Russian capital woes closing plants in Latvia?

Both the Riga Electric Machine Building Works (JSC RER) and the Jelgava-based Uralvagonzavod (UVZ Baltija) railcar factory are laying off workers and halting operations, reported Latvian Television’s Russian-language Channel 7 news program Lichnoye delo.

UVZ Baltija was supposed to relaunch a line of cargo wagons in the former premises of the defunct Jelgava sugar refinery. Most of the product was intended for export to Russia and Ukraine. But construction at the new plant was mothballed at the end of last year.

A security guard told LTV7 that all building had stopped. “Some problems they’re having. The workers? They’ve finished up, take their equipment and that’s it,” he said.

Plans were for a €20m investment into the Jelgava facility, creating 300 new jobs, expecting a turnover up to €114m. However the parent company in Russia, Uralvagonzavod, was included on the EU’s third-stage sanctions list against Russia, denying its access to European financial instruments.

Company leadership declines to comment on the situation or reveal any of its further plans. The city’s local government says it has no clear information on the fate of the manufacturer.

“There’s a promise that the project will continue and won’t be halted, there’s some activity, but I can’t name any results so far,” said Jelgava mayor Andris Rāviņš.

The RER plant, too, is undergoing difficulties in light of the situation on the Russian market. In 2012 the factory employed close to a thousand workers. It made electric engines for trains, also primarily for the Russian market. On January 21 the company notified the Riga Bourse Nasdaq OMX it plans for a fall in turnover from €34m in 2014 to €20m this year.

Its leadership is also mum, but workers met at the entrance to the plant were exchanging rumors of a massive layoff.

“Just two weeks in January, a whole cadre left and went to the job fairs. Only a few people left to keep up the equipment,” some of the workers told LTV7.

There are between 100-200 workers currently active at RER. Andrejs told LTV7 that termination is not happening according to a reduction of workforce (entailing compensation payments), but rather “on the basis of mutual agreement.”

“Basically, everybody’s getting laid off. Only the pensioners whom the job fairs won’t accept anymore, are left,” Andrejs said.

Raisa, who worked at the plant for most of her life, is more concerned for her son, who followed in her footsteps and also has worked at the plant now for a long time. “He says they’re reducing personnel by 80%,” she claimed.

According to the state Employment Agency, unemployment status was issued to 149 former employees of RER between December and January.

LTV7 estimates that between the two troubled plants plus another Jelgava manufacturer AMO Plant controlled by Russian capital, there are at least 600 people out of work, while the Latvian state treasury forfeits tens of millions of euros in taxes.

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Economy
Economy