Something big is going down in Narva.
For some time now, the city council has been fighting the Kreenholm factory over some disputed utility bills. The Kreenholm textile factory is one of Estonia's biggest manufacturing enterprises, contributing a serious chunk to the country's exports. It is also an extremely important employer in the troubled Ida-Virumaa region.
Tomorrow Kreenholm will lay off 900 employees.
From what I gather, Narva's municipal water company has raised prices sharply. According to Kreenholm management, the amount that the factory is being charged is 14 times above cost; as Narva Vesi is the monopoly, this does appear extremely fishy. Kreenholm, which consumes some two hundred million kroons' worth of power and water annually, challenged the price hike and took it all the way to the Law Chancellor (a high-ranking civil servant, used as a nonpartisan arbiter), who demanded an explanation from the city. The arbitration court has not yet ruled on the lawsuit of Narva Vesi against Kreenholm, claiming 20 million kroons in unpaid fees.
The Narva city council, which has been backing the water company aggressively, has arrested Kreenholm's bank accounts on December 4th. With no way to pay suppliers, or its employees, Kreenholm has cut its losses. The factory employs some 2400 people total, after an earlier layoff of 500. Another nine hundred jobs lost will in itself be devastating for Narva's economy; more could follow. The factory's Swedish owners say they will not close it down completely, but by next Christmas it will hardly employ more than a thousand people.
It's been a bad day for Estonian business. Skype, the darling of the Estonian IT sector, has been in trouble. Its owner, eBay, which paid $2.6 bln for the company and then announced it had overvalued the business massively, has not been able to develop the service in any significant way. The former owners, Niklas Zennström and Janus Friis, have quit to pursue other projects. And today, around 30 Skype employees suddenly found themselves out of a job.
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3 weeks ago