Swedish owners sack textile CEO

Sweden's Krenholm textile producer, one of the largest employers in Estonia's eastern city of Narva, dismissed chief executive officer Meelis Virkebau Jan. 29, citing differences over the company's future.

Virkebau, 45, did not comment on his dismissal, but shareholders said the two sides disagreed about the dismissal of 91 workers at the Krenholm Frotee division that produces terry cloth.

Shareholders said the division remained unprofitable even after a 100 million kroon (6.6 million euro) investment into production in 1994.

Mats Skogman, managing director of Boras Wafveri AB, Krenholm's largest shareholder, replaced Virkebau as temporary CEO.

"We had different views on how to develop the company in the near future," he said.

At the time, Virkebau said the company should find new jobs for the 91 workers rather than dismiss them altogether.

Apart from firing Virkebau, the company is neither planning other changes in the Narva-based textile factory's management nor planning to sell its stake in Krenholm.

He added it was difficult to say when a new CEO would replace Virkebau but said the new executive would also be from Estonia as well.

Krenholm employs 5,000 workers, one of the largest employers in a city that suffers from unemployment rates well above the national average of about 5.4 percent.

The news on Virkebau's leaving shook the Krenholm trade union. "We had really good and civilized relations," said union director Julia Dmitrieva. "Virkebau understood well that employer and trade union must be partners."

The announcement came as a surprise to the Narva City Council as well, and government spokesman Ants Liimets said Virkebau had done a good job at the company during his eight years at the helm.

"If 5,000 workers receive salaries, 5,000 Narva households are fed. When Virkebau started, the factory worked in one shift, and now it works in three shifts. Those achievements are very positive," he said.

Virkebau has not said whether he intends to step down as chairman of Estonia's Central Association of Employers or as honorary Swedish consul in Narva.

The Krenholm factory was established in Narva in 1857 by Baron Ludwig Knoop and has always been one of Estonia's largest companies.

Boras Wafveri, a major European textile company based in Sweden, bought a majority stake in the factory after privatization in 1994 and has since become sole owner.

Krenholm produces finished cotton fabrics, bed linen, terry and kitchen towels, curtains, table-cloths, baby cotton napkins, upholstery fabrics, garments and other products.

From 1995 to 2002, Boras Wafveri invested 710 million kroons in equipment, construction, computer network and staff training.

Krenholm produces about 50 million meters of cloth a year and listed a turnover of 626 million kroons and profit of 16.7 million kroons in the first-half of 2002.