The story about LTP is not only about how LTP developed. It’s the history of how the garment and furniture industries transformed from small locally based producers with relatively little competition into large international players facing extremely tough competition from all over the world. LTP was indeed born out of the globalization.
And the gap between garment and furniture production is not that big – it all started by sewing 2 pieces of fabric together. So read the story!
Out of Denmark
In the middle of Jutland, Denmark, the Danish textile industry had been very successful. Self-made people with strong technical skills built large production companies. But in the late '80s a new wind was blowing. While labor costs went up, the global retailers opened up worldwide sourcing and the prices went down. The industry was challenged.
In the middle of this change Jon Knudsen (now chairman of LTP Group) got the idea to offer cut/sew from the southern EU countries and re-export to the non–EU members. Jon spent a couple of months travelling through especially Italy and Portugal to find reliable factories and trustworthy people to cooperate with and the production agency “Capacity” had become a reality.
Because of the difference in salary levels, Capacity could offer production in southern Europe at less than half the price of production in Denmark, all extra costs included. This offered the customers an outstanding competitive advantage.
Thinking back to the start, it is hard to see that it was so special, but at that time it was quite unique. The whole idea of outsourcing was new and Capacity were the first in Denmark to offer a structured outsourcing concept to the customers.
The next big step came in the very beginning of the '90s. The eastern European countries got their independency and a completely new world opened, with even lower cost levels than in southern Europe. This presented new possibilities and Capacity was ready to offer production from Poland in 1991.
At the same time Morten ?stergaard (now CEO of LTP Group) and some of his friends were investigating business openings in the new wild east. In Lithuania, they found a large textile industry and made contacts. Large factories, skilled staff, OK machines – but no sales. This was an opportunity. By mediation of some common customers, Jon and Morten met and found that they should do something together in Lithuania. LTP was a reality and registered as one of the first foreign owned companies in the new independent Lithuania.
Women’s leadership crucial to our results
Today Lithuania is a well-run country, an EU member and more. At that time though, it was a struggle to build a strong organization in a new country. What are the rules? How do we avoid corruption? How do we find the right people?To a great extent, the answer to these questions came in the form of women. They were the new management generation - responsible, ambitious, yet unpretentious.Today, strong women continue to hold numerous management positions in LTP contributing to the success of both the company and their societies.
From agent to producer
During the '90s LTP expanded to become the biggest production agency in Scandinavia with production in southern and eastern Europe.
But it was hard to keep our word and deliver as promised without fully controlling the production capacity. And keeping our word was a key value. So we started to build our own factories and had to learn many new things. We established our first sewing factory in Kaunas in 1995.
From ‘one dollar’ to complex garments
At that time, we made a very wide but relatively simple range of apparel. The big buyers moved more of this to China and thus out of Europe. The prices dropped and we had to rethink our strategy. Actually, it was hard to understand the price pictures from the Chinese factories. In LTP some believed that these low prices were only for bad quality garments and that the customers would return. We decided to take the entire management group on a study-trip to China. We still remember the managers discussing price levels with the Chinese factories. No matter what product we quoted the answer was “ONE DOLLAR!” This was a wake?up call.
We decided to move from subcontracting to become the best producer of functional and technical garments and high-quality organic products and base this on our own factories. In the year 2000 this strategy was delivered.
Many brands outsourced production at that time, but almost all kept the more technical jobs in Western Europe. In LTP our thinking was different. If you can manage a production, why not learn to purchase, to construct products, to do the selling? By this way of thinking we kept the costs down and created a company where the customers were very close to the production. It worked.
Belarus – are you crazy?
Many people ask why we have a factory in Belarus – is it possible to do business there at all? The short answer is yes.
Actually, the Belarus setup has been a very positive experience. When we started out in the middle of the ‘90ts it only took around 6 months from the decision was made by the board until we were in business. All permits and paperwork done, both with owners and local authorities.
We wanted to make sure that we had enough capacity in the near market, and the costs in Lithuania were going up. We have never been afraid to move our feet and today LTP Belvit is an integrated and growing part of our supply chain with around 100 employees.
Can you sew covers for office chairs?
We have never been afraid to accept a challenge from a customer. In the late ‘90s the furniture industry also began outsourcing. Furniture has always been moving out slower than garment as the supply chain is less mobile. The Norwegian high-end office brand H?G asked if we could sew some covers for office chairs. And why not? So now, LTP had its first contract furniture customer. The next big move came after the financial crisis in 2008, which again pushed hard on outsourcing from western to eastern Europe. The contract furniture industry was inspired by the automotive industry with near-market assembling and few strategic component suppliers. LTP developed into a large and lean production supplier of upholstered components to office and transportation seat producers.
Our way into home furniture
Our furniture factory also began to started produce covers for sofas for the home furniture market. BoConcept became a large customer and covers were shipped from Lithuania to their factory in Denmark. 2005, BoConcept decided to outsource their production and the former production director in BoConcept Claus Svenningsen was offered a management buyout. Claus asked LTP if we would join him in this idea and we said yes. Production was moved and a large operation was set up in Kaunas where we currently have more than 600 people working.
Vietnam here we come
Even though we were growing and growing fast, we could see that we were missing something in our offering to the garment customers. We had a highly specialized production in Lithuania but our dream was to become a global supplier. We believed it would add value to our customers if they could source from fewer suppliers which had this global outreach.
We had been working in China, but we never managed to find the right attitude and competence there. 2007, Jon and Morten went on a research trip to Vietnam and found that Vietnam and specifically Ho Chi Minh City was the right place to start the next factory. Here we could find skilled staff with the right mindset and a cost level very competitive with China.
We hired two persons and started by subcontracting sewing. After one year, we realized that we needed to have our own factory and our first factory was opened in 2008.
Our concept of offering the same complicated product range both in Lithuania and in Vietnam proved its worth and following several expansions of the first factory, in the spring 2016 we opened a brand new factory covering more than 15.000 square meters in Ho Chi Minh City.
To wrap up the history of LTP in the correct way it is important for us to mention our long-lasting relations. With staff, with customers, with suppliers and all the other stakeholders. We are very proud to say that most of our management and a very big part of the remaining staff has been working and developing together with us since the early beginning in both Lithuania, Belarus and Vietnam. We still have customers with whom we have been working for 25 years. These relations, the CARE and the TRUST means everything to us.
The adventure continues
The last of our three values is CHALLENGE. Today we are present in three industries with factories in Lithuania, Belarus and Vietnam. Will it stop here? – no, for sure not! It lies deep in the spirit of the LTP organization that expansion is fun. Where and what we cannot say now, but we do love new challenges.