Snaige halts Kaliningrad production

  • 2009-02-11
  • By Adam Mullett

FRIDGE FREEZE: The fridge manufacturer will suspend production at its Kaliningrad plant as at the beginning of next month.

VILNIUS - Lithuania's beleaguered refrigerator producer Snaige will temporarily freeze production at its plant in Russia's Kaliningrad exclave from March 2, leaving hundreds of employees without work.
The Snaige board chose to suspend manufacturing to reduce losses stemming from the possible devaluation of the Russian ruble and general market downturn, Snaige said in a statement to the NASDAQ OMX Vilnius Stock Exchange.

"We have stockpiled around 20,000 units, which will allow us to close for five months. During this time we will look more deeply at the situation in the region and Kaliningrad," Snaige managing director Gediminas Ceika told The Baltic Times.
Russia is the biggest market for their products, but sales there have slowed significantly recently.
"The situation in Russia is difficult for two reasons: the global situation really affected Russia badly, consumption is shrinking, and also the devaluation of the ruble is a problem. Around 70 percent of our materials are imported from EU countries and we really depend on the exchange rate of the ruble to the euro," Ceika said.

The stockpiled fridges will probably be sold at a reduced price.
"We planned to sell these stocks rather quickly, before the devaluation of ruble. Now we could sell with big discounts, but we have decided to sell the products instead of giving them away as gifts," he said.
"I do not know whether we are successful in selling at the new price, which we will raise from Feb. 9. To be more exact, we are not raising but correcting the price, which will increase only in rubles, but not in foreign currency. I think this will stop the sales immediately. However, we have not got any such information as yet," Ceika told the Baltic News Service.

The majority of workers at the Kaliningrad plant will be dismissed, with others going on unpaid leave. Ceika said that 340 workers at the Kaliningrad plant would be let go, leaving just administration staff behind. In Lithuania, the company will be firing 350 local workers.
Ceika squashed hopes that the shutdown of the Russian plant would lead to more jobs in Lithuania.
"No. We don't have the possibility to sell our fridges from Lithuania because of high customs duty on the Russian border."

Snaige executed a similar suspension recently when it suspended production at its Alytus plant at the end of 2008 and resumed the process on Jan. 19.
The company posted 5.3 million litas (1.5 million euros) in unaudited consolidated losses in the first nine months of 2008. Sales over the first three quarters shrank by 8.1 percent, to 279 million litas, from 303.6 million litas a year earlier.

Snaige is quoted on the Main List of NASDAQ OMX Vilnius Stock Exchange.
Snaige is not the only company shedding jobs in the region with Lithuanian unemployment skyrocketing.
Between Jan. 30 and Feb. 6, 10,700 new people registered at the Lithuanian Labor Exchange to find work. The Labor Exchange currently offers around 1,000 jobs.

During that week, just 1,600 people found new jobs, leaving around 156,500 people looking for work.
The Central Bank of Lithuania predicts that the level of unemployment would reach 10.2 percent this year, and 11.6 in 2010.