Development of mechanical engineering and metalworking industry in Latvia

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29. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC activities - TehnoBuss

6. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC - main activities Representation of interests Networking / Co - operation Education & HR development Marketing / Export promotion International co - operation Information Joint project development

33. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC - A ssociation of mechanical engineering and metalworking industries of Latvia Ezermalas 6 K , Riga, LV - 1006, LATVIA Phone: +371 67554825 Fax: +371 67089776 masoc@ masoc .lv www.masoc.lv

1. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Development of mechanical engineering and metalworking industry in Latvia Toms Grinfelds Executive Director MASOC Riga, Tech Industry, 01.12 .201 6

11. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Production of machinery (C28) • Machinery and equipment for all sectors of national economy (ports, woodworking, forestry, energy, food, agriculture, lifting – handling, etc )

13. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Other transport vehicles (C30) • Shipbuilding and repair • Production and repair of railway rolling stock

8. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Production of metals (C24) • Cast iron • Non - ferrous metals • Aluminium ingots

9. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Production of metal products (C25) • Metal constructions • Metal processing services / subcontracting • Various metalware

10. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Production of electrical equipment (C27) • Electrical engines • Products for energetics and electrification • Power generators

12. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Automotive, trailers, semitrailers (C29) • Parts and components for automotive industry • Trailers, semitrailers • Equipment, accessories for trucks and special purpose vehicles

27. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC – key activities and projects • Tehnobuss • Training project • Competence centre project • Cluster project • International projects

22. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Examples of investment - Keramserviss • Small family owned company • Main competence – equipment, materials and solutions for heat treatment processes • New heat treatment processes introduced for big size components - 6 to 8 ton electrical heat trea t ment furnace (3000 mm x 6000 mm 3000 (h) mm)

7. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Mechanical engineering and metalworking sector in Latvia • One of the most significant manufacturing sectors in Latvia: – Accounts for more than 17% of the total manufacturing output and value added (2014) – Second biggest exporting sector in 2014 (accounts for more than 21% of Latvian exports of goods) • Exports over 70% of the output to more than 100 countries • Covers NACE 24, 25, 27, 28, 29, 30

21. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Examples of investment – TS Riga • Part of SEE Group (France) • Main product – wood chippers • Existing production extended in Jelgava • Investment in new premises and equipment – CNC machining, balancing equipment, warehouse system

32. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC activities – Cluster project • Developed and submitted in July 2016 • Waiting for final approval • Supports joint activities for MASOC companies: – Export promotion and marketing – Productivity and efficiency – HR development – Networking and collaboration • Implementation 2016 - 2020

2. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Outline • MASOC – short introduction • Mechanical Engineering in Latvia – Key facts & figures – Latest trends – Investment • Trends in Europe • Current projects of MASOC

23. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Main challenges ( development problems identified by companies , Sector study by MASOC, 2016) 0 10 20 30 40 50 60 Information about market, standards, etc. Infrastructure Tax administration Access to finance Quality of education Political / economical situation in export markets Lack of orders Legislation, tax regulations Lack of qualified specialists 2016 2015

31. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC activities – Competence centre project • Support for development of new products, technologies and industrial research • Timeframe 2016 – 2018; 3,2 mio EUR • 15 projects approved and in various stages of implementation • Projects grouped in three research areas : – Engineering / production systems – Materials – Transport systems

15. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv 0 20 40 60 80 100 120 140 Denmark Sweden Germany Norway Russia France Lithuania Belgium Estonia UK 2014 2015 Main export markets 2014 and 2015, M EUR

28. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC activities - TehnoBuss • Mobile demo laboratory equipped with modern technologies – CNC machines, FESTO automatisation , 3D printer, multimedia, welding equipment, etc ; • Visiting schools and giving lectures to schoolchildren (mainly 7 - 9 grade) • Operating since September 2015 • Project developed in co - operation with Nordmetall , Germany • Since beginning, more than 100 schools visited, lectures attended by 9000 schoolchildren Main objective – To raise interest in technology and engineering sciences and to attract young people to choose technical education

20. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Examples of investment – BBC - R • New factory built in Riga • Brand – «Baltic Bearing Company» • Investment ~ 9 million EUR • New equipment – machining, grinding, assembling and quality inspection • Producing wide range of bearings ( • 107 employees • Planning to establish one more production site in Rezekne

3. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC – Association of Mechanical Engineering and Metalworking Industries of Latvia • Established in 1994 as informative and consultative centre for the specified industrial sector • Voluntary, membership based organisation • Unites about 160 leading sector enterprises • Member companies produce over 70% of the sector’s total output, over 50% of sector’s employment • Implements activities typical for trade associations and cluster organisations • The main goals: – To promote the competitiveness and growth of the sector; – To promote mutual cooperation – To promote professional growth of the specialists in the sector

16. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Turnover in MM sector ( thsd EUR) 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1800000 2000000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F MM MM25,27,28,29

30. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC activities – training project • Project started in 2016 • Similar to previous training project • Training areas : – Production management and engineering – Computer science – Engineering and technology – Manufacturing – Environmental protection • Support intensity : – Small enterprisses 70% – Medium enterprises 60% – Large enterprises 50%

17. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Development of MM subsectors (2005=100%) 0 50 100 150 200 250 300 350 400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 F (C24) Base metals (C25) Metal products (C27) Electrical equipment (C28) Machinery and mechanical equipment (C29) Automotive, trailers, semitrailers (C30) Other transport vehicles

19. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Investment (NACE 25, 27, 28, 29, thsd . EUR) 0 5000 10000 15000 20000 25000 2008/1Q 2008/2Q 2008/3Q 2008/4Q 2009/1Q 2009/2Q 2009/3Q 2009/4Q 2010/1Q 2010/2Q 2010/3Q 2010/4Q 2011/1Q 2011/2Q 2011/3Q 2011/4Q 2012/1Q 2012/2Q 2012/3Q 2012/4Q 2013/1Q 2013/2Q 2013/3Q 2013/4Q 2014/1Q 2014/2Q 2014/3Q 2014/4Q 2015/1Q 2015/2Q 2015/3Q 2015/4Q 2016/1Q 2016/2Q

26. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Outlook by ORGALIME • Slight economical recovery in EU in 2016 • Problems in export markets ( China , Russia , Brasil ) • Automotive – the fastest growing segment • The investment growth of European industry will be positive in 2017 • Main uncertainties – geopolitical risks, BREXIT, trade with USA after the elections 1,3 0,5 1,6 1 1,7 0,1 1,6 1,4 Mechanical engineering Electrical, electronics and instrument engineering Fabricated metal goods Total 2016 2017 Annual change in output (current prices) of European engineering industries (year - on - year growth in %)

18. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Changes in production and exports (2016 9m, %) - 40,4 6,4 2,4 - 1,8 - 0,6 - 13,7 - 4,7 3,1 - 40,5 14,9 5,3 - 1,8 - 0,9 - 21,0 - 2,7 6,5 (C24) Base metals (C25) Metal products (C27) Electrical equipment (C28) Machinery and mechanical equipment (C29) Automotive, trailers, semitrailers (C30) Other transport vehicles MM (24; 25; 27; 28; 29; 30) MM (25; 27; 28; 29)

4. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC – members’ profile METALS METAL PRODUCTS MACHINERY ELECTRICAL EQUIPMENT TRA NSPORT VEHICLES Design and prototyping Testing and certification Specialised services Material suppliers Materials recovery Suppliers of equipment Education Research • The core group of companies cover various subsectors of metalworking and engineering (NACE 24, 25, 27, 28, 29 and 30) • Besides manufacturing companies, related organisations and service providers are included as well, covering the whole value creation chain.

25. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Development of the main steel using sectors – EUROFER forecast October 2016 % change year - on - year in the SWIP (Steel Weighted Industrial Production) 1,6 0,1 7,5 4,3 6,7 - 5,4 2,2 2,1 1,4 0,4 5,1 4,6 2,6 2,6 2,6 2,5 2,2 1,3 2,8 2,4 2,4 4,6 2 2,4 Construction Mechanical engineering Automotive Domestic appliances Other Transport Tubes Metal goods TOTAL 2015 2016 2017

14. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv Main export markets – mechanical engineering and metalworking, 201 5 , % of total exports 2,5 3,3 8,3 8,6 41,7 72,9 84,6 North America Asia Baltic Countries CIS Scandinavia EU28 Europe Denmark 17% Sweden 13% Germany 11% Norway 9% Russia 7% France 5% Lithuania 5% Belgium 4% Estonia 4% UK 4% Other 21%

24. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv EU macro - economic overview (y - o - y change in %) EUROFER, Octorber 2016 2014 2015 2016 F 2017 F GDP 1,5 1,9 1,8 1,4 Private consumption 1,2 2,0 2,0 1,5 Government consumption 1,1 1,3 1,7 0,9 Investment 2,6 3,1 2,3 2,0 Investment in mach. equip. 2,4 4,8 2,8 2,2 Investment in construction 1,4 2,2 1,6 1,8 Exports 4,1 5,4 3,2 3,4 Imports 4,8 6,0 3,9 3,8 Unemployment rate 10,8 10,0 9,4 9,1 Inflation 0,6 0,1 0,3 1,4 Industrial production 1,4 1,9 1,3 1,5

5. Association of Mechanical Engineering and Metalworking Industries of Latvia www.masoc.lv MASOC – member companies Number of Member Companies Size of Member Companies ( persons employed ) 29 1 5 6 6 7 12 8 26 5 12 47 24 21 1 18 10 12 9 14 15 9 29 30 29 28 33 32 35 44 52 81 90 103 140 158 177 172 151 146 151 154 158 162 164 0 20 40 60 80 100 120 140 160 180 200 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 New members

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