As the countdown to Brexit continues, some UK companies are considering relocating parts of their operations to the eurozone. Preparing to meet this demand, locations such as Lithuania’s Klaipeda free economic zone (FEZ) are adopting strategies that recognise that speed is of the essence.
Klaipeda FEZ, a 412-hectare industrial and technology park in coastal Lithuania, has invested €2.7m in an advance production facility targeted at UK engineering, food and logistics companies. “We’re scheduled for completion by August 2018,” says Eimantas Kiudulas, CEO at Klaipeda FEZ. “We already have customers for more than 50% of the facilities.”
An Irish example
Mr Kiudulas says the concept is borrowed from IDA Ireland, the Irish investment promotion agency, which has used property solutions as a key part of its marketing programme for many years.
“We’re learning from IDA Ireland’s experience of previous projects,” he says. “It has more than 10 years’ experience of developing property for lease during different economic development phases. It will allow us to avoid the mistakes it made. Our building will be energy efficient and will also use green energy. And because the building is aimed at industrial companies, all solutions will be designed according to their needs.”
The aim of the universal production building in Klaipeda FEZ is to enable companies to be up and running in three months. Mr Kiudulas says this quick-start option allows UK companies to test the market if they are not absolutely sure of their final project size. “They could start small, rent an office or some area for production or distribution, and then expand. More than 80% of FEZ companies have expanded after two years of operation,” he adds.
Mr Kiudulas continues: “Usually, when companies make expansion decisions, they already know their markets, and have customers or even contracts to supply. And because the decision has been made, they naturally want to start operations as soon as possible. Every day of not operating from a new location represents lost profits.”
The need for speed
This focus on speed is something that Klaipeda FEZ has also learned from IDA. “From the start, the IDA realised that speed is a key competitive advantage and it has offered shovel-ready sites and advance factories to potential investors,” says Mr Kiudulas. “In the recent past, the speed factor has even exceeded tax breaks and incentives in importance when it comes to choosing a location for investment.”
Klaipeda FEZ has designed its advance building based on extensive research and discussions with current and prospective investors, as well as Irish investment consultants. The type of companies it is targeting usually require multi-functional premises with a floor area of 500 square metres to 2000 square metres and a ceiling height of six metres. It is also meeting their needs for bespoke solutions such as mezzanine floors and special areas for employees.
Mr Kiudulas is confident that Klaipeda FEZ will be on the shortlist of some UK firms looking for a eurozone location. “Lithuania has many similarities with UK firms in terms of business and work attitudes,” he says. “And as the second largest port after Saint Petersburg on the eastern side of the Baltics, Klaipeda has a natural advantage in being able to supply the UK by sea if needed.”