RIGA - The confrontation with Swedish unions and the subsequent loss of a major contract slashed a deep cut into 2004 sales and earnings for the Laval and Partners construction company.
The company ended last year with sales of 1.4 million lats (1.9 million euros), down by 32 percent from 2003, while earnings amounted to a paltry 2,962 lats, down 20-fold from the previous year.
Director Guntars Tiltins commented that the "poor" results were mainly due to leaving the Swedish construction market and the strong pressure from trade unions there. "Besides, our operations were focused mainly on filling orders in Sweden, which we no longer have," he said.
According to Tiltins, the largest projects completed by Laval and Partners in Sweden last year were an exclusive four-story apartment building in Stockholm and several individual homes.
He declined to comment on the company's largest projects for this year. "We will try to develop projects in Latvia. At the same time we will try to prevent the company from incurring losses," Tiltins said, admitting that Laval and Partners concluded the first quarter of this year in the red, with the biggest losses in the company's history.
Laval and Partners' subsidiary in Sweden, L and P Baltic Bygg, filed for bankruptcy in April.
Laval and Partners, which was founded in 1998, turned to Sweden's labor court after the construction workers' trade union blockaded the company's school reconstruction project in a suburb of Stockholm. The union demanded the Latvian firm sign a collective labor contract with its workers in Sweden, which would mean the Latvian firm would have to pay its workers 's several of whom were brought in from Latvia 's higher wages.
Laval and Partners said that the trade union violated EU law on the free movement of services and labor, and though Latvian government officials intervened on the company's behalf, it was forced to pull out of the project.
The local authority that ordered the school reconstruction eventually terminated the contract since work had been brought to a standstill.
The European Commission is scheduled to decide by June whether to send Sweden a formal warning over insufficient transposition of the EU law in connection with restricting the Latvian company's operations on the Swedish construction market.
