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Monday 23.07.2018 | Name days: Magda, Magone, Mērija

Opinion: working export should be prepared for any fluctuations on the global market

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIf an industry is engaged in export, it should expect and be prepared for any and all fluctuations on the global market, says President of Association of Mechanical Engineering and Metalworking Industries of Latvia Vilnis Rantiņš.

He adds that the metallurgy industry could have grown 4-5% this year if not for Liepājas metalurgs or the possible reduction potentially caused by the geopolitical situation.

Rantiņš notes that the impact on the metallurgy markets caused by the lengthy Russian-Ukrainian conflict may cause a 10% reduction in total production volumes.

‘The situation is what it is; there’s nowhere to go. It is clear there will not be a positive impact. Estimates suggest there may be a 10% decline for total production volumes. The Russian-Ukrainian conflict may even impact the number of orders from Germany, because everything is tied together on the global market. Sanctions introduced against Russia by the West will also impact everyone, because even the West is dependent on Russian gas and oil,’ – explains Rantiņš.

The head of the association also notes that a new market can be found to replace the lost one. ‘Businessmen closely follow developments of the situation. They are always on the move to somewhere else – go around in search of new markets and customers,’ – says Rantiņš.

When asked if companies can reorient from the east to somewhere else, Rantiņš notes that reorientation is not a simple thing to do.

He adds that mechanical engineering and metalworking industries hold 25% in exports among all processing industries and 20% in total production volume. In 2012, the industry’s total produced volume reached EUR 1.8 billion and had exceeded that of 2008. The closure of LM had impacted production volumes by approximately EUR 1.45 billion.

The decline was rather large, because production of metals forms nearly 30% of the industry’s total production volumes. The total decline in production volume for the industry was 18% in comparison with 2012. If the impact caused by LM is not taken into account, however, it seems there was actually an increase of 2%.

‘Aside from the story with LM, the situation as a whole was not bad last year. If we look at the first three months of 2014 and entrepreneurs’ mood, it would appear their view on life is optimistic. Yes, there are some companies whose export is aimed at the east. It is also likely they are not experiencing the best of times at the moment. The industry’s total export volume was approximately 80% of the total production volume. This is why any fluctuations always have an impact on the industry,’ – says Rantiņš.

The industry exports goods to 116 different countries of the world. The majority of the export (70-75%) goes to Europe, including Norway and Iceland. The east – Russia, Ukraine, Kazakhstan and other CIS countries – receive 12% of exports. ‘The European market has experienced some changes – we mostly left southern European markets when the crisis began there. Now our main export markets are those of Germany and Scandinavian countries,’ – adds Rantiņš.


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