Klasmann-Deilmann to expand production capacity in Lithuania

Long-term investment

Klasmann-Deilmann is the leading corporate group in the international substrate industry, with sales and production companies in Europe, Asia and the Americas. On every continent, its peat-based growing media provide a vital foundation for plant growth, and for the success of countless horticultural businesses. As long ago as the early 1990s, the company entered into long-term supply agreements with Lithuanian peat producers. Since the year 2000, Klasmann-Deilmann has been investing in the expansion and modernisation of corporately owned extraction and production operations in Lithuania. 2010 saw the opening of what remains the largest and most modern substrate factory in the Baltic region, whose construction cost just under EUR 10m and whose annual production capacity exceeds 1 million m³ of growing media. Klasmann-Deilmann is also developing extensive activities related to renewable energy and resources in Lithuania, and manages some 2,000 ha of short-rotation plantations there.

All of the sites – Klasmann-Deilmann Šilutė, Klasmann-Deilmann Gedrimai, Klasmann-Deilmann Ežerėlis, Klasmann-Deilmann Laukėsa and Klasmann-Deilmann BioEnergy – are located in regions of Lithuania that are structurally weak. The firm is among the major employers there, making an important contribution to economic development.

According to economy minister Evaldas Gustas, it is exceptionally important that businesses like Klasmann-Deilmann are attracted to Lithuania: “In 2014, the company was recognised by the State Social Security Fund Board (SODRA) for its transparency throughout its operations, and by the regional divisions of the State Tax Inspectorate for its considerable contribution to the state budget in the parts of the country concerned. Socially responsible enterprises are extremely important for the Lithuanian regions, which is why the Ministry of Economy fully supports the development of companies such as Klasmann-Deilmann.”

With the upcoming expansion of the substrate factory in Šilutė in mind, managing director of the Klasmann-Deilmann Group Dr Norbert Siebels says: “We are operating in a competitive business environment. Only those who invest in modernisation and in the expansion of their production capacity can hold their own in the international markets. The fact that Klasmann-Deilmann chooses to be active in Lithuania is because of the country’s extensive resources, the well-developed infrastructure and the constructive attitude of the state authorities. For this reason, Lithuania has long been our company’s most important business location outside Germany. From here, we can provide our products and services to many customers throughout the world. For example, we are working closely with Lithuanian carriers in the European markets, and the fact that the port of Klaipėda is free of ice all year round is essential for transporting products by sea.“

The managing director of Klasmann-Deilmann in Lithuania, Kazimieras Kaminskas, points out that the corporation had in the past also considered other countries with similar attributes for forthcoming investments. “However, the final decision in favour of Lithuania was, among other factors, influenced by the proactive approach of the public sector in Lithuania, especially that of the investment promotion agency Invest Lithuania.”

Development of research and development activities

In Šilutė, Klasmann-Deilmann sets the standard to beat by producing numerous substrate blends of world-class quality. To intensify its activities at all levels of the value chain, its upcoming investments will involve not only the installation of an additional, high-performance production line, but also research and development facilities: among other things, there are plans for a product testing laboratory and an experimental greenhouse. With regard to the related ongoing development of its product range, Klasmann-Deilmann will be working closely with Aleksandras Stulginskis University and other educational institutions in Lithuania. Another special focus is on in-house employee training.

According to Justinas Pagirys, director of Investment Development at Invest Lithuania, Klasmann-Deilmann’s business development and ongoing investment in high value-added research activities indicate the firm’s long-term plans in Lithuania: “Since the 1990s, Klasmann-Deilmann has been consistently investing in our country – and both the scale and the nature of its investment reinforces its serious commitment to making Lithuania the company’s most important location in the Baltics. This is a huge testament to the quality of work and the business climate in Lithuania, and also very good news for the regions.”

In 2014, Invest Lithuania attracted a record number of new investors: 29 foreign companies decided to establish or expand a subsidiary in Lithuania, creating just under 2,000 new jobs. The largest portion of investment projects (41%) involved the manufacturing sector, and almost half of the companies chose to locate outside Vilnius.