Due to the war in Ukraine, JSC Daugavpils Lokomotivju remonta rupnica (DLRR) will be forced to lay off at least 300 workers. On top of that, in the future there is a possibility of freezing or shutting down operations entirely, according to DLRR representatives.
The company notes that since the end of February, DLRR’s financial situation has been at risk due to the war in Ukraine. The reason is because the company has been providing services to Ukrainian Metinvest Group, and due to the complicated situation in the country this company has not been able to transfer payments to cover services worth a total of EUR 8,229,550.
DLRR representatives stress that without immediate and effective support mechanism, there will be consequences that will leave an impact not only on Daugavpils but the entire country as a whole.
On March 2, DLRR management sent a letter to all of Latvia’s high-ranking officials. In it they detail the complicated situation that has surfaced as a result of Russia’s military aggression in Ukraine. The letter also details specific measures that would help maintain the company’s operations.
DLRR representatives note that two weeks have passed since the letter was sent. Unfortunately, it remains unclear how it is planned to support DLRR and at least 135 other companies that have turned to Investment and Development Agency of Latvia (LIAA) for assistance.
DLRR representatives stress that it is the only company of this kind in Baltic States and one of the biggest production companies in Daugavpils region. The company currently has 642 employees. The company performs domestic and international scale cooperation with an average of 360 regular partners. In the last ten years DLRR has paid Latvia’s state budget EUR 28.593 million in the form of taxes. It is also an important export company (95% of goods/services are exported). DLRR turnover was EUR 113.073 in the last three years.
DLRR representatives stress that without state aid, management will be forced to initiate mass lay-offs, leaving at least 300 people jobless and affecting the lives of 1,000 more (family members of those left jobless).
Secondly, note DLRR representatives, there will be a chain reaction for at least 70 out of 360 aforementioned partners. DLRR is very important for those companies because it provides its partners the majority of income, which means most of them may end up on the brink of insolvency.
The company also does not exclude the possibility of freezing operations or shutting down completely, because restoring operations of such a maintenance center after halting is not easy at all.
DLRR representatives also note that after closure of this company, chaos may commence in Daugavpils and Latgale. It will not be possible to provide jobs to all of the specialists at risk of lay offs. This would also mean Latgale taking a step back on the path of development of high-grade production and services.
The company notes that it has never received state aid and has always been able to maintain operations and jobs for a large number of the region’s residents even under pressure from external factors. The factory has been able to get through two years of Covid-19 crisis thanks to support from shareholders and even perform investments to continue operations after the energy crisis that commenced in November 2021 even though DLRR’s energy expenses have increased by nearly 85% since then. This is why state aid will be decisive in this, DLRR representatives stress.
The company adds that the management board is prepared to reorient operations if need be, adding that it could also prove useful in the restoration of Ukraine’s railway infrastructure after the end of the war.
In 2020, DLRR operated with turnover of EUR 46.76 million, down by 0.6% YoY. The company’s profits increased 6.3-fold, reaching EUR 2.066 million.
DLRR was registered in 1991 with the base capital of EUR 24,445,037. The company’s beneficial owner is Estonian businessman Oleg Osinovsky. (BNN/Business World Magazine)
