Swedish electrical appliance company Electrolux closed its factory doors in Västervik in March 2004 with a loss of 1,500 jobs – a sizeable number in a town of 20,000.

The closure of the factory was undeniably a blow to the town, but local leaders saw that it also provided new opportunities. Their initiative has come to be known as The Västervik Model – an active way of promoting business growth in a small town.

Much of the success can be attributed to an informal air of council and community co-operation, which is a vital partnership for success according to Västervik’s council leader Harald Hjalmarsson.

“The council and local businesses work to clarify their roles and their expectations of each other,” he says.

Businesses continue to be responsible for formulating their needs through Västervik Framåt, a development agency and resource centre for new and existing enterprises in the region.

“A crucial factor for the positive development of Västervik is the involvement of business leaders at every level,” Hjalmarsson adds. “They believe in Västervik and want the municipality to develop in a positive way.”

Five years on and the abandoned factory is thriving again with 25 companies housed in the building, employing 400 people.

During that time the council has also focused on establishing a better business environment with improvements to infrastructure, communication and education in the region.

Västervik has also used its attractive natural setting as an advantage to entice both new business and new residents. With a coastline stretching 550 metres and around 5,000 islands in the surrounding archipelago, it has focused on developing new waterfront housing and trade centres, a huge draw for the sea-loving Swedes.

Indeed, the area was a prime choice for Stockholm-based company Aquavilla to expand its offering. Founded in 2000, the company is behind the capital’s Pampas Marina, a living harbour with 20 habitable floating villas, a restaurant and sailing supplies store.

Aquavila acquired land on the island of Lucerna in the Västervik archipelago and will complete the construction of a new factory in 2010, creating around 60 jobs in the process.

“We believe Västervik is a perfect location for us,” says Roger Alm, managing director of Aquavilla. “It’s on the coast, has a very good harbour and the good transportation links are a benefit.”

Aquavilla will also construct a living marina by the town’s Södra Skeppsbrokajen. “The town has a positive attitude and that translates into new business,” Alm adds.

The council has taken a proactive approach in marketing the town as both a tourist destination and an attractive place to move to. It offers a moving service (Inflyttarservice) which helps private individuals or families relocate to Västervik.

The approach that has paid off with a current database of around 3,000 people who have shown interest in making a move.

This information means new companies have a head start in recruiting locally. “If I know a company is looking for an IT specialist, I can contact people whose skills fit those credentials,” explains Hanna Hägg who works with the service.

“Companies can connect with people they otherwise would have missed,” she adds. “Other authorities working with this kind of moving service are reactive, but we work differently and have a more holistic approach.”

The turnaround in Västervik has been used as a model for other municipalities in Sweden looking to stimulate business growth in an increasingly tough climate.

“Despite the global finance crisis and the conditions in the job market, the market here is still good,” Hjalmarsson says.

And work to promote the region continues: in 2010 the municipality and the business community will create a group to work strategically with the business development in Västervik.

Article produced in cooperation with Västerviks Kommun.