South European production
The company was established in Silkeborg by Jon S. Knudsen in 1987 under the name of Capacity. The purpose of capacity was to arrange production for Danish garment producers in the cheap EEC countries, from where it was legal to re-export to none EEC member countries such as Norway and Sweden. From the beginning Capacity was arranging production in Italy, Portugal, Cyprus, Malta and Greece, but concentrated quite fast on production in Portugal and Greece. During the first couple of years, Capacity build up an organisation with account managers in the office in Silkeborg and own quality controllers in Portugal and Greece.
The whole idea of outsourcing the sewing was for most of the Danish producers a very big step, and in a number of the first intermediary contracts between capacity and the customers was mentioned that the customer relationship was confidential.
From the beginning the profit on outsourcing was quite substantial for the customers. The gross sewing cost per minute was typically around Dkr 2,50 - 3,00 by Danish subcontractors and in the level of Dkr. 1,00 in Portugal and Greece.
Eastern European production:
Already by 1990 capacity started to investigate the possibilities of arranging production in Easter Europe, and consequently Capacity opened its own office in Poland in the spring 1991 and later in 1991 also in Lithuania. During the 90ties, Capacity invested in its own production facilities in both Poland and Lithuania. In Poland in cooperation with the director of capacity Poland and different Danish customers and in Lithuania together with ETCO trade company (still shareholder in the LTP) and a Danish customer.
Up during the 90ties, Capacity had more than 1000 employees on its own 4 factories and kept in the high seasons up more than 10.000 people in work in Poland, Lithuania, Greece and Portugal for customers from Denmark, Sweden and Norway. In those years Capacity was the first or second choice for the majority of the Danish garment producers and for a number of the Swedish and Norwegian. The difference in sewing prices was even more significant between Poland/Lithuania and Scandinavia. A typical price in Lithuania was around Dkr 0,60 per minute against a Danish price in the level of Dkr 3,20.
From subcontracting to Fob production:
All good things have an end and time for changes comes. For Capacity two things happened more or less at the same time.
A quite big number of the biggest customers decided to get their own factories in Eastern Europe (capacity even helped to establish in several cases), and of that reason Capacity went from being the first choice to be second choice and ended up to be only "fire brigade". Also the remaining production in Portugal and Greece ended in the same period. At the same time it showed up that the Polish partner in the Polish factories had an unknown and different agenda than the Danish partner, which resulted in exit from Poland and significant losses for all the 3 Danish shareholders in the polish factories.
As a consequence of those drastic changes, Capacity was forced into a turn round of the business, and started a strategy project in the year of 2000, which resulted in the first strategy plan for Capacity/LTP. All account managing was moved from Silkeborg to Lithuania and it was decided to focus on 3 business areas:
At the same time it was decided not to through away any of the old subcontracting customers, but to keep them and give them the full service as long as they wanted to produce through LTP, and we are proud to tell that we still are having customers who has been customers for more than 15 years.
Building up a new company:
To change a company from arranging production or being subcontractor to be a full service garment producer in a financial very weak position is tuff. From being used to receive everything from the customers in a box, ready to unpack with all the materials, fabrics and accessories and to start sewing, until arranging everything our self was a huge challenge. We had to learn about selling, sourcing, purchasing construction and patternmaking. We had to learn calculation and planning, about transport and about trading terms. We had to learn everything from the beginning. The first couple of years each single day were a new challenge. There was all the time something totally new to understand and sometimes we failed but most of the time we succeeded.
During the period LTP has continuously worked with and adjusted its strategy according to the realities in the market and in Lithuania. Today we have acknowledged that we cannot work on simple things - it has to be difficult and complicated - as more complicated as better.
Continuously development:
With strong focus on the strategy, LTP has continued to develop. On the sales side we have changed from focusing on fashion to ecology / organic garments, whereas both function and furniture is running according to the original strategy plan.
On the production side, we have in 2004 started to produce the first orders in Belarus and we have in 2005 taken over a branch in Silale from a Lithuanian colleague. In 2005 we also started to produce the first garments I China by Chinese factories. In 2006 with finished building totally new factory in Kedainia for our furniture production. In 2007 we opened own factory in Vitebsk in Belarus and in 2008 we have opened our own rep. office in HCMC in Vietnam.
On the organisation side we have reorganised both the companies names so the names gives more sense of community and the company structure so we today have a 100% Danish ownership of all daughter and associated companies.
For further information please look into "Milestones" and "company structure"