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Estonia's metalworking industry facing fall in export competitiveness

Metal industry.
Metal industry. Source: ERR

The competitiveness of Estonia's metalworking industry is falling as prices for raw materials and energy rise. The government is not providing subsidies for companies, unlike some other countries.

Thirty-four people lost their jobs at the Saajos metal factory, which has been operating in Keila for 23 years, Wednesday's "Aktuaalne kaamera" reported.

While managers refused an interview, it has previously been reported that the company's Finnish owners decided to close the facility.

Saajos bankruptcy administrator Jüri Truuts said initial estimates blamed rising material prices, broken supply chains due to coronavirus and energy costs. The company has facilities in both Estonia and Finland and will make a final decision on the company's future on November 17.

Priit Lind, a manager at BLRT Grupp, the largest industrial holding group in the Baltic states, said input prices have shot up for everyone. The metal industry, in particular, also uses a lot of energy.  

"Electricity costs are an important component for us, and if I compare the nine months of last year with the nine months of this year, I have to say that the increase is 32 percent," he said.

The company, a shipyard, still has orders as customers have been sympathetic to the situation.

Metal industry. Source: ERR

"We have also reacted in a timely manner to important things like rising energy prices. In many cases, we did reach agreements with customers, but I know there are a lot of companies that have not. And if you really look at the European side of things, it is difficult to compete with, for example, Poland or the Czech Republic or other companies where you know they have support and state backing," Lind told AK.

Almost all — 90 percent — of the goods created by the Estonian metal industry are exported but competitiveness is falling as prices rise.

Raul Kütt, executive director of the Federation of Estonian Engineering Industry, said: "Already since the summer, it has been getting tougher for our businesses, and not just for businesses in our union, but for businesses in our sector. One indicator is that there are fewer and fewer price inquiries and fewer new orders."

"Today, fortunately, most of our businesses still have their noses to the grindstone, but it's getting harder and harder," he said, adding that a solution needs to be found.

"These measures must not be weaker than those offered by our competitors to their producers," said Kütt.

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Editor: Helen Wright

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