Entrepreneur Andris Bite: Even chickens can fly if the wind is strong enough

"Neither Kariņš nor the other responsible people cause anger anymore, only pity. You are even beginning to be ashamed that you are Latvian and that you live in Latvia, whose government is pointless,” says Andris Bite, the owner of the company Karavela (formerly Kaija). Today - an interview with him.

In 1996, Andris Bite started working for the Ave Lat group company Kaija. "I went around as a sales agent trying to sell our products. And so little by little... Now it is my company. When it had difficulties and everyone left it - both the owners and the management - we, some people, thought - maybe it could be pulled out of the pit? Neither banks nor competitors believed this. And yet... the revival and success of the company are based on continuous work for 20 years,” says Andris Bite.

Karavela is currently, upon the acquisition of the German company Larsen, the third-largest canned goods producer in Europe with a turnover of more than 66 million euros a year. Karavela currently has an export market in 46 countries. "In all Western European stores - as long as there are canned fish there, then a large part of them are ours," laughs Andris.

Where do you get the fish? It has been heard that there are no longer any in the Baltic Sea.

The "geography" of the fish is wide. Most are mackerel from Scotland and Ireland, the Faroe Islands, herring from Norway and Scotland, salmon from Alaska, the Far East and Norway, sardines from Morocco, tuna from Ecuador and Mauritius.

How many people work in the company?

Karavela itself has 245, but the group has several other companies engaged in metalworking, real estate management, and technical services. There are a total of 650 people.

How has the Covid crisis affected the work of your company?

The beginning of 2020 affected us not with cuts and falling production, but, on the contrary, with increased demand. It was not only in our country that buckwheat and other goods with a long shelf life were intensively bought, but all over the world. It was like in the 80's, when no more than two cans were given per person. Such rules were introduced in Germany for one week by the Aldi network, where we placed our product.

Last year was a challenge: to produce everything that was requested. In addition, the intensive production had to be reconciled with the spread of Covid in the company. It is no secret that the number of positive cases in November and December was high, although we had put in place strict safety measures and even closed the plant for a week. Everyone who could work from home did so, but we did not figure out how to put sprats in cans from home...

Not only does production have to take place in person, but it is also probably difficult to offer the product only on the Internet.

Of course. We are not visiting our customers for the second year in a row. We went to them every year, and that was one of the keys to our success: we spent at least nine weeks a year in different parts of the world where food exhibitions took place. Now we only meet online... And this creates difficulties with offering new products. Although - we also adapted to this situation: in April we will have the second online exhibition - with cameras and a video studio in our company hall. Before that, we sent customers product samples for tasting. Everything just like before, the only thing missing is the night out in the bars (laughs).

Last year, the tax system was also changed, which a lot of entrepreneurs literally cursed about.

One of the reasons for our country's backwardness and loss of competitiveness is, to put it mildly, a lousy tax system. We lag dramatically behind our neighbors - Lithuanians, Estonians, Poles, but our government does not want to recognize that. We are lagging behind in terms of GDP per capita, and that is an indicator of the wealth of the people. We are lagging behind because tax policy has been wrong for years: we have much higher taxes than our neighbors. As a result: either employees are not paid enough, or the taxes are not fully paid, or companies do not grow.

I did some simple calculations to understand: what would be the payroll taxes if my company was located in Estonia, for example? If my company was in Estonia, I would spend 1.2 million euros less than in Latvia. I could either pay these 1.2 million into staff salaries, invest in development or, in the end, build a house for myself.

This disproportion is huge and results in a weak industry. Of course, I am proud of mine and other big companies, but there are too few of them. But the other businesses - ones that are still alive - are too small. For example, our largest milk processor is four times smaller than the third-largest milk processor in Lithuania. No one in our country has ever thought about how to actually make more money in taxes. It's just: let's raise the tax rate! It kills development and common economic power. The social tax should be reduced and the non-taxable minimum should be raised. Then we would end up in similar positions as our neighbors. And then we could expect new factories to come to us.

We have talked to Inta Dāldere about taxes, Reirs hardly talks to us at all. We say that taxes are inadequate. They answer us: look, here we have a study from the OECD (Organization for Economic Co-operation and Development) and there they recognize that we have the best tax system in the world. No one disputes the fact that the tax on reinvested earnings is good here, except that if the other taxes remain as they are now, there will be no profit. The situation in our company is better now: we have been eating dirt for about twenty years, we have been feeling better for the last three years. We are a big company, but what about small and medium-sized enterprises? Many of them live neck deep in manure, and any issues can drown them.

And another thing. To have something more here, we have to take something away from others, that's how the world works. Last year, we bought a strong German company - Larsen - we liquidated it there, moved production to Latvia. But we could only do that because we were already strong. Many smaller companies would not be able to do this because it is difficult to obtain financing. Unfortunately, our economic environment is not one in which people would like to invest - compared to our neighbors. Our rulers are doing very little or nothing to reduce this lagging behind.

Is it not the case that Latvia is too small for the number of officials who need to be fed by those who create added value?

No doubt. But not only officials need to be fed. Salaries have to be paid for teachers, doctors, firefighters... But there are not enough money generators, and it is a huge disproportion - dependents and payers. Too big is the section that should not just keep "sitting" on public money but move on to private business - to understand what it is like to make money.

If there was a normal public policy, this disproportion could be reduced. It must be understood that there is a constant shortage of staff, so many should adapt to new circumstances and learn to work intensively. At the same time, efforts should be made to increase the number of manufacturing companies.

Sounds nice. But how to achieve it?

First and foremost, the process must be led by people with economic and financial knowledge. If a good musician - clarinetist can be an advisor in the Ministry of Finance, the result will be only problems... I can not operate on the appendix, because I do not understand anything about it, as it is with clarinetists who try to manage finances. But when we explain all this, we are not heard, and then I realize that we live in different worlds.

But there are, of course, good examples of supervisory institutions doing their best to make the industry thrive. The first to point out that officials had to do everything the industry needed was Minister of Agriculture Jānis Dūklavs, who came from the business environment. Afterwards, being in the prevailing environment brought an end to that, but the start was good... The Ministry of Agriculture also works well under Gerhards. On the other hand, the subordinate institutions of the Ministry of Finance, such as the SRS, are neither given the task of Minister Reirs, nor do they themselves have an understanding that these institutions should serve us, and not the other way around. Well, at least there should be mutually beneficial cooperation.

You say there is a shortage of staff. Are you considering migrant workers?

I have talked a lot about it, at least with the National Alliance (Nacionālā apvienība), which is of the opinion that no one should be allowed to enter here. However, I am in favor of a strictly controlled entry of migrant workers. It has been like this in history - Latvia has never had enough labor force. For example, in the 1930s, there were about 40,000 seasonal workers from Poland and Lithuania in Latvia. And in Soviet times, who weeded beets?

Hutsuls.

The locals neither wanted nor were able to do those jobs. Now the economy is slowly going up, we are not standing still and not falling. If we want development to take place, we will not be able to do without foreign labor. I do not want people from foreign cultures to stay with us forever, but at the same time I will always defend the position that people should be allowed to come and work freely for a certain period of time so that people earn money and leave taxes here for which they will never claim benefits and go home afterwards.

We can talk about robotization as much as we want, but simple jobs will require human hands. Those who are able to work are already doing so. Then there is another category: those who have never worked and will never work. This is a consequence of a frivolous social policy: the official unemployment rate is around 6 to 7%, but some three-quarters of them simply do not want to work - they are professionals at being unemployed and they cannot be converted.

Currently, a number of industries have closed due to the Covid, but before the Covid, we had virtually zero unemployment. And then what is unemployment benefit? It's a safety pillow for those moments when you can't find a job, rather than don't want to! But the social system allows it.

We lack workers because of these people who are unwilling to work?

Yes. If someone wanted to build a large factory here, there would be no people to work there. Even if the jobs were well paid. A Continental tire factory was built in Lithuania - with a thousand jobs. We couldn't have found so many people willing to work.

A sprat factory went bankrupt in Roja, I was talking to Norwegians at the time, I said - come here, the place is ready. They needed 150 employees. We went to the municipality, said that a Norwegian had promised to invest. The municipal worker laughed: then we would have to look for people within a radius of 200 kilometers. So... the labor problem will have to be solved. And then it is better to take people from familiar places rather than from afar...

How do you assess the government's performance over the past year?

Can I use curse words or only polite language?

Well, you can say "beep" in the place of curse words...

Okay, I can also be polite. I believe that a beautiful suit and hairstyle is not enough to be able to run a country.

Really?!

Under normal circumstances, this may be sufficient. Even chickens can fly if the wind is strong enough. However, we have entered a crisis situation - not through our own fault. But that we are so deep in it - that is our own fault. The mediocre must not be entrusted with leading Latvia, who do not have the slightest understanding of what the crisis means. A person who has gone bankrupt at least once will have a greater understanding of the crisis than the current health care system manager or financial system manager.

I do not want to say that all government ministers are useless, but what the government as a whole decides often gives the impression that it does not understand what it is doing. The Prime Minister looks like an observer from the sidelines, not the head of government. There are people in positions of responsibility who are unaware of the seriousness of the situation and do not understand how to act in critical moments.

Kariņš may be trying to manage it all within the limits of his understanding, but in the eyes of many people, he would gain much more respect if he said: you know what, I'm leaving, bring in some people who understand what crisis management is, and then I'll come back to lead the country again when everything will be calm.

What is the most critical task right now?

To open up the economy by vaccinating people as soon as possible. But everything is like wading through a swamp... Neither Kariņš nor the other responsible people cause anger anymore, only pity. You are even beginning to be ashamed that you are Latvian and that you live in Latvia, whose government is pointless.

It is incomprehensible why there are no people who can evaluate the pros and cons of every decision and every action. The fact that decisions are being changed is only half the issue because no one knew what this Covid misfortune would bring. But if decisions are confusing and illogical and if they are not explained, then the conclusions arise of their own accord: the government is incompetent.

If I was in Kariņš place, I would acknowledge my inability and call professionals to take my place. And there are definitely such people in Latvia. Even the vaccination process could be managed much more efficiently without wasting money on some vaccination bureaus.

Then to sum it up: why are we where we are?

The situation we are in is not a problem of each individual, but of the political system. Active, accomplished and thinking people do not want to get involved in politics. Why? Because work in parliament cannot be combined with business. It is useless from this point of view: if you want everything to be fair, it would be naive to imagine that a person who has invested knowledge, time and finances in his business for 20 years will leave his company and go to work in parliament for a lower salary.

At the same time, the workload in the Saeima is so small compared to the work of serious entrepreneurs - one or two parliamentary sessions and some hours in committees - all this can be combined with the time needed for business. This does not only apply to business people because if there are only entrepreneurs in the parliament, we will quickly start selling something (laughs)... If this system was changed, the whole situation would improve. But the majority of the Saeima does not want to change anything.

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