A new production volume record in manufacturing in December

According to the data of the Central Statistical Bureau, the amount of manufacturing production in December 2013 grew 1.0% month-on-month (seasonal factors excluded). The volume of manufacturing production in 2013 overall has thus grown by 0.6%, compared to 2012.

In December, a substantial increase was posted by wood industry (+5.2%), metals production (+6.6%), as well as the fluctuating sub-branches of pharmaceuticals (+26.7%) and computers, electronics, and optical equipment (+32.4%). Owing to new output volume records in wood industry, the production of automobiles and semi-trailers, paper products as well as computers, electronic and optical equipment, manufacturing in the last month of the year managed to achieve a new output record. The record would be even more impressive if the fabricated metal products and electrical equipment sub-branches had not ended up in the minuses (-15.9% and -14.2% respectively).

Year 2013 in manufacturing was uneven. The year's negative highlight in the branch was, of course, the problems at its largest enterprise, "Liepājas Metalurgs" with the following insolvency process. The problems at the enterprise and the rapid decreasing of its production volumes had a substantial impact not only on the metal production sub-branch but also on the data of the entire branch, thus making the dynamic of the production in the first quarter of the year unfavourable.

Yet as early as the second quarter, the branch posted growth, which continued and even increased in the third and fourth quarters. Despite the problems in the metal production sub-branch, in the rest of the manufacturing sub-branches, the year was mostly successful, i.e. the rate of growth was positive. The greatest contributors to the annual growth of the branch at large was the productions of foodstuffs (+6.4%), wood (+3.3%), construction materials (+4.9%), as well as electronic and optical equipment (+27.6%) and electrical equipment (+9.0%). The success of these branches has managed to offset the negative impact of "Liepājas Metalurgs". In a breakdown by sub-branch the year was less than successful for metals production (-55.8%), chemical industry (-9.4%), and in pharmaceutics (-13.5%). Behind the drop in the production output of chemical industry was the consolidation of the biodiesel fuel sub-branch. The substantial "minuses" of the pharmaceuticals sub-branch, however, were ultimately not clear: the year was relatively successful for the two largest enterprises of the branch. In the sub-branch of repair and installation of equipment and devices there was also a minus (-20.5%), which is probably related to the completion of the construction of Riga TEC-2. It is worth mentioning the "side-branches": in mining and quarrying, the year was successful (+3.9%), whereas in the power industry it was less so (-4.3%).

In 2013, manufacturing managed to post growth despite several unfavourable factors. With the external demand weak, the sales of manufacturing products have increased. The rate of growth has been higher for the production sold locally (+5.6% in 11 months), whereas sales in export markets have dropped slightly (-2.3%). The year was also characterized by a slowdown in investment activity. This was mostly explained by manufacturers' worries regarding the external economic situation. A large role here was also played by the financing cycle of European Union funds, i.e. entrepreneurs chose to wait, knowing that in 2014 they will be able to receive co-financing for investment projects.

What can the branch expect in 2014? As per tradition, the growth of the branch will depend on external developments, yet internal developments will also play an essential role. In 2014, a series of important investment projects will be carried out. The growth in output and value added will depend on the success of investment projects. Our prediction is that in 2014, manufacturing output will increase by about 5%. The growth in value added could be even somewhat greater, which will be determined by investments in the modernization of existing equipment and processes and thus in increased productivity.