It is quite common to think that energy efficiency in manufacturing primarily means lower electricity bills. However, for a small or medium-sized enterprise, it can also be a very practical matter of “survival” – helping to reduce production costs, maintain competitiveness and continue operating even when energy prices rise significantly. Vilnis Grundmanis, whose company SIA “AJV Birojs” manufactures plastic construction components in Krāslava, has experienced this first-hand.
Company: SIA “AJV Birojs”
Business activity: Manufacture of plastic construction components and plastic components used in concrete works
Location: Krāslava
Number of employees: 7
Annual turnover: EUR 800,000
Challenge: A 13-year-old plastic injection moulding machine, increasing wear and tear, more frequent repairs and high electricity consumption
Solution: Replacing the old plastic injection moulding machine with a new, more energy-efficient model
Investment: EUR 87,000
ALTUM support: EUR 26,000 capital rebate under an EU co-financed programme
Benefit: 57% primary energy savings and an annual reduction of 2 tonnes of CO₂ equivalent emissions
Additional benefit: Lower risk of unplanned repairs due to equipment wear and tear, as well as more advanced technology offering automation, artificial intelligence and remote-control capabilities
The company invested EUR 87,000 in replacing its old plastic injection moulding machine with a significantly more modern and energy-efficient model. The project was implemented with support from ALTUM’s business greening programme, including a capital rebate of EUR 26,000.
The company’s owner has no illusions about the investment – one new machine alone will not solve every production challenge. However, it undoubtedly enables the company to operate more efficiently and thereby remain competitive.
When Old Equipment No Longer Meets the New Reality
SIA “AJV Birojs” has been operating in Krāslava Municipality since 2013. Although the company employs only seven people, its activities are not limited to the domestic market – it also serves export customers.
The production facility has developed gradually over the years, with the company investing both its own funds and making use of available support opportunities.
The plastic injection moulding machine that the company replaced had already been in operation for 13 years. According to the head of “AJV Birojs”, production could still continue using the machine, but the effects of wear and tear were becoming increasingly noticeable over time. Repairs were needed more frequently, bringing additional costs, while the older technology was no longer as efficient as modern equipment.
Rising energy prices ultimately became the decisive factor. When electricity costs increased significantly, the company had to reassess how competitive its existing production process remained.
“It was not possible to fully offset rising electricity costs by increasing product prices. ‘AJV Birojs’ works with Latvian supermarket chains, so any price increases have to remain proportionate to what the market can absorb. At the same time, we also have to take competition into account, including imported products such as those from China. A company’s competitiveness is largely determined by how efficiently each unit can be produced and how effectively its production cost can be controlled,” Grundmanis says, sharing his experience.
Investment Starts with a Need, Not with Looking for Support
The company’s CEO emphasises that the machine would have had to be replaced in any case. However, the ALTUM programme provided an opportunity to take this step with a lower financial burden thanks to the capital rebate.
Nevertheless, obtaining the capital rebate was not a straightforward process. To demonstrate the energy efficiency of the new equipment, the company had to commission expert assessments, prepare documentation and compile financial information. These preparatory activities also involved costs, which the company initially financed itself.
Overall, the process from project assessment to installation of the new machine took approximately one year. During that time, the company had to go through the procurement process, assess the specifications of the new equipment and wait for the technology to be manufactured and delivered. Meanwhile, the old machine remained in operation.
As Grundmanis explains, equipment of this kind is not a standardised product that can simply be purchased off the shelf. It can be configured according to specific production requirements, with automation and robotic solutions added as needed. As a result, prices can vary considerably – a fully equipped machine of this type can cost EUR 200,000–300,000. In this case, the total investment amounted to EUR 87,000.
“Any major investment also means financial obligations – the loan has to be repaid, which means the company must continue to operate steadily in the future. That is why I first assess what the company genuinely needs and only then look at whether support is available for that investment.”
Vilnis Grundmanis, owner and CEO of SIA “AJV Birojs”
The New Machine Saves Energy and Makes Production Smarter
Following the installation of the new machine, the most precisely measurable benefit is a 57% reduction in primary energy consumption. However, other benefits are equally important in the company’s day-to-day operations – the new technology reduces the risks associated with equipment wear and unplanned repairs.
“With older production equipment, components wear out over time and need to be replaced more and more frequently. That creates additional costs and can also lead to unplanned production downtime. New is new. I think we will be able to operate without problems for five years, if not longer.”
Vilnis Grundmanis, owner and CEO of SIA “AJV Birojs”
He explains that modern machinery has not only become more energy-efficient but also considerably “smarter”. Artificial intelligence solutions are being incorporated into the equipment, many processes are automated and some operations can be controlled remotely.
This does not mean that human involvement in production is no longer necessary. An operator still needs to configure and monitor the machine, perform technical tasks and oversee the process. However, fewer manual operations are required in day-to-day work, while technology enables much more precise control over production processes.
“You could say that if you know how to get along with your smartphone, you will also know how to get along with the machine. Production technologies are becoming increasingly similar to other modern devices – they are connected to apps, can be controlled remotely and offer an increasing number of automated functions,” the entrepreneur says.
“Greening” Is Becoming Important to Customers Too
For Grundmanis, investing in energy efficiency is first and foremost a way to reduce consumption and thereby improve competitiveness. At the same time, his experience shows that sustainability is no longer simply an internal choice for a company. It is increasingly becoming a requirement in export markets.
“AJV Birojs” works with Scandinavian customers, and these partners want to know how the company manufactures its products, what materials it uses and what sustainability requirements it follows.
“Customers have also visited us in person to make sure that production really takes place as promised. Scandinavians very much appreciate it when you are ‘green’ and can prove it with certificates. We have another advantage in this respect – approximately 90%, and in some cases even 99%, of the raw materials we use are recycled. A more energy-efficient machine is therefore one part of a broader approach to the company’s operations, where resource consumption, the materials used and customer requirements all matter,” the entrepreneur says.
More Efficient Production, Not a Miracle Solution
“Investments mean loan commitments and the responsibility to ensure that the company remains capable of operating steadily in the future. That is why you have to take a long-term view and be confident that the company has a future. The new machine is not a miracle solution. It simply gives the company a better technological foundation for its future operations,” the entrepreneur adds.
The experience of “AJV Birojs” clearly illustrates the difference between an investment on paper and an investment in the day-to-day reality of a business.
On paper, the results can be expressed in very specific figures: EUR 87,000 invested, a EUR 26,000 capital rebate, 57% primary energy savings and an annual reduction of two tonnes of CO₂ equivalent emissions. In the entrepreneur’s everyday reality, however, these figures exist alongside loan commitments, fluctuating raw material prices, competition and the constant need to find ways to produce and sell successfully.
“In a small company, every major purchase has to be carefully assessed. The new machine reduces one area of costs, but at the same time there are many other production costs that an entrepreneur cannot control. The price of raw materials is particularly important. An energy efficiency investment does not make a company invulnerable, but it can make production more efficient and help a small business remain competitive in a market where energy, material and other costs can change much faster than we are able to adjust our product prices,” the entrepreneur says.
Businesses can receive ALTUM financing for energy efficiency projects with a capital rebate of up to 30% of project financing. Support is available for investments that help reduce energy consumption, modernise production or introduce renewable energy solutions.
The capital rebate means that, following successful implementation of the project, part of the loan is written off, reducing the investment cost for the company. More information is available from ALTUM.
