OREANDA-NEWS. February 21, 2011. The manufacturer of sealing foams and sealing tapes Krimelte has transferred its unit producing expanding sealing tapes from Denmark to Estonia, said Wolf Group, which unites the domestic and international production and sales divisions of Krimelte.

The unit, Exadan AS, was acquired in 2008.

The factors speaking in favor of moving the factory to Estonia were the favorable tax system, lower fixed costs, and flexibility, Wolf Group CEO Jaan Puusaag said.

"For our Western European clients moving production to Estonia looks like an undertaking of dubious nature. We definitely must walk the line now so they will get it that they aren't losing anything in terms of product quality," Jaan Puusaag said in his remarks to the daily Aripaev.

For clients in Western Europe the Estonian plant is an entirely new partner. "It takes a lot of energy to break prejudices and we need to do it in such manner that we won't lose a single client. You can do whatever you want, but when a salesman comes from Denmark it's an entirely different thing than when he comes from Estonia. In old Europe you're from eastern Europe and you have to be five times better before anyone starts to believe you," he said.

Planning of the shift started about a year ago. "The initial plan was that we'll bring it over last summer, but volumes grew very steeply and we understood that it's not possible to handle the shift without risking losing customers," he said.

"For example in Denmark, the factory worked in one or two shifts, but here we could make it work in three shifts, if necessary. Such an integration of production provides the company with flexibility and stability," Puusaag said.

Also, in Denmark, for instance, a person must not work alone with a piece of equipment in a separate room, there must always be another person present. "It means that when you don't have a very big operation to do, but a simple one, you must nevertheless hire two people," Puusaag said, adding that because of the high tax base hiring a person cost three times more in Denmark than in Estonia.

Another factor speaking for Estonia is summer holidays. "The whole Denmark is on holiday in summer. In Estonia you can arrange these things in such manner that you don't have to close the plant for the whole month of July and half of August," the CEO added.

The company will also save on rental costs as the rental of the plant in Denmark is 25,000 euros a month or 300,000 euros a year. The cost price of material on the other hand is bigger in Estonia.

The sealing tapes plant in Denmark last year had a turnover of three million euros. The Danish plant employed a work force of 12, whereas in Estonia eight people would be hired.