May 21 d., 2020

The transformation during pandemic has opened new business opportunities

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. Clusters participating in the InoLink project were among the most daring 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, crises force us to act quickly. While business leaders are optimistic about the challenges and opportunities to become different, no one is looking forward to such opportunities. “For the younger generation of business executives COVID-19 was the first crisis. The older generation of leaders in our companies have already had a crisis and therefore reacted calmer. For the first two weeks active clusters and their managers instantly reacted to the situation and helped each other on all issues. At this stage, clusters could be compared to liaisons during the war. Later, everything came together, the work of the clusters and their managers got back on their tracks to planned activities. 

Critical situations always reveal true business’ capabilities. The COVID19 pandemic for clusters was an opportunity to show its value and do certain things to satisfy members’ demands. It helped value-creating clusters to become stronger, but for some, it was the last point to think of suspending their activities, commented G. Bagušinskas. 

 Science and business synergy in the fight against COVID-19 

Coronavirus necessitated a global increase in 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 its 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 delightful to state that understanding the seriousness of the situation, we managed to think creatively, focus on the resources available, 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 hospital of Lithuanian University of Health Sciences Kauno klinikos. The first shipment has already reached Italy, the EU country most affected by a coronavirus. 

New products were developed to provide workers and their families with safety equipment 

Participation in the LAuGEA cluster has undoubtedly proved clusters worth in the face of a pandemic for JSC Laurema Graphics. The cluster has made a significant contribution to publicity for the new company’s products – disposable and reusable face masks enriched with exclusive SilverPlus technology. 

Protective face masks in the range of JSC Laurema Graphics derived from the need to provide employees and their families and to support nursing homes and hospitals. The company’s CEO Jūratė Kasperavičienė stated that this transformation was an opportunity to test the team: We made sure we have a team that can mobilize, reorient, and distribute tasks. Some people were left to routine jobs and develop products, which will be presented at upcoming exhibitions. We wanted to put as few people as possible into downtime – keeping the whole team is a great success so far”. The company currently exports masks to Germany, England, Latvia, and Poland. If the orders last, it continues manufacturing reusable masks further.   

The new product group entered the market without advertising expenses 

Automotive fluids producer JSC Lesta responded market demand starting produce 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 of producing 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 used in the company’s automotive products previously. 

“Ordering large quantities of basic raw materials, containers, and stoppers, before we received permits to produce disinfectant fluids, was a great risk. But it paid off – after getting permits from the Ministry of Health of The Republic of Lithuania we were able to start production immediately. Buying in advance we managed to save costs because later alcohol prices increased notably. When the shortage of containers and nozzles on the market began, we already had them, commented M. Stankevičius. 

We were gratified by the understanding of the whole team. The factory worked two shifts on both weekdays and weekends. Several other members of the LAuGEA cluster contacted us and helped with distribution. Firstly, disinfectant fluids were supplied to state institutions: hospitals and other health facilities (most of the disinfectant fluid went as support), the Ministry of National Defense. Large quantities were then taken to large retail chains, pharmacies and petrol station shops to make the facility accessible to the widest possible range of consumers. 

The transformation during the quarantine 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 in the category of cosmetics and hygiene products. It is likely that event after the quarantine it will be common to have disinfectants in handbags, cars, or at home, so the company has already added disinfection fluids to its contemporary product range. 

New consumer behavior forced to look for alternatives 

Food and beverage producers participating in the SMART FOOD cluster during quarantine produced the same products but paid more attention to safety measures. JSC “Volfas Engelman” has 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 took care of safe packaging. 

As consumer habits changed, increasing demand for online buying forced 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. Hoping to maintain existing customers and attract new ones, the company has reoriented its business model online. Seeing the growth of shopping on electronic platforms, SMART FOOD and NaMŪK cluster member confectionery factory JSC Rūta started the market analysis and shortly cooperated with the main e-commerce platforms. In April 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 confectionery factory Rūta. 

The efforts of the film festival team were noticed by the international media 

After the announcement of the quarantine in Lithuania, the organizers of the Vilnius International Film Festival (Vilnius IFF) managed to transfer the festival from the cinemas to home cinema platforms within 168 hours. According to them, there was no consideration to postpone the festival: “If we had postponed it indefinitely or done nothing, we would have irreparably damaged ourselves both financially and psychologically. 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, acquire professional knowledge and certain skills. 

Last year, over 126 thousand people visited the 19th Vilnius IFF screenings. This year, according to 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 to reduce it drastically. 

Furthermore, taking into account the bans on mass cultural events, the festival team has created a completely new experience that meets the requirements of quarantine safety and set up a drive-in cinema on the runway of Vilnius Airport. The organizers confirm that Aerocinema project was financially risky, but extremely relevant as well. The news about the unique format of event during quarantine 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 the 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 helps to follow the general tendencies of the film market, and influence the development of the institution’s activities. 

Lithuanian fintech start-up offered a unique business support idea 

In the face of a pandemic Lithuanian-founded fintech start-up Bankera offered a Business Care solution to help small and medium-sized enterprises. It has been recognized as the best solution in the Digital Finance category on hackathon #EUvsVirus, which has involved 21 thousand participants from more than 140 countries. 

The team sought to find 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, thus this way, quarantine companies can help each other. Business risk assessment of the model is based on COVID-19 risk criteria by geography and business sector. The Bankera team currently is developing the solution and planning to launch financing services for small and medium-sized businesses across Europe shortly. 

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. Representative of the Agency for Science, Innovation and Technology (MITA) and InoLink Project Manager Jolita Razumienė complimented cluster members on looking for new opportunities and helping others instead of waiting for state aid: “Participation is value-creating cluster during the crisis is definitely useful. Cluster assistance to its members and each other ranged from sharing of relevant information and member representation in public institutions to consulting on accounting issues or even promoting new products. Many cluster members reacted to the changed market situation immediately. Those who dared to transform, gained invaluable experience and new competencies. Moreover, for some members the risks not only paid off – they managed to survive and took advantage of new opportunities in 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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