classification. The building was constructed by UAB YIT Lietuva and was designed by UAB 2L Architects.

Bicycle assembly and painting workshops are part of the new building, along with a warehouse and administrative offices. It is noteworthy that the facility uses underfloor heating in a floor area of 20,000 m2, providing comfortable working conditions for employees. 2,500 solar panels are installed on the factory’s roof to supply electricity to the factory. A large car park (parking lot) has been built, including electric vehicle charging stations. The old trees surrounding the factory were preserved, and new greenery has been planted as well.

Led by Algimantas Gedvilas, Pon.Bike Lithuania already has 68 employees and plans to create about 600 jobs as production accelerates. This will be the eighth Pon.Bike factory in the world, which, when operating at full capacity, will be able to assemble up to 450,000 bicycles per year. The factory will produce bicycles for the Gazelle, Kalkhoff, and Focus brands. The factory will also produce electric bicycles.

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.

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

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.

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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.