Alexela laying off 93 people in coronavirus-related economic trials

Alexela Grupp CEO Andreas Laane.
Alexela Grupp CEO Andreas Laane. Source: ERR

Fuel company Alexela Grupp is laying off 93 people as a result of the economic effects of the coronavirus pandemic and the ensuing emergency situation, and against the backdrop of plummeting global oil prices.

Fifty-eight of those laid off currently work at oil products producer Kiviõli Keemiatööstus, with 25 at AS Alexela and 10 connected with its metals subsidiaries, BNS reports.

"We have today made redundancy announcements to up to 93 people at our companies," Andreas Laane, CEO of Alexela Grupp, said Monday, via a press release.

Kiviõli Keemiatööstus is to stagger the layoffs over March, when 29 employees will go, April, when the same number will be laid off.

Priit Orumaa, head of Kiviõli Keemiatööstus, said that due to a drastic drop in oil prices and the ever-evolving coronavirus pandemic situation, there were no measures open to the company other than cost-cutting in order to keep it afloat.

"The economic situation in the oil shale sector has deteriorated sharply, and is sadly set to continue to deteriorate. With a heavy heart, I have been forced to downsize my team and implement austerity measures across the industry," Orumaa added.

"At present, we are continuing to work with a team which is to be reduced by 58 employees, but we are living one day at a time, and unfortunately, I cannot promise that there will not be any further redundancies to keep the industry going. Today, all companies are facing an increasingly difficult situation in their business activity," Orumaa went on, adding that he is very grateful to all his staff for understanding this difficult situation.

Andreas Laane said it is not possible to estimated when restrictions resulting from the pandemic are likely to end, and the normal environment of operation be restored.

"Right now, my personal opinion is that, unfortunately, we are facing a deeper crisis than that which we had experienced during the [2008-2010] recession, and we have started making difficult decisions right away," he said.

Economic damage caused by the coronavirus pandemic also means difficult business operation for Alexela Group subsidiaries.

"Personally, it has been very difficult to share this information across the group, but we have no other solution for cutting costs and maintaining business than to reduce the number of staff at the companies. We believe that, in a rapidly deteriorating emergency situation, we need to prepare for longer-term reduced demand and adverse economic conditions," Laane added.

Alexela Grupp compaies at the same time are not eligible for government rescue measures, BNS reports, referring to an Unemployment Insurance Fund (Töötukassa) initiative which can reimburse salaries over a two-month period for companies in difficulty, to 70 percent of the salary and/or a maximum of €1,000.

"The promised emergency economic package for Estonian companies is still in the process of being launched. Although [credit provider] KredEx is starting to accept loan applications from the end of this week, no KredEx funding has been organized yet, and the measures are more targeted at small and medium-sized businesses," Laane said.

"Only if we, as an employer, cut all employees' wages by 30 percent, would employees then receive crisis measure compensation from the Unemployment Insurance Fund. We do not consider this approach fair to our more than a thousand employees," Laane said, adding that crisis measures for business require more clarity and a sector-specific approach from the state.

Emergency situation business activity is evaluated weekly across Alexela Grupp, the company says.

Alexela Grupp employs over 1,000 people across Estonia, including in energy, industry and real estate. The group also owns teelwork company Kohimo, Tiki trailer manufacturer Bestnet, and hot-dip galvanizing plants in Paldiski, Estonia, and Rauma, Finland, as well as Kiviõli Keemiatööstus.

It also develops liquefied natural gas (LNG) terminals in Paldiski and in Hamina, Finland, according to BNS.

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Editor: Andrew Whyte

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