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Concerning the activity of EKRANAS AB
The electronics market invigorated at the end of the last year - the increased demand for vacuum devices as well as the prices allowed to forecast more optimistic results of Ekranas AB operations for 2006. Over the Q1 of 2006, in line with the planned sales objectives, Ekranas AB sold 1 235,5 thous. of tubes, which is by 44 % more compared to the Q1 of 2005, which was 856 thous. tubes. Over the Q1 of 2006, the prices for tubes increased by 11%.
In order to use the favorable development of market tendencies, Ekranas AB invoked all the possible measures to stabilize the business: good will of employees, cost reduction policy, extensive marketing strategy, support of financial institutions and the Government of the country.
Company’s Efforts
Thanks to the efforts of more than 4000 staff, the Board of the company and the Administration the following accomplishments have been made:
- production costs have been reduced by more than 4 % over the last half-year, regardless of the steady increase of the prices of production materials and labor costs;
- preparations have been finished for mass production of the highly marketable Slim Type CPT;
- many alternative materials and components have been found in various new sources and have already been introduced into production.
Actions of Shareholders
The intensive activities of Ekranas AB shareholders did not remain unnoticed in the European Union:
- The Board representative of Ekranas in EDIA worked very hard during the past two years to convince the EDIA Board to make action against unfair competition and all ırregularities concerning CPTs imported from third countries.
- at the beginning of 2006, the European Commission commenced the anti-dumping investigation of imports of color picture tubes originating in People’s Republic of China, Republic of Korea, Malaysia and Thailand;
- the Vice-Chairman of the Board of the Company Aydin Giz has been elected to the presidency of EDIA (European Display Industry Association) and as a member of the Board of Directors at EECA (European Electronic Component Manufacturers Association);
- many meetings took place with responsible officials of the European Commission aiming at protecting the interests of Ekranas AB and of all other European electronics companies;
- significant lobbying actions have been taken in the European Commission in order to stabilize the functioning of the company as well as the entire European electronics industry;
- a lot of actions were taken to keep alive the European CPT glass and related companies.
Unfavorable Business Context
This unfavorable business context in the European Union and a long procedure for measures were not sufficient to ensure profitable operations of Ekranas AB. Today the company is not capable of competing with manufacturers of South East Asian and Latin American countries which are actively supported by national authorities in forming of advantageous tax policy, subsidising new products, investments and research and development promotion in every possible way of exports of production manufactured in the country and subsidizing of companies and sales with dumped prices to eliminate all European CPT, glass and consumer electronics.
Currently only three tubes production companies operate in European Union: Ekranas AB, Videocon – THOMSON (Poland) and Samsung (Hungary). A month ago, the biggest worldwide CPT producers LG Philips Holding BV and recently Tesla – Ecimex Company (Czech Republic) announced bankruptcy and termination of its operations. During recent years, several factories of traditional tubes owned by multinational companies were relocated from Europe into Latin American or South East Asian countries. Over the last year and a half 15 companies engaged in color picture tubes and glass and also the related industries closed their plants in Europe.
Although the conclusions of electronics experts show that in 2009 more than 60% of TV sets sold all over the world will be vacuum devices, the unfair competition of third countries, their unfair sales policy and the costs of tubes produced in the European Union countries do not allow to ensure profitable business.
New Technologies
The Ekranas’ Board and management considered and evaluated formally and informally the possibility to produce LCD and Plasma in Ekranas. However, the reality shows that at this time no company gave a lisence to Ekranas for production of these items and on the other side, a minimum 1.5 billion USD investment for each line and product is needed. The reality is such, that in any case it is not possible to collect this amount for investment to LCD and Plasma. Actualy there is no production in European Union of LCD and Plasma due to very huge investments amount needed and losses incurred also in this production.
Later on, Ekranas AB management decided to investigate the possibility to only assemble the LCD parts in Ekranas. And again due to huge investment amount requested only for unsophisticated assembly, the company was forced to dismiss this project and to concentrate on the future of Slim Type CPT, to succeed in the design etc.
Decision to Announce the Bankrupt
At present, three tubes assembly lines operate in Ekranas AB, however the company is unable to make due payments for the material delivered, repay credits and fulfill other material obligations. On the one hand, there is a market demand, on the other side, there is a lack of materials and finances to produce more, to decrease the costs and in turn increase profitability. Furthermore, the unfortunate partial collapse of the panels’ glass melting furnace particularly aggravated the situation.
Ekranas’ management tried all the economical, strategical, and marketing efforts to survive and to continue the production and maintain the working places with all possible devotion, imaginable hard work and persistence.
The Board of Ekranas AB and the management realize the social responsibility to the employees and the community of the city, however, the economic situation on the global market impels to undertake radical measures in order to avoid more detriment being done against the people of the city. Phenomena of globalization did not bypass Lithuania.
The Board after the evaluation of the inside and outside possibilities of business and aforementioned reasons decided to agree with judgment to apply to the court for necessary procedure for Ekranas AB on the 7 of April, 2006.
Today I, Eimutis Žvybas, submited an application to the Court of Panevezys county under obligation of the Board.
Difficult, but Unavoidable Decision
This was the most difficult decision during our business life.
We are worried and anxious about all employees and their families as they can incur moral and financial difficulties.
A lot of good employees, experienced and young managers work for Ekranas AB. They had plenty of possibilities to learn and develop, to acquire professional skills and creativity. We hope, all that intellectual capital will be used in new spheres of activity.
The managers of subdivisions of the company will be obliged to inform all employees about legal guarantees and rights as quickly as possible.
We express our gratitude for dedication and honest work for Ekranas AB. We deeply regret about this difficult, but unavoidable decision was determined by very complicated circumstances in the market.
Eimutis Žvybas
Ekranas AB Chairman of the Board, Chief Executive Officer
Aydin Giz
Ekranas AB Vice Chaiman of the Board
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