Vulkans' fire puts Kuldiga jobs on the line

  • 2001-12-13
  • Leah Bower, RIGA
Fire damaged more than equipment at the Vulkans wood processing and furniture plant in Kuldiga.

Even though the flames that tore through sorting and packing facilities Dec. 4 were extinguished, the future of this unemployment-ravaged city is now clouded.

Vulkans, which once reigned as wooden match making master of the Baltic states, directly employs 500 people from Kuldiga or the Kurzeme region the city is in, a large chunk of the city's 13,500 population.

This is the third major fire in two years for the company, which has already had to temporarily lay off its staff once after suffering 700,800 lats ($1.13 million) in fire damages during a February 2000 blaze.

A fire department spokeswoman and Vulkans representatives both said there was no information yet on what caused the latest fire, which will cost the company 57,867 lats.

However, a criminal investigation has been opened into the Feb. 2000 fire, said Andrejs Sveisbergs, president of the company.

"There is a case that was opened, but it has not been solved," he added. "But police don't think the most recent fire was arson. There is no evidence it was arson."

One possible cause under investigation is a short circuit.

The fire, which broke out around 7:30 p.m. on Dec. 4, was contained to packing and sorting facilities, in addition to several buildings that weren't being used at the time.

The fire was contained by 2:20 a.m. Dec. 5, fire department officials said, but the fire was not completely extinguished until several hours later.

While experts are hazarding that the latest fire, which did 52,867 lats' worth of damage to Vulkans facilities, might drive the already troubled company over the edge into bankruptcy, the company claims it is going strong.

"There is no chance Vulkans will close," Sveisbergs said. "But still, if it did, the closure would have considerable impact. Not only do we employ 500 people, the closure would [indirectly] affect 2,500 Kuldiga residents.

If the company does go under, Kuldiga - where unemployment hit 8.8 percent as of Nov. 1 - will definitely feel the reverberations.

That Vulkans is already in some financial straits is no secret.

The Finance Ministry is already working on a plan to allocate the company 311,000 lats to pay Vulkans' overdue personal income tax and discharge default interest on the tax liabilities.

After the Feb. 2000 fire, Vulkans also declined to join in privatization of another furniture production company by buying a 40 percent stake for $3.13 million, said Andris Berzins, an official with the Latvian Privatization Agency.

It did manage, however, to boost its staff from a maximum of 350 people to 500 using new equipment that survived the February fire. Staff at the company can fluctuate depending on the number and size of orders being processed.

That fire not only cost the company a large chunk of money and a business deal, but production was halted for days and the entire staff of 350 was temporarily laid off.

Now the company is looking at taking 40 percent of its shares - the same percentage held by Cartex Corp. - public at some undesignated point in the future. Vulkans controls the other 60 percent of its own stock.

A plan to offer 20 percent of Vulkans' stock to the public was scrapped in 2000.