Roundup: Coca Cola to shut down Lithuania plant, sparking competitiveness concerns

Coca Cola HBC Lietuva, the multinational's subsidiary in Lithuania, announced on Thursday it will close its plant in the country's southern town Alytus and dismiss 80 employees.

The company's spokeswoman said that Coca Cola's aim to improve its competitiveness was behind the move. It was also announced that the company would move production to Poland.

"The decision was prompted by our goal to remain as competitive as possible in countries where Coca Cola has its activities and to supply customers with the products and services of highest quality," Gabriele Sereniene, spokeswoman for Coca Cola HBC Lietuva, was quoted as saying by local news website vz.lt.

It was a "difficult decision" and that the company "regrets" the move and understands its consequences for the workers and their families, the spokeswoman said.

"We have prepared a social plan for employees, which includes severance pay, supplementary payments for working period of time and loyalty benefits," Sereniene added.

The closure of the factory is planned for the end of November.

The company's logistic, sales and marketing divisions will continue its activities in the Baltic country, Coca Cola HBS Lietuva said. The company currently has 215 employees in Lithuania, including those working in Alytus.

OFFICIAL, EXPERT REACTION

Lithuanian Prime Minister Algirdas Butkevicius said he did not intend to "dramatize" the company's move presuming that it was likely a part of Coca Cola corporation efforts to optimize its activities across the region.

However, the prime minister said he will make a more detailed inquiry into the reasons behind the company's decision.

In a commentary, Butkevicius said that Coca Cola HBC Lietuva in the past did not address the government with any claims, demands or proposals concerning the business environment in Lithuania. Therefore, it is unlikely that the company's decision was determined by poor business or tax environment in the country.

Meanwhile, Vytautas Grigaravicius, mayor of Alytus town, said the decision was a strong signal that "measures must be taken to improve our (Lithuania's) competitiveness."

Municipal officials expressed their concerns over the fate of dismissed workers. Alytus, the sixth largest Lithuanian city with approximately 54,000 residents, in the recent years experienced a large scale exodus of emigrants who left the country mostly due to economical reasons.

Mantas Katinas, director of Lithuania's investment promoting agency Invest Lithuania, suggested that Coca Cola was aiming at centering its activities in the region's largest Polish market.

"We believe this is the case. Poland's market is significantly larger than Lithuania's, we cannot compete with it in terms of size and purchasing power," Katinas was quoted as saying by Invest Lithuania.

However, he admitted that poor investment climate, disagreements with official institutions, lack of labor force could be among other reasons prompting companies to redirect investments.

"Our public sector's task is to ensure that foreign employers do not start moving elsewhere from Lithuania due to these reasons," Katinas underlined.

Ruta Skyriene, head of Lithuanian association Investors Forum, pointed to lack of liberal labor code and the government's unwillingness to improve the business environment in the country.

Coca Coca HBC opened its plant in Alytus in 1994. It was expanded in 2010.

Data from Nielsen, the global performance management company, shows that Coca Cola has a market share of 16 percent in the country's non-alcoholic beverages market.

Last month, German snack-manufacturing company Intersnack Group, producer of Estrella chips, also said it planed to relocate its production from Lithuania's second-largest town Kaunas to Poland as of 2017. Enditem