The transformation during crisis reveals Lithuanian business’ capabilities

Submitted by Alina Danieles… on 26 May 2020

As a result of the quarantine announced in the wake of the COVID-19 epidemic, business restrictions, changing consumer habits and market demand, various industries have begun to adapt their production processes. Lithuanian industrial clusters placed big efforts to turn the challenges that came along with lockdown-imposed restrictions into new opportunities. 

According to Giedrius Bagušinskas, the President of the Lithuanian clusters network and the Coordinator of the SMART FOOD cluster, the crisis forced us to act quickly. “For the younger generation of business executives COVID-19 was the first crisis. The older generation of leaders in our companies already went through a crisis before and therefore reacted calmer. During the first two weeks active clusters and their managers instantly reacted to the situation and helped each other on all issues. At that stage, clusters could be compared to liaisons during the war. Later, the work of the clusters and their managers got back on its track to planned activities“. 

Critical situations always reveal the true business’ abilities. “The COVID19 pandemic was an opportunity for clusters to prove their value and address their members’ demands. It helped value-creating clusters to become stronger, however, for some, it was the last thing that led to suspending their activities,“ commented G. Bagušinskas. 

Science and business synergy in the fight against COVID-19  The Coronavirus pandemic led to a global increase of the need for personal protection equipment. Members of the Laser and Engineering Technologies Cluster LITEK ™ responded to the invitation of the company Terekas, a member of the Lithuanian Plastic Cluster, which manufactures PET packaging and forming equipment. The Center for Physical and Technological Sciences (FTMC) and JSC Elas with colleagues from JSC Elinta Robotics came up with a way to adapt a CO2 gas laser for the production of PET plastic panels and developed an efficient robotic laser face shield cutting system in just three days. Face protection against COVID-19 can now be cut out in only 7.5 seconds. 

“It is great to be able to say that, understanding how serious the situation was, we managed to think creatively, focus on the available resources, create and run an automated, mass-produced system in less than a week,” noted FTMC researcher Dr. Gediminas Račiukaitis. FTMC laser-cut face shields are already used by physicians of the Klaipėda region and the hospital of the  Lithuanian University of Health Sciences Kauno Klinikos. The first shipment has already reached Italy, the EU country most affected by the pandemic". 

New products were developed to provide workers and their families with safety equipment  The participation in the LAuGEA cluster has undoubtedly proved for JSC Laurema Graphics its benefits in facing the crisis. The cluster has made a significant contribution to the publicity for the new company’s products – disposable and reusable face masks enriched with exclusive SilverPlus technology. The company currently exports masks to Germany, England, Latvia, and Poland. If the orders continue at their present rate, it will continue manufacturing reusable masks.  The new product group entered the market without advertising expenses  In response to market demands, the automotive fluids producer JSC Lesta started producing hand and surface disinfection fluids. “The transformation was not completely unexpected – we observed what was happening worldwide. It was a matter of time before this virus reached us,“ told the CEO Mindaugas Stankevičius. The possibility to produce disinfection fluids was considered because of the company’s technical capabilities: own laboratory, production lines adapted to dispense large quantities of chemical fluids, chemists able to ensure the quality of the new product. The main raw material – ethyl alcohol, was already used in the company’s automotive products before. The production change during the lock-down period allowed the company to enter a market with a new product group without advertising expenses. The awareness of the Lesta brand has grown – the company has become known not only in the category of automotive fluids but also for cosmetics and hygiene products. After the quarantine it is possible that having disinfectants in handbags, cars, or at home, will become a common thing, so the company has already added disinfection fluids to its current product range.  New consumer behavior forced to look for alternatives  Food and beverage producers participating in the SMART FOOD cluster produced during the lock-down the same products but paid more attention to safety measures. JSC “Volfas Engelman” had been using protective foil for some products until now, but with the spread of the virus, it started to cover all other canned beverages: kvass, energy drinks, lemonade. Feeling the decline in sales of freshly baked bread and confectionery and realizing that people are afraid that the virus could spread through open-selling products, JSC Biržų Duona implemented safe packaging. 

As consumer habits changed, increasing demand for online buying forced the National Food Cluster (NAMŪK) companies to look for alternatives. The turnover of the company Mėlynė fell to a minimum right after physical stores and restaurants using its products were closed. Aiming at maintaining existing customers and attract new ones, the company reoriented online its business model. Seeing the growth of shopping on electronic platforms, SMART FOOD and NaMŪK cluster member confectionery factory JSC Rūta performed market analysis and shortly started cooperating with the main e-commerce platforms. In April the confectionary factory established its own e-shop. “Hardship strengthens the business and encourages to look for new and effective solutions,” said Rolandas Pridotkas, director of the confectionery factory Rūta. 

The efforts of the film festival team were noticed by the international media  After the announcement of the lock-down in Lithuania, the organizers of the Vilnius International Film Festival (Vilnius IFF) managed to transfer the festival from cinemas to home cinema platforms within 168 hours. According to them, there were no reasons to postpone the festival: “If we had postponed it indefinitely or done nothing, we would have irreparably damaged ourselves both financially and psychologically. On each step we assessed possible financial harm or help and impact on the team’s psychological state. The relocation of the festival has taught us to act under extreme circumstances, strengthened the team, allowed acquiring professional knowledge and certain skills“. 

Last year, over 126 thousand people visited the 19th Vilnius IFF screenings. This year, according to the market research company Kantar, the number of viewers reached as many as 151 thousand. Although the loss could not be completely avoided, the taken steps helped reduce it drastically. 

The news about the unique format of event during lock-down has already spread in the international media. As the conditions change, the format of the project will change as well – it is planned to transfer the project to airports, aerodromes, or other public spaces of the resort towns in summer. The organizers state that during this unusual period, participation in the film community formed by the Vilnius Film Cluster helped to follow the general tendencies on the film market, and influence the development of the institution’s activities. 

Lithuanian fintech start-up offered a unique business support idea  Facing the pandemic, the Lithuanian-founded fintech start-up Bankera offered a Business Care Solution to help SMEs. It has been recognized as the best solution in the Digital Finance category at the #EUvsVirus hackathon, that involved 21.000 participants from more than 140 countries. The team sought a solution to help businesses that had been managed responsibly and had no debts before the crisis but faced financial problems during the COVID-19 pandemic. They focused on companies that do not operate under the state or European Union financial assistance criteria for losses. The innovation of Bankera model is the loan provided to the company with half of it guaranteed by the company’s partner, in this way companies under lock-down being able to help each other. The business risk assessment of the model is based on COVID-19 risk criteria by geography and business sector. The Bankera team is currently developing the solution and planning to launch financing services for SMEs across Europe. Bankera is a member of the Fintech Lithuania cluster participating in the network.    Lessons clusters must take from the crisis   Most of the above-mentioned clusters participate in the InoLink programme. The representative of the Agency for Science, Innovation and Technology (MITA) and InoLink Project Manager Jolita Razumienė congratulated cluster members for looking for new opportunities and helping others instead of waiting for state aid: “Participation in value-creating clusters during the crisis is definitely useful. The assistance the cluster offers to its members and the one offered between the members ranged from sharing relevant information and member representation towards public institutions to consulting on accounting issues or even promoting new products. Many cluster members immediately reacted to the changed market situation. Those who dared to change, gained invaluable experience and new competencies. Moreover, for some members taking risks not only paid off, but they managed to survive and take advantage of new opportunities on both local and foreign markets“.  InoLink is a project of the EU instrument Inogeb LT, implemented by the Agency for Science, Innovation and Technology (MITA) in cooperation with the Lithuanian Innovation Center. The project aims to promote the clustering of companies, increase cluster maturity, promote growth, and international cooperation. 
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