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Where Machinery comes together KAUNAS REGION. 2 Source: Statistics Lithuania, VRM, Invest Lithuania 2014 Welcome to Kaunas Region, Lithuania! KAUNAS REGION.

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Presentation on theme: "Where Machinery comes together KAUNAS REGION. 2 Source: Statistics Lithuania, VRM, Invest Lithuania 2014 Welcome to Kaunas Region, Lithuania! KAUNAS REGION."— Presentation transcript:

1 Where Machinery comes together KAUNAS REGION

2 2 Source: Statistics Lithuania, VRM, Invest Lithuania 2014 Welcome to Kaunas Region, Lithuania! KAUNAS REGION stats Regional capitalKaunas City Population593,000 Labour pool289,000 Unemployment31,300 (10.1%) FDI growth11.4% LITHUANIA stats Size65,300 km2 Population2.97 million CapitalVilnius Official languageLithuanian CurrencyLithuanian Litas (LTL) Pegged to Euro since 2002 1 Euro = 3.45 LTL Real GDP growth2013: 3.2% 2012: 3.7% 2011: 6.0% FDI growth8.1 % Annual inflation1.2% 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 REGION Where Machinery comes together

3 Source: * World Bank, Invest Lithuania 2014 Lithuania, a gateway to the EU and CIS KAUNAS 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 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

4 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 Kärcher NASA BOEING BMW GM Audi Wolkswagen Volvo Chrysler Magna Ford Renault Toyota Scania Husqvarna ABB Bombardier Rolls-Royce Bosh Siemens

5 KAUNAS REGION The 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 In KAUNAS REGION it all comes together

6 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 products Source: 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

7 7 Employer 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 TaxGeneralFree Economic Zone Income tax15 % 0 % (first 6 years) 50% of the tax rate (subsequent 10 years) Property tax1 %0 % Dividend tax15 %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 together Cost attractiveness

8 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 together International accessibility Kaunas Region is conveniently located on crossroads of modalities Source: BCI, 2014 * Source: Invest Lithuania, 2013

9 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 REGION Where Machinery comes together International accessibility

10 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, etc Source: 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

11 Source: Invest Lithuania, 2014 KAUNAS REGION Financial support available per FDI project in the field of services Construction, Infrastructure, Salary costsPersonnel training costs Up to Euro 1.5 millionUp 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 together National incentives support program

12 Information Consultancy Analysis Search Guidance Networking Assistance Aftercare One stop shop TBD Contact Information: +370 …. @ www KAUNAS REGION Contact us Where Machinery comes together


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