Plans to expand Homanit’s wood-based panels production are advancing in Lithuania.

The company is launching a €175m MDF and HDF project in Pagiriai, close to the country’s capital Vilnius in south-east Lithuania.

For Homanit, it will be the group’s fourth panels factory, with existing operations already in Losheim (Saarland) in Germany and two factories in Poland.

The new factory is planned to have an installed annual production capacity of about 260,000m3 of MDF and HDF.

Under the plan, the investment in Pagiriai is to be completed in the third quarter of this year.

The project is expected to create some 440 new jobs, according to data released by the municipal authorities of Vilnius.

NEW PAGLIRAI SITE

Last year the company made a big stride forward with the acquisition of a land plot in Pagiriai, where the new facility is to be located on a 77ha site. This was the biggest transaction of its type in the Lithuanian market in 2020, with the deal thought to be worth about €10m, according to data obtained by international consultancy PwC.

The German group says the new factory, which will be operated by its local offshoot Homanit Lietuva UAB, will produce its HDF product range and MDF boards with thicknesses of up to 22mm.

Speaking in late March, a spokesperson for Homanit told Wood Based Panels International that construction work on the Lithuanian factory was advancing and that the company intended to share more details on the facility’s capacities once the project was completed.

The construction work had officially launched last December and, to celebrate this milestone, Lithuanian decision-makers, diplomats and senior company representatives gathered in Pagiriai. The manufacturer was represented at the event by Fritz Homann, the chief executive of German parent company Homann Holzwerkstoffe GmbH, and Andrius Ostrauskas who serves as the president of Homanit Lietuva UAB.

“I am very glad that a large international company will be located in our district, Pagiriai, which will be able to provide our residents with many jobs,” mayor of Vilnius Marija Rekst said at the event.

Mr Homann told the gathered officials that his company decided to select Lithuania for its latest investment owing to the Baltic state’s preferential location along its export routes, its employee base and also other factors.

Mr Ostrauskas said in addition to the designed factory, in the future, Lithuania will also host an R&D facility and a storage facility.

NEW FACTORY TO ENHANCE LOGISTICS

In earlier statements, Homanit Lietuva’s president said that transport costs from Poland have been taking a toll on the bottom line of the company’s customers and the new plant in Lithuania was designed to solve this issue.

Under the plan, about 50% of the Pagiriai plant’s production is to be allocated to local furniture producers, while the remainder will be exported to customers in a wide range of foreign markets, including companies based in North America and the Far East, according to Mr Ostrauskas.

Homanit Lietuva has ordered a complete thin high-density fibreboard (THDF) production line from German manufacturer Dieffenbacher.

“In addition to the raw fibreboard plant, all relevant finishing units will be installed at the Lithuanian site, which will thus cover the full Homanit product range,” the company said in a statement.

“Investments in further processing and finishing include sanding, painting, laminating, sawing, folding, drilling and milling.”

The ordered THDF production line is designed for the production of fibreboards with widths of between 1.5 and to 22mm, with a planned annual production of some 310,000m3, equivalent to a daily capacity of about 950m3.

Once it is completed, the factory in Pagiriai will further strengthen the role eastern European markets play in Homanit’s production capacities.

In Poland, Homanit’s two factories are located in close proximity to the country’s border with Germany.

Opened in 2008 and situated in Poland’s north-western part, the plant in Karlino makes MDF and HDF with a width of 1.5 to 10mm, and has an installed production capacity of some 250,000m3 per year.

The production facility in Krosno Odrzanskie, in the country’s west, was acquired in 2012, and it makes MDF and HDF with a width of 1.5 to 7mm, and has an annual output capacity of some 240,000m3, according to the group’s own data.

The company’s Losheim am See plant in Germany’s western state of Saarland was opened in 1995 and specialises in HDF and MDF with a width of 2 to 8mm, with a particular focus on the doors industry.

Last December, the manufacturer unveiled plans to invest in modernising the production facility. The project foresees opening a new fibreboard press, as well as further investments related to fibreboard finishing. In total, Homanit is to allocate some €65m to the project to upgrade the plant.

In addition to launching a new production line, Homanit will also fit the German factory with enhanced exhaust air purification technology to pave the way for more sustainable and climate-friendly production, the German business said in a statement.

The manufacturer aims to initiate production activities at the new line by the end of 2023.

PROJECT INCENTIVES

Owing to its size, Homanit’s Lithuanian investment will benefit from a number of incentives designed for major manufacturing projects carried out in the country. It will be the first Lithuania-based venture to secure the status of a large investment project, a special framework Lithuania’s authorities developed to attract a higher number of foreign direct investors (FDIs) such as Homanit.

Under legislation passed by the country’s parliament in 2020 and implemented the following year, tax cuts and other incentives are available to projects that comprise capital expenditure of at least €30m in Vilnius and €20m in other parts of the country.

In addition to the above criterion, investors who seek to benefit from this status must also vow to create at least 200 new full-time jobs in Vilnius or 150 jobs in other parts of the country.

Jobs created within manufacturing, data processing, and internet server hosting services make projects eligible for a preferential 0% corporate income tax which can be applied for a period of up to 20 years.

Moreover, investors also sign a contract with the Lithuanian government which “grants the project the status of national significance, ensuring fast decision-making, simplified procedures and all-round reduction of bureaucracy,” according to the country’s Ministry of the Economy and Innovation.

The ministry says that, as the status extended to large-scale investments ensures additional state support for territorial planning and environmental assessment procedures, it allows investors such as Homanit to save about six months in comparison to companies which carry out their investments in Lithuania under standard regulations.