where machinery comes together kaunas region. 2 source: statistics lithuania, vrm, invest lithuania...
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Where Machinery comes together
KAUNAS REGION
2Source: Statistics Lithuania, VRM , Invest Lithuania 2014
Welcome to Kaunas Region, Lithuania!
KAUNAS REGION stats
Regional capital Kaunas City
Population 593,000
Labour pool 289,000
Unemployment 31,300 (10.1%)
FDI growth 11.4%
LITHUANIA stats
Size 65,300 km2
Population 2.97 million
Capital Vilnius
Official language Lithuanian
Currency Lithuanian Litas (LTL)Pegged to Euro since 20021 Euro = 3.45 LTL
Real GDP growth 2013: 3.2%2012: 3.7%2011: 6.0%
FDI growth 8.1 %
Annual inflation 1.2%
Lithuania is at the center of three of large consumer markets: • Western Europe• Baltic Sea Region• Russia and former Soviet States (CIS)
Kaunas Region
KAUNAS REGIONWhere Machinery comes together
Source: * World Bank, Invest Lithuania 2014
Lithuania, a gateway to the EU and CISKAUNAS REGION
• Lithuania allows access to main markets*:– Member of the European Union– Member of the Schengen Agreement
(free trade and travel)– Member of NATO– Member of the Nordic Investment
Bank, and part of Nordic-Baltic cooperation of Northern European countries
• Lithuania is ranked 17th of the world on the Ease of Doing Business Index (higher than e.g. Germany, Latvia or Poland) *
• Lithuania is a low risk country in the Central and Eastern Europe region, making it an excellent alternative for nearby high risk countries as Russia or Belarus
Overal
l asse
ssmen
t
Secu
rity r
isk
Gov. eff
ective
ness ris
k
Legal
& regu
latory
risk
Macroeco
nomic risk
Tax p
olicy ris
k0
20
40
60
80
100
LithuaniaPolandHungaryRussiaBelarus
European Union is the largest single market in the world (almost double the GDP of China) with over 500 million consumers (source: IMF)
Risk rating of Lithuania compared to other countries (100= most risky)
Source: Economist Intelligence Unit Q2 2014
Where Machinery comes together
Worldwide customers of engineering companies in Lithuania
Source: Invest Lithuania 2013
KAUNAS REGION
Source: Invest Lithuania 2013
Largest sub sectors of mechanical engineering and machinery
Machinery sector Lithuania
Source: Invest Lithuania 2014
• Strong enigineering cluster with over 2,000 manufacturers having approx. 38,000 employees, out of which ~80% work in mechanical engineering sector. Over 70% of engineering production is exported
• Mechanical engineering and Machinery is highly competitive and one of the fastest growing segments of manufacturing industry in Lithuania. Over 2009-2012, the production value of mechanical engineering sector grew at an average annual rate of 18%
• Major foreign companies within the industry: Schmitz CargoBull, Kinze Manufacturing, Stansefabrikken, CIE Automotive, KB Components and many others
• Main export destinations: Germany, Russia, Sweden, Norway, Denmark and Poland.
Where Machinery comes together
38%
12%10%
9%
8%
5%
3%3%
12%
Plastics
Other general purpose machinery
Structural metal products
Other fabricated metal products
Bodies for motor vehicles
Other products of first processing of steel
Ships and boats
Other transport equipment
Other
KärcherNASABOEINGBMWGMAudiWolkswagenVolvo
ChryslerMagnaFordRenaultToyotaScania
HusqvarnaABBBombardierRolls-RoyceBoshSiemens
KAUNAS REGIONThe Kaunas Region provides an unmatched mix of cost-effective production workforce and high class infrastructure
Where Machinery comes together
Highly educated and multilingual talent
• The right people• The right education• The right languages
Industrial parks
• The right industrial parks• The right cost advantages
Cost attractiveness
• The right labor cost savings• The right tax scheme
International accessibility
• The right location• The right direct flights
InKAUNAS REGION
it all comes together
Manufacturing workforce
• Kaunas region has a long history of mechanical engineering and machinery production• In Kaunas Region over 50,000 people are employed in the machinery sector, which is almost 20%
of the total workforce• The Kaunas region workforce is highly educated with 39% of workers having a third level diploma
(Lithuania: 34%; EU: 24%). Virtually all highly educated graduates speak English• The five universities in the Kaunas region have 9,000 students in technological sciences, which is
nearly half of all Lithuanian tech students• Production workers are largely available in the Kaunas Region with a > 10% unemployment
(2012)
KAUNAS REGION
Sources: Lithuanian Statistical Department, VRM, Invest Lithuania 2014
Source: wwww.kitron.com
KB Components (Sweden) Is one of the leading suppliers of technically advanced products for light vehicles, heavy vehicles, medical and industrial applications. It has ultra-modern operations in Scandinavia and in Kaunas, Lithuania. The facilities in Kaunas offer cost-efficient production of labor intense productsSource: www.kbcomponents.com
Kitron (Norway) Is an Electronics Manufacturing Services (EMS) company with operations in Norway, Sweden, Lithuania, Germany, China and USA.With 260 highly skilled employees in Kaunas, Kitron manufactures and delivers electronics assembly, box-build products, cable harnessing from fully assembled electronic circuit boards to complete end products for customers globally.
Companies that selected Kaunas in the last two years for the availability of cost-effective, high quality labour
Where Machinery comes together
7Employer cost are based on the following expenses: gross salary, social security, medical and pension costs in addition to social security and performance bonuses
Source: National/Regional Statistical Offices, IMD, UBS, 2014
KAUNAS REGION
Annual full employers cost skilled industrial worker (Euro)
* Source: Invest in Lithuania, FEZ Kaunas, FEZ Kėdainiai 2014
Tax General Free Economic Zone
Income tax 15 %0 % (first 6 years)
50% of the tax rate (subsequent 10 years)
Property tax 1 % 0 %
Dividend tax 15 % 0 %
Tax rates*
• In general, labour costs in Lithuania are less than half compared to Western European countries and the USA
• Kaunas is a very cost attractive location for manufacturing facilities as employers’ cost levels are 15% lower compared to Vilnius and 30-50% lower than in Poland, Slovakia and Hungary
• Standard income tax rate is one of the lowest in Europe at 15%. If established in a Free Economic Zone (FEZ), property and dividend tax is at 0% and income tax is at 0% for the first 6 years and 7.5% for the following 10 years*
Where Machinery comes togetherCost attractiveness
Kosice - Sk Katowice - Pl
Gyor - Hun
Gdansk - Pl
Tallinn - Est
Vilnius - Lith
Kaunas - Lith
-
10,000
20,000
30,000
40,000
50,000
60,000
8
• Many companies see Lithuania as a springboard from which to penetrate the vast markets of the EU and the Russia-Kazakhstan-Belarus Customs Union and other CIS countries. The latter is increasingly important now that Russia has joined the World Trade Organization*
• Kaunas is connected to Poland (and the rest of the EU), Belarus and Russia by rail and road
KAUNAS REGION
Baltics, Russia, CIS, CEE and Germany are reached within two truck days*
Where Machinery comes togetherInternational accessibility
Kaunas Region is conveniently located on crossroads of modalities
Source: BCI, 2014* Source: Invest Lithuania, 2013
9
• Two major trans-European corridors connect Lithuania’s market to the rest of the EU • Rail links to China in 15 days via Kazakhstan • Rail links to the Black Sea ports via Belarus and Ukraine in 55 hours• The Port of Klaipeda, one of the northernmost ice-free ports in the world, is well connected to
Kaunas by road and rail infrastructure• A modern truck fleet of 25,000 units; almost the same size as the entire fleet of the Russian
Federation (30,000)• Kaunas airport, which is the second largest airport in Lithuania, serves 8 international
destinations (incl. London, Birmingham, Dublin, Oslo and Frankfurt) throughout the year on a weekly basis
• Vilnius International Airport is located within a one hour drive providing 2-3 flights per hour and more daily direct flights to major European capitals and cities
KAUNAS REGIONWhere Machinery comes togetherInternational accessibility
• The two Free Economic Zones of Kaunas Region are good locations for the setting up of manufacturing facilities. The zones provide favourable and lower taxes for investors investing at least Euro 1 million
• The logistics and manufacturing area of Kaunas FEZ comprises 294 hectares. It is occupied by several different companies in automation, insulation boards, etc. Direct foreign investments in Kaunas FEZ account for 76% of all investments
• The Kėdainiai FEZ offers 9 plots for investors, with already installed water supply, sewage, surface waste water, pipeline and road infrastructure. The size of the proposed plots vary from 6,26 to 20,86 ha. Targeted activities are industrial and storage premises, construction of industrial and warehousing companies, etcSource: Kėdainiai FEZ, FEZ Kaunas, 2014
KAUNAS REGION
The Kaunas FEZ provides 294 hectares of logistics and production area
Where Machinery comes together
The Kėdainiai FEZ provides 9 ‘ plug-and-play’ plots
Industrial parks
Source: Invest Lithuania, 2014
KAUNAS REGION
Financial support available per FDI project in the field of services
Construction, Infrastructure, Salary costs Personnel training costs
Up to Euro 1.5 million Up to Euro 2 million
Max. possible support 3.5 million Euro
• Foreign investors interested in locating a business in Lithuania as well as foreign companies already operating in the Lithuanian market but eager to further expand may apply for Invest in Lithuania’s financial investment support of up to Euro 3.5 million per investment project
• Invest in Lithuania provides financial support to cover personnel training costs (up to Euro 2 million) as well as eligible construction, infrastructure and salary costs (up to Euro 1.5 million), incurred by foreign investors establishing a services business unit in Lithuania
• The financial support tool is designed to support foreign businesses investing into the production of export-oriented high-quality services as well as establishment of qualified jobs on the market
Where Machinery comes togetherNational incentives support program
• Information• Consultancy• Analysis• Search• Guidance• Networking• Assistance• Aftercare
One stop shop
TBD
Contact Information: +370 ….@www
KAUNAS REGIONContact us Where Machinery comes together
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