Wood Processing in Lääne-Viru County

Lääne-Viru Development Center2013Investor consultant

Sustainable competitiveness in business services

Estonia offers distinctive opportunities for business service centres for both in-house and outsourced solutions. Estonia is the emerging Nordic location and an excellent gateway between Northern, Western and Eastern Europe and Russia.

Estonia offers sustainable, high-quality, competitive costs and low risk solutions for BPO, IT and financial services shared service centres, customer and technical support centres.

Enterprise Estonia is here to help you achieve and maintain these competitive advantages.

Why Estonia?

Quality technical skills Foreign language skills Competitive costs and taxes Cutting-edge ICT infrastructure Strategic location and global vision Easy to do business Low risk: economic & political stability Room for growth: a sustainable solution Supporting your investment

Business enviroment in Estonia

• Estonia's economy offers key opportunities for companies in a number of sectors including ICT, electronics, machinery and metalworking, wood processing, logistics/transport and food. The R&D elements of these activities are supported by the country's 10 universities and 25 higher education colleges, which collectively provide a source of graduates, often fluent in English, Swedish, Russian, Finnish and German.

• Estonia has been ranked 16th in the Index of Economic Freedom (2012, Wall Street Journal/The Heritage Foundation), 24th in the Ease of Doing Business Report (2012, World Bank), and 33th in the Global Competitiveness Report (2012, World Economic Forum).

• Estonia has some of the highest credit ratings in the region (Fitch IBCA, Standard & Poor's, Moody's).

Business enviroment in Estonia

• Estonia is a member of euro area as of January 1, 2011.

• 0% corporate income tax is imposed on all reinvested earnings in Estonia.

• The Estonian cost level is still significantly lower than that of neighboring Scandinavian countries.

In Estonia, all capital is treated equally, foreign or domestic. Estonia is a member of the International Center for the Settlement of

Investment Disputes, the Multilateral Investment Guarantee Agency, and the New York Convention.

Estonia is the leading country in Central and Eastern Europe in terms of attracting foreign direct investments.

Estonia is one of the leading countries in the world in creating and implementing e-government solutions and cyber security

Why Lääne-Viru County ?

• Logistically very good location ( 100km to the airport in Tallinn, 25 km to port Kunda, 120 km to the east border in Narva)

• Closeness to important markets: the largest Estonian market in Tallinn and Harju County, the largest Finnish market in Helsinki region, one of the largest Russian markets in St. Petersburg region;

• Highways network in good shape

• A railway and port to ship raw materials and/or goods for export

• The existence and availability of local raw materials

• Skilled labor force within a radius of 100 km

• The presence of wood specialty professional learning

Why Lääne-Viru County ?

• Long experience and traditions in wood processing in the region

• Good cooperation with local authorities and assistance to investors

• Existing business areas that offer various services (including electricity and gas supply);

• Various existing companies: building materials, wood processing, food industry, metal and engineering industry, electronic industry;

• A good living environment with a normal social infrastructure and recreation opportunities

Location

• Situated in northern Estonia. Bounded by Ida-Viru County on the east, south and west of Jõgeva, Järva and Harju counties.

• Bounded on the north by Gulf of Finland

• Fifth most populated county in Estonia, with the population of 66 701people

• Territory is 3609 sq km and we are the third largest county in Estonia.

• Divided into 15 municipalities (13 rural municipalities and 2 towns). Rural population is 55%

• The largest municipality is town Rakvere with 16 570 inhabitants, being the county center as well

Connections

Transport and logistics • Lääne-Viru County has a very favourable logistic location by the sea,

between Tallinn on one side and Ida-Viru County on the other side.

• Rail link with St.Petersburg and Pskov (Russia)

and Riga (the Baltic States, Belarus, the Ukraine)

• Port of Kunda – located 26 kilometres from Rakvere

• Close to Tallinn-Narva highway (Rakvere – Tallinn 98 km, Rakvere – Narva 120 km)

• Rakvere-Väike-Maarja- Vägeva highway (Rakvere – Tartu 135 km)

• Sõmeru- Rakvere –Pärnu highway (Rakvere – Pärnu 178 km)

• International road transport companies: transport operations all over Europe as well in Russia and in the Ukraine

• Storage terminals for chemical and oil products

• Airport in Tallinn – 98 km

Power network • Electric power reaches Estonian households and companies with the help

of Eesti Energia Jaotusvõrk OÜ which provides services for 87,7 % of Estonian electricity consumers.

• Lääne-Viru County is supplied by a network of power lines with a total length of 5235 kilometres, 4520 kilometres of it is made up by overhead transmission lines. In the financial year 2010, over 2.58 million € was invested by the distribution network in the renovation of the power network of Lääne-Viru County. Nearly half of that sum was spent on the installation of underground cable lines.

• In 2011 the focus was on replacing overhead transmission lines with underground cable lines, the company replaced 80 km of lines with underground cable lines. The distribution company invested about 2.88 million € in 2011 in Lääne-Viru County for the construction and renovation of networks. In addition, maintenance and repair work necessary for sustaining the operating reliability is carried out. www.energia.ee

Regional workforce skills and costs

• Estonia has relatively low taxes and a simple tax system. Currently there is no corporation tax ( tax is not imposed on reinvested profit)

• Income tax on dividends forms 21/79 of the dividends received. • Value added tax is 20 per cent with just a few exceptions.• The average labor cost per hour worked in 2009 wood processing, wood and

cork products produstion and production of braids was 6.5 eur (www.stat.ee)• Educational level in Lääne-Viru County

Statistics 2011 (people, thousands)• Primary education or lower 5.2• Secondary, post secondary and pre tertiary education 17.3• Tertiary education 9.2• Education after secondary education 2.7• Higher education, mater`s doctoral degree 5.5

Unemployed wood processing skilled workers at Lääne-Viru County 30.11.2012 (www.tootukassa.ee)

Wood processing

• Wood processor 53• Joiner 3• Wood machine tool operator 8• Paper producing line operator 2• Wood industry device operator 10• Sawmill operator 3• Wooden furniture compiler 1

TOTAL 80 persons

Taxes and duties

• Rate of tax on income 21%.• Additional tax-exemption income when accidents at work or

occupational disease benefit is 64 euros monthly • Social security tax is 33%. The minimum obligation base

monthly rate for social security tax is 290,00 euros, which means that the minimum obligation social security tax is 95,70 euros monthly.

• Unemployment tax for the worker is 2%, for the employer it is 1%.

Taxes and dutiesThe company must be registered as a VAT payer when from the

beginning of the calendar year, turnover is in excess of 16,000 euros, on a voluntary basis can be registered also earlier.

When the company is registered VAT payer in Estonia and starts to use the imported (equipment, goods) for goods under VAT too, it can deduct VAT paid at customs on these good from its taxable supplies VAT.

Each month for the 20th is needed to present a tax return when registered VAT payer, VAT return form KMD. VAT payer can read from the registration requirement of § 19 VAT law (law is also available in English).

When the company will make special payments or other distributions paid in Estonia, and the company already is registered in Estonia, then you may re-turn to the specific tax questions also directly at jurisik@emta.ee.

Labor costs• The average wages in Estonia in

2011 was EUR 839. The monthly minimum wage for full-time work is EUR 290.

• Approximately three to four times lower labour costs, compared to Scandinavian countries, in miscellaneous business activities sectors.

• More than three times lower labour costs in the computer related services sector compared to the EU27 average.

1,487,4761,551,833

1,559,3551,811,572

1,965,661

2,312,688

3,495,198

4,277,570

4,872,490

5,690,992

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Latvia Lithuania Poland Hungary Estonia CzechRepublic

UK Finland Sweden Germany

Total labour costs, EUR/yearShared service centre/BPO, 80 persons

Benchmark locations

Source: fDiBenchmark.com, spring 2012

Wood processing in Lääne-Virumaa• Logistically good place, whence starts the road network in all directions in Estonia • Railway (station in Rakvere and Tapa, stop in Tamsalu)• Port of Kunda• Existing raw materials • Local governments provide different plots for companies in the wood sector ,

investors are welcome• Experienced and skilled unemployeed workforce• Branch of industry with the long-standing traditions• Opportunities for continuing education and training• The most suitable areas for production: Rakvere, Sõmeru (Näpi), Kadrina (Hulja),

Viru- Nigula, Väike-Maarja, Laekvere, Roela, Tudu.• 86 companies 2215 employees• Revenue 152756737 • Export 78704639 • Profit 11429278

Larger foreign investments in wood sector in Estonia

Company name Field of business Foreign investor (country)

Estonian Cell Pulp plant Norway, AustriaHorizon Pulp and Paper AS

Pulp, paper and other paper products

Singapore, USA

Balti Spoon AS Furniture industry materials

USA

Stora Enso AS Wood processing FinlandValga Gomab Mööbel AS Furniture SwedenFinnforest AS Sawn wood FinlandFenestra AS Windows and balcony

doorsFinland

Natural AS Sawn wood IcelandFlexa Eesti AS Furniture, sawn wood DenmarkViktor Stationery Stationery UK

Industrial areas in the regionRakvere Industrial Area• Reconstructed infrastructure

• Good logistical position of the highway (Tallinn-Narva), railroad and port of Kunda

• Good labor force potential in urban and in near rural municipalities

• Perspective of bringing one of railway line to industrial park

• Perspective of developing airport for serving enterprises

• Existing neighborhood of the Estonian energy and natural gas distribution network

• Possibility of developing the industrial park area existing residential areas and residential land to allow the relocation of labor

• The business environment in addition to a quality living environment

• Opportunity to provide affordable and cheaper production costs, while logistically well-located plots (eg Harju county companies)

Industrial areas in the region Kadrina Industrial Area

• Kadrina industrial village is situated on 21,5 ha in the northern and north-eastern part of Kadrina.

• Operating enterprises own 7 registered immovables with the total area of 16,8 ha, two plots are owned by the state. The territory has a good access roads and streets.

• Location: Kadrina municipality Technical networks: Free electrical capacity of 1200 kW, heating 70 MW/ daily, water 150 m³/daily , sewerage-waste water treatment facility, capacity 400 cupic metres per 24 hours

• Desired use: wood products manufacturing industry;- cluster companies servicing companies (wood cluster, metal cluster);- production must be environmental friendly;- production should not be labor intensive.

• Distances: • Tapa railway junction (Russia, Latvia) 15

km• Port of Kunda 35 km• Port of Loksa 60km• Tallin-Narva highway and Pärnu-Rakvere-

Sõmeru highway – Tallinn 90 km, Rakvere town 15 km

Biggest suppliers in the regionJed-Wen Eesti AS• Wood products

• Number of employees 647

• Profit 6 969 000 EUR

• Turnover 48 693 000 EUR

• Revenue 40,9 milj EUR

• Contact: www.jeld-wen.ee

• Arkna tee 1, 44317 Rakvere

• Ph.nr/ Tel +372 3229 130Fax +372 3229 132

• inforakvere@jeld-wen.biz

 

Biggest suppliers in the region Estonian Cell AS

• Aspen pulp mill which is located in Kunda, Estonia. The production started in April, 2006. Total project cost was 153  million Euros and thereby was the second largest  foreign direct investment into Estonian industry.  Owner of AS Estonian Cell is the Heinzel Holding GmbH from Austria.

• The main constructer was RWE Industrie-Lösungen GmbH, equipments supplier was  Austrian company Andritz. The mill annual capacity is over 150 000 tons of aspen pulp. This pulp is raw material for high quality paper and tissue. Estonian Cell employs 85 people. 

Turnover: 67 786 000 EUR (2011); 744 136,1 EUR

• Profit: -8 869 000 EUR (2011); 10 366 597,2 EUR

• Export turnover: 67 112 000 EUR (2011); 64 741 000 EUR (2010)

• 19 years of experience in the timber processing industry• Aru Group, a woodworking factory situated in Northern Estonia, was founded in

the year 1993 and currently employs about 150 people. The whole production consists of four factories: window and door production; stairs production; log-house production and component production.

• Ensured quality• Aru Group meets the requirements of the ISO 9001:2008 quality management

system.• Brand• Aru Grupp Ltd owns the brand Aru Joinery.• Turnover: 6 195 571,4 EUR (2010); 7 011 662 EUR(2011)

• Profit: 69 870, 96 EUR (2010); 394 185 EUR (2011)

• Export turnover: 2 989 015 EUR (2011)

Biggest suppliers in the region Aru Grupp AS

Biggest suppliers in the region Stora Enso-Eesti AS

• Stora Enso is the global rethinker of the paper, biomaterials, wood products and packaging industry. We always rethink the old and expand to the new to offer our customers innovative solutions based on renewable materials.

• The Group has some 30 000 employees in more than 35 countries worldwide, and is a publicly traded company listed in Helsinki and Stockholm. 

• Sõmeru Stora Enso Forest is one of the world's largest timber industry group of Stora Enso wood supply company in Estonia. The log is stored for the Stora Enso sawmill industry, chips and pulpwood for Stora Enso's paper industry in Finland and Sweden. The goal is to supply the wood sustainably and thereby create new values for both current and future consumers of timber for forest owners

• Turnover: 180 111 735 EUR (2011); 163 395 945,4 EUR (2010)• Profit: 15 109 445 EUR (2011); 17 533 EUR (2010)• Export turnover: 126 799 725 EUR (2011); 115 131 774 EUR (2010)

Foundation Lääne -Viru Development Centre

Investor consultant

ar@arenduskeskus.ee

Phone nr: + 372 32 58 028

www.arenduskeskus.ee