TALLINN - The financial troubles of the Kreenholm textile mill came to a head last week, with the local utility company temporarily shutting off power due to payment arrears. Though power at the Narva-based plant was restored the next day, local media reported that a number of Swedish managers, fed up with the situation, were packing their bags and heading for home.
On March 28 VKG Elektri-vorgud, the utility company in the eastern city, started curtailing energy supplies to the Kreenholm textile mill due to some 5 million kroons (319,000 euros) in overdue payments.
Ahti Puur, board chairman of VKG Elektrivorgud, told the Baltic News Service that the order for a complete cutoff had been given, but that the utility would gradually switch off energy supplies.
"We warned Kreenholm beforehand of cutting their power supply on March 28, so this is what we have to do," he said.
The power company isn't the only local utility frustrated with the mill. Narva's water company had earlier in March threatened to stop accepting Kreenholm's waste water due to a 16 million kroon debt. Eventually the water company backed down from its threat on pressure from municipal politicians.
Puur stressed that it wasn't the size of the debt that concerned VKG Elektrivorgud, but the company's attitude. The utility issued its warning on March 8, but the company didn't even bother "to pick up the receiver," as he explained.
"If we look how Kreenholm has recently acted we get the impression that they are looking forward to this move of ours," Puur said.
But by March 29 power was fully restored.
"The electricity has been switched on again, and the factories are working at full capacity. The parts that do not work have done their work ahead of schedule and the standstill was planned," Kreenholm personnel director Olga Zaitseva told the Baltic News Service.
Prime Minister Andrus Ansip, speaking to journalists on March 30, described the situation at Kreenholm as a "social catastrophe."
While mill managers have denied the existence of a plan to shut down the textile mill, there are reports that up to 800 jobs will be cut in the near future.
Understandably, the situation appears to have worn down the company's Swedish managers, who are reportedly packing their bags and going home.
"Our family will apparently leave on Saturday [March 31], but I know that the other Swedes are also about to leave. I must terminate my kindergarten agreement, and then there will be nothing else to keep us here," a Swedish member of Kreenholm's management, who wanted to remain anonymous, told the Eesti Paevaleht daily.
Earlier this year Kreenholm auctioned off the development of a group of semi-detached houses in Narva-Joesuu that were to have accommodated managers. The initial bidding price of the development was 32 million kroons (2 million euros), and it was reportedly sold for 37 million. The company did not disclose the buyer's name.
The paper wrote that Kreenholm CEO Matti Haarajoki is a "professional liquidator" and was also responsible for closing the Alytaus Tekstile, a Lithuanian mill, in the second half of 1990. (See article below.)
Kreenholm, which was founded in 1857, employs 3,000 people and has a production capacity of 60 million meters of fabric. It is owned by Sweden's Boras Wafveri Group.