IKEA prepared to boost furniture orders in 2006 and beyond
VILNIUS - Sweden's IKEA strengthened its position among Lithu-ania's furniture producers last year and has said it intends to build on existing relations in the market, where it already soaks up over 50 percent of output.
"Lithuania is one of our key purchase markets. We intend to expand our relationships here, and we have quite a few solid projects with suppliers," said Tomas Franzen, an IKEA representative.
IKEA, which has placed Lithuania as one of its top five furniture producers, currently places orders with more than half of the Baltic state's furniture makers. The company intends to increase orders for 2006.
Klaipedos Baldai (Klaipeda Furniture), has assumed obligations to manufacture furniture worth over 500 million litas (145 million euros) for the Swedish company in a four-year period.
"This contract has wrapped up talks that took almost one year to complete," said Ricardas Kiaurakis, head of SBA Furniture group and Klaipedos Furniture chairman. "The IKEA order will guarantee the utilization of all Klaipedos Furniture capacities for at least four years."
Vilniaus Baldai (Vilnius Furniture) won an IKEA order for the manufacturing of beds last year. The order's annual value is expected to exceed 18 million litas.
Analysts estimate that exports to IKEA comprise up to 85 percent of total sales by Vilniaus Baldai.
Dilikas, the Klaipeda-based furniture producer controlled by Baltic Furniture Group, channels almost full output to IKEA. Cooperation has enabled the company to shrug off losses.
Lithuanian furniture makers dependent on IKEA orders are currently mulling over the possibility to build a joint logistics center to supply IKEA stores directly.