How and why a cable manufacturing giant chose Kaunas

Feb 14, 2018
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In February 2018, the Danish NKT Cables Group announced plans to set up a financial services centre in Kaunas. The company chose it from several potential candidates that included India. Verslo žinios had the chance to talk about this selection, employee training and competition with Poul Erik Stockfleth, NKT Cables Group’s VP for Finance.

“The initial idea was to establish a service centre in Poland or in the Czech Republic, as we have factories there,” says Poul Erik Stockfleth. “A whole series of overlapping reasons, including a timely call from Invest Lithuania, brought Lithuania to our attention. Finally, Poland and the Czech Republic were rejected, because we believe that the market for such service centres is getting oversaturated, especially in the Czech Republic. The level of unemployment there is much lower than in Lithuania, and the competition for workforce is much harsher.”

The company even considered establishing a service centre in India. This idea was abandoned because of the cultural rift between India and Europe, as well as long distances.

“Our first option in Lithuania was Vilnius, but then we went to Kaunas and finally decided that it would provide a better environment competition-wise,” says the Vice President.

The availability of qualified specialists was one of the main criteria alongside the vicinity of universities.

The group’s VP was not frustrated by the presence of other multinational service centres looking for financial professionals in Kaunas. In his view, the Danish group is sufficiently competitive as an employer. In addition, the emergence of such service centres will encourage young people to choose finance-related majors, and universities will be encouraged to increase the number of admitted students.

Employees are already being trained

The recruitment process has already begun, as the first financial centre employees are already being trained. The Danish company’s service centre currently employs 17 people in Kaunas, 12 of them are finance professionals. The company plans to have more than 30 people working at the Kaunas Service Centre by the end of 2018. The business centre will move to the facilities of Kauno Dokas in spring. Currently it is based at the Happspace office space on Laisvės alėja – the city’s main pedestrian street.

Ilona Antonovičiūtė was appointed as the head of the centre. She has previously worked in several similar multinational service centres.

So far, the new service centre is looking for account payable/account receivable, fixed assets management, general accounting and travel expenses specialists.

“The further growth of the service centre depends on many different circumstances,” says Mr. Stockfleth. “Currently we are moving our group’s financial services to Kaunas. But I cannot rule out the possibilities of transferring other services in the future. I can illustrate our plans presenting the premises we rented at Kauno Dokas. We will have facilities of 800 sq. m. where, if necessary, up to 80 people will be able to work. We have agreed on the possibility of renting additional premises up to 600 sq. m.”

The premises were chosen by the company according to the location, modernity of the building, its ergonomics, and quality of Internet connection.

Aerial view of Kaunas

Serving the whole group

The NKT Group uses SAP as their accounting services provider. It seeks to update the system for it to become more efficient. So far, different factories of the group use different accounting systems, aiming at integrating them with the help of a new service centre to avoid the hassle of filing consolidated reports.

“Such improvements are easier to implement with the creation of a new service centre, because new people are more likely to adapt,” the company’s VP is convinced.

The new service centre should, in the first phase, serve companies of the group located in Denmark, Sweden, the Netherlands, the United Kingdom, Germany, and later – the entire group.

Mr Stockfleth did not want to name the size of the investment in Kaunas, according to him, in such cases, the main investments are in people, their training. He believes that the size of investment in service centres is difficult to compare with investments in industrial enterprises.

Electric cable manufacturer

NKT Cables group produces a wide range of power cable, from indoor to underwater. The latter are also laid by the company using a special dedicated boat.

Established in 1891, NKT is one of the world’s leading manufacturers of cables and accessories. The group supplies products to electric infrastructure, energy, construction and railway companies, employs more than 3,400 employees. In 2016, the group registered a turnover of €1 billion. NKT’s shares are listed on the Nasdaq Copenhagen stock exchange.

“The prospects of our group are excellent – for example, the demand for offshore wind farms is growing very rapidly,” explains the interlocutor. “Such power plants require a lot of powerful cables that only a few companies can manufacture.”

When asked if the Danish group has plans to move one of their factories to Lithuania or set up a new one, the interlocutor said that such an opportunity had not yet been considered.

“We know that foreign investors in Kaunas and in the surrounding area are building a number of factories,” he says. “But moving a factory is a much more complicated process than setting up a service centre.”

In the speaker’s opinion, our region’s prospects for growth are excellent – primarily due to the highly-qualified, multilingual talents accustomed to the global business culture.

Service centres are growing

Kaunas has already been discovered not only by industrial enterprises but also by foreign capital companies investing in service centres. Among others, the first such service centre was founded here in 1992 by the international Festo group. According to Pekka Parikka, director of Festo for Finland and the Baltic States, the service centre in Kaunas is the largest of the group’s service centres in Europe. At the end of 2017, this service centre settled in new premises on V. Krėvė street. The company has been expanding lately. Now it employs more than 300 people, and when the current enlargement process is finished, which will take several years, it should host more than 500 employees.

The service centre employs financial, IT, document management, marketing and engineering professionals who provide services to Festo Group companies.

The core activity of Festo are industrial automation solutions. The need for such solutions is currently increasing at a speed that we could have hardly imagined a decade ago. And it’s obvious that the level of automation will grow.

This winter, Festo hosts a recruitment project for financial professionals proficient in Greek, Portuguese and other languages.

In 2007, Germany’s Dematic established an engineering services centre in Kaunas.

A division of international software developer Devbridge Group has recently moved into their new office in the Šančiai district of Kaunas. Devbridge’s customers include such giants as the US agricultural, construction and gardening technology company John Deere, the financial services company Fitch, the Canadian Imperial Bank of Commerce (CIBC) and the audit and consulting company EY.

Devbridge focuses on finance, industry and technology companies. These companies use software for both the optimisation of their internal processes and for the creation of higher value-added products.

Callcredit Information Group, an international data management company, „ had 180 employees at the beginning of February, 2018. The company has a team of specialists in Kaunas that are responsible for the development of software and databases, testing, project management, IT support, data analysis, e-marketing and customer services.

Virtustream LT, an IT company under the umbrella of the DELL Technologies group, is operating in the B66 centre.

Intermedix Lithuania has already opened two offices in Kaunas. The American Intermedix, a provider of healthcare business services, is one of the fastest growing employers in our country. The company now employs more than 600 people. The first office in Kaunas officially opened in October 2014, later the company opened the second office here. The total area of ​​both offices is about 7,000 sq.m.

“The cluster of service centres in Kaunas has grown rapidly in recent years. This is illustrated by the fact that NKT – a world-class manufacturer – entrusted their very first financial services centre for Kaunas. The NKT solution and the success of Kaunas’s incumbents Intermedix, Festo and Dematic make it possible to see good prospects for the development of this industry in Kaunas,” said Virginijus Sinkevičius, Minister of Economy.

Source: Verslo žinios

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