Processing industry

The most important branch among processing industries in Estonia is timber, paper and furniture industry. Second comes the food processing industry, mostly in the form of meat and milk producing, but the production of drinks, bread and confectioneries is also substantial. Light industry yields a highly varied output from cotton fabrics to clothing and footwear. The fastest production growth can be witnessed in the enterprises of mechanical engineering and metalwork and chemical industries which give more added value.

Food industry
Food industry that has undergone huge changes during the recent years, offers quite varied products. Estonians love locally produced food, considering it to be purer, of a higher quality and more tasty. For instance, in the early 1990s the majority of the ice-cream on the market was imported as virtually no ice-cream was produced in Estonia, but presently the share of imported product has fallen to 14.5%. Such change has been fostered by production methods that have quickly become more modern and more varied. Several producers hope to soon enter the EU market with their production.

Consumer preference for domestic and imported products in shops

Mainly domestic products Mainly imported

100%

milk, beef, bread -

Over 90%

yoghurt, butter, curd, pork, sausages, vodka -
Over 80% ice-cream, tinned meat, oat flakes, beer, cucumbres margarine, pasta

Over 50%

cheese, poultry, wheat flour

cooking oil, biscuits, pickled cucumbres, juices, tomatoes

Estonian milk and meat industries are made up of a large number of very different enterprises — bigger and smaller. Some enterprises belong to commercial associations, but private ownership is most widespread. Estonians' favourite sweets are made by Kalev, a company whose predecessor was founded in 1921, but where recipes dating even earlier are used (there is a legend saying that marzipan was first made in Tallinn). The larger producers of beer are Saku near Tallinn and A’le Coq in Tartu — companies with traditions more than a hundred years long.

Light Industry
In the 1990s the majority of Estonian sewing and textile enterprises worked for foreign companies, providing cheap labour for those through subcontracting. Experience and skills gradually accumulated and today the situation has radically changed. In some instances only the design phase is carried out in Finland or Sweden, in some instances everything is done locally. Estonian companies have subcontractors in Latvia, Lithuania, Ukraine, Russia and even China. Estonia's trade-marks have proved successful abroad (e.g Monton, Baltman, Ilves). One of the largest companies in Estonia is the Kreenholm Manufacture in Narva, where cotton fabrics and products thereof are manufactured. However, recent years have not been easy for the textile and sewing industry as it is increasingly difficult to compete with cheap producers from outside the European Union – Estonian market is also being gradually flooded by cheap goods from China, India and Turkey.

Engineering
Mechanical engineering and motor vehicle industry have experienced a rapid development during the recent years, although the branch became nearly extinct in the early 1990s after the collapse of the Soviet military industry. The local business climate has been revived thanks to the opening of the plant of the international electronics company Elcoteq in 2000, which increased the interest of other foreign engineering companies in Estonian products and production possibilities.

Engineering products and equipment manufactured in Estonia range from cables, mobile phones and computers to security equipment for cars, laboratory equipment, different hoists and other equipment for different industries.

During the last few years significant development has occurred in the metalworks industy, whose growth has been promoted by the establishment of a new plant in Muuga in the outskirts of Tallinn. Estonia exports mostly ferrous metals and articles made thereof but also articles of different non-ferrous metals (aluminium, zinc, copper).

Today, the most rapidly growing areas in Estonian industry is the production of capital and durable goods. Considering the investments of the enterprises this development is likely to continue in the next coming years as well.

Chemical industry
The economic changes of the 1990s had an especially severe effect on the chemical industry as many of the enterprises were oriented to the Soviet military industry and their products became unnecessary after Estonia regained its independence. In the economic chaos that ruled in Russia, old contacts with Russian enterprises were lost. Several large-scale enterprises of the chemical industry are located in the industrial area of the North-Eastern Estonia and have by now been largely restored, having found new partners and markets as well as new products. The largest factories include Nitrofert, Viru Keemia and Velsicol in Kohtla-Järve and Silmet in Sillamäe. Nitrofert produces fertilizers and chemicals (ammonia, nitrogen etc). Velsicol is one of the world's few producers of bensoic acid, Viru Keemia makes different oil shale products (e.g. oil shale oil). Silmet is one of Europa's largest producers of precious and precious earth metals. The production process which originally used local raw material has now entirely switched to Russian raw material.

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