Entrepreneurs: Lack of government support to blame for competitiveness fall | News

Standard, one of Estonia’s most well-known furniture manufacturers, will reduce its operations and lay off 163 of its 200 employees.

Aktuaalne kaamera (AK) reported on Wednesday that the company has been producing furniture for almost 80 years.

Board member Anne Veskimagi said the factories will be up and running by the end of the year and Kose by January. However, production will be closed in Mustamae district of Tallinn.

“We don’t dare to take on anything new right now,” he said, adding that the company still has valid contracts with several companies.

Costs have increased because high energy prices have increased the price of Standard’s products. 70 percent of their goods are sent abroad and many are sold to hotels.

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“We have been in the international hotel market for 15 years. We have been very successful there, but we simply cannot compete with today’s prices,” Veskimägi told EC.

The board member said that the fate of the company depends on the recovery of the market, which no one can predict.

“We watch it practically every day and see where the market is going. Today when I ask someone when the war is going to happen [in Ukraine] will end, no one answers.”

Many companies face a similar problem.

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“I am absolutely convinced that layoffs are to be expected,” Eneli Org, chief executive of the Estonian Furniture Industry Association, told EC.

“There have already been reductions. It is our initial prices that affect us, and the price of electricity has increased 6 times compared to last year, and the price of gas has increased 9 times.”

Another well-known manufacturer, Tarmeco, is coping for now, but called the situation “very difficult”. Manager Jaak Nigul said one reason he was able to manage it was because the company spread its risks across different industries.

But the entire timber industry has similar concerns.

“Both raw material prices and energy prices have increased, which are huge costs,” said Nigul. “For example, the price of birch trees in Estonia is 200 euros per cubic meter, and in Finland it is around 80 euros. This should be a big enough difference to create all kinds of problems for international competition.”

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Both Veskimagi and Nigul said that the main reason for the loss of competitiveness is the lack of state subsidies. Other governments provide support that reduces demand for Estonia’s more expensive products, allowing them to lower prices in neighboring countries.

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