Norwegian radiator company moves south

RIGA - Norwegian businesses are on the lookout for cheaper labor costs, lower taxes and a central location - all factors that are attracting more business to Latvia.

While many Nordic nations dodge high local taxes and expensive labor costs by building plants in Central Europe and Asian countries like Hong Kong, Singapore and Korea, many businesses are discovering the Baltics as a prime location for manufacturing, said Gints Vins, station manager for the Norwegian Trade Council in Riga.

And unlike other locations around the world, Latvia and the Baltics boast a mentality closer to that found in Nordic countries.

"The living conditions are understandable, the working conditions, the business conditions are familiar," Vins said. "And it is closer. A container takes four weeks from the Far East, but from Latvia it is four days."

A new plant opened by Tipro Nova, a Norwegian-owned radiator manufacturer, is situated to take advantage of many of Latvia's business benefits, said Georgijs Buklovskis, the company's vice president.

"Latvia has a good logistical location near our main markets in the south of Sweden, the south of Norway and the Baltic countries," he said. "Costs are lower there and the workers are skilled."

Foreign investment, even in a small plant like Tipro Nova's Olaine-based radiator production line, can give a much needed boost to the Latvian economy.

Tipro Nova's investment is about 1.2 million lats ($1.9 million) and the company is already contemplating two more plants - one to be opened in late December and the next in the spring of 2002.

While the plant has already churned out 5,000 radiators during equipment testing and employee training, annual turnover in the first year should be about 40,000 units, Buklovskis said.

The plant's capacity will be about 100,000 units per year.

It isn't only proximity to Nordic markets and cheaper costs that make Latvia attractive to companies like Tipro Nova.

Buklovskis said his company had a marked interest in the Baltic market as well. The company is shooting for a 30 percent share of the Latvian radiator market and a 20 percent share in the two neighboring countries.

Instead of selling standard radiators, Buklovskis said Tipro Nova is targeting buyers looking for custom-made radiator systems.

"Though made on an assembly line this type of product is individually tailored," he said. "We're more flexible. We have added services that are not possible for a larger company."

But despite the many benefits for Nordic countries bringing their business to the Baltics, Vins cautions there are a few downsides.

"There is a lack of transparency in decision making among mid-level bureaucrats," he said. "As a result decision making is slow and depends on the level of interest of a particular person."