A few years ago, we read about the use of plywood manufactured by Latvijas Finieris in tankers. Last year, the company introduced its betulin extraction plant and the new finished goods warehouse at the “Furniers” factory, and at the end of the year, it celebrated the company’s 30th anniversary. What next? How has the changing situation in recent years affected the company's operations and plans, and has it changed them at all?
The fact that Latvijas Finieris is providing significant and substantial support to Ukraine will have been noticed not only by those in the forestry sector but also by the wider public. What has this support changed within the company over the past year? We, of course, try to be optimistic, but at the moment no one can predict the end of the war – will there be enough capacity for the time to come?
These are several important questions. Latvijas Finieris represents that part of society that wants Latvia’s development to be oriented towards the Western world. We believe that the fight in Ukraine is between good and evil; it is a question of the survival of the democratic Western world. Unity is very much needed, both in the societies of many countries and in the cooperation between these countries; it is just as important as support.
In our opinion, the stance on the Ukraine issue must be clear. Discussions about such matters in the inner circle of Latvijas Finieris management took place a considerable time before 24 February 2022, and on the morning when the Russian invasion began, the first necessary decisions were made very quickly. For example, symbolic as it may be, raising the Ukrainian flag at the company sent a clear signal to the entire staff. The support of Latvijas Finieris for Ukraine sends an equally clear signal, showing whose side we are on and what values we defend. In our view, this has helped many people not to feel confused in the first place. In the early days of the war, in a multinational team such as ours—and indeed such as the Latvian state and society—the first news and information could have caused a certain confusion or misunderstanding. A clear response is given by clear action. That was the most important thing; our team has accepted and understood it.
Speaking of the scale of the support, I will emphasise that the decision was made quite quickly – aid must be constant and provided every month; it cannot just be an emotional one-off contribution. That is how the formula was created – €5 for every cubic metre of roundwood processed.
Changes in the timber market have given us the opportunity to earn a profit, and we already consider providing support a certain duty. If our work has positive results, if we can earn a profit, then we must share it. We are continuing, and will continue, to provide support.
We recently received news from the European Council’s Working Party on Forestry that a Ukrainian representative had particularly praised the support provided by the forest sectors of Germany, Poland, and Latvia in delivering aid.
Here, a big thank you is due to Māris Liopa, Chairman of the Forest Certification Council of Latvia. Māris has built good relationships with representatives of the Ukrainian forest sector, which, in turn, helps to direct shipments and the support received to where it is most needed. This is the strengthening of relationships and cooperation at a new level; this type of assistance is the foundation for even better relationships in the future.
The Latvijas Finieris programme is broader – as we felt that we might lack the human resources to get involved in organising the aid, we considered our primary task to be providing financial support to those groups of aid organisers that have a clear plan of action – who is to do what, what is needed, who needs it, where it should be sent, etc. We have found our place, and we are continuing this way.
A quick and clear position in a difficult situation is commendable. Does this not hinder business? Because, as we have noticed over the year, some react quickly, some think for a long time, and some, in turn, are unable to make a decision.
I would not say that our decisions have been fast; they have been well-considered. It must be remembered that the war in Ukraine effectively began in 2014, and already then it was necessary to develop specific action programmes. We also had a series of homework assignments, for example, trying to understand if and when we could stop cooperating with chemical raw material suppliers from Russia. At that time (in 2014) it was not simple, because it implied very sharp changes in financial impact. This happened in part; we understood what it meant.
In parallel, we thought about and planned how to combine several ideas and plans on how to “walk away” from cooperation with Russian entrepreneurs. One of the programmes that stimulated this was the path taken towards replacing petroleum-based components with lignin in the resins used in plywood production. Now, evaluating the situation from a year ago, the Russian invasion has certainly accelerated the replacement of certain technological solutions previously used in the company.
It should also be mentioned that the company's internal policy documents have for a long time included points on human rights, respect, and non-violence. In the summer, we supplemented them with points in which we express intolerance towards the glorification of war, aggression, and the promotion of Soviet symbols. Of course, this had been self-evident for a long time, but now we have also formalised our attitude. Our team is large, and I must admit that last year we also encountered provocations – there were cases where “Z” letters appeared on walls and forklifts. Meanwhile, at the factory gates, the newspaper “Strādnieku Cīņa” was being distributed – a clear example of how an attempt is being made to incite society by addressing the employees of a large company.
We discuss too little about agents of influence in Latvia, how they emerge, how they organise themselves, what issues are being sabotaged, and what counter-actions are taking place. Aware that we, as a large company, can also be a target, we try to understand these things ourselves, talk about them, and explain them to our employees.
A year ago, Māris Zanders* very harshly evaluated the (supposed) experts on Western European politics who did not predict the war. Would that be a lack of foresight, or something else?
Accepting changes is not easy, especially in Western society. The value that each of us creates is part of a long value chain. If changes occur at any stage, they affect everyone and are usually very profound. The interruption of resource flows from Russia has greatly affected Western society, and even though it understands the situation sufficiently well, it still does not easily accept the changes that follow. Because, of course, the most habitual thing is to continue living as we lived yesterday.
If we do not delve into the nuances, it may seem that Western society is slow. However, overall, I am convinced that the result is sufficiently fast and good. For example, regarding energy resources, giving up Russian hydrocarbons within a year was not easy at all, but it happened.
It is difficult to make changes in a stable system, but if they do happen, their progression is of sufficiently high quality, without harming members of society. Western countries are very concerned about balance, and chaos has not set in at the moment either.
Latvian society has faced serious problems over the past few years, starting with C19, followed by the war and a huge price hike. How does a large company cope with such unplanned situations that effectively affect everyone?
On one hand, you have to try to balance income with expenses – that is a large and serious task that must be thought about; we also had to do it. On the other hand, our priority is the relationship with the company's employees; the individual is the direct performer of the work, and their well-being must definitely be taken into account. We have paid a lot of attention to this. For example, seeing the crisis we were approaching in the winter period, already in the middle of summer we began to support employees to collectively survive the period of inflation and the rising cost of energy resources, also indicating this on the payslip: “Allowance for the partial coverage of energy price increases caused by the war started by the Russian ruling regime.” Understanding the situation led to the conclusion that we must do more than usual. In parallel, we communicate actively with company employees, creating an understandable narrative of why this is happening.
Latvijas Finieris is considered a good employer. From the company management’s point of view, what is a good employer?
It is certainly an understanding of the mutability of things and the common path we are taking at the company. There are several things that must be accepted as basic principles of the business model. For example, employee remuneration must grow every year; training processes must take place within the company to supplement the employees’ knowledge. If a person’s professional growth happens concurrently with the company’s development, if prosperity increases, there is a foundation for positive emotions.
In a company, it is important to know how employees feel. We know this because since 2019 we have been conducting an annual engagement survey that meets international standards. In 2022, when it was last held, the engagement index reached 68 points (which is to be evaluated as a high engagement rate). I would, to a certain extent, link this to the fact that in these tense times, people highly value stability.
In Latvia, the word and concept of “trade union” still encounters a certain reluctance. The Latvian Forest Industry Trade Union, however, has long been praising Latvijas Finieris for its cooperation.
This has developed historically. If relationships are formulated through a collective agreement, discussing many issues, and writing down priorities, it is important to write at the top of the page the common goal – what we are doing and why. In our opinion, we have managed well enough to articulate why a trade union is important. What is its role for the employees, and what is it for the employer? The trade union invests a lot of work in education, in finding out and determining needs, and helps us not to miss anything. And if a person is ready to accept that life is changeable, if they feel responsible for what has been done, the joint work and relationship are valued positively. There must not be static immutability. In my opinion, a person must want to change; that is very important.
Latvijas Finieris and the National Guard. For a company employee serving in the National Guard, this means a certain amount of time to perform this duty.
As I mentioned before, the reassessment of the situation and pragmatic analysis in the company took place as early as 2014, when the collective labour agreement was supplemented with a point that 10 days for performing duties in the National Guard would be compensated with full pay. The idea was to respect and, with management skills, strengthen active individuals who operate in the country’s defence.
Our understanding as an employer is that these are active people who do more and understand external circumstances; they have defined their relationship with the state and state defence. If they are involved in management processes, I think others will also evaluate and reflect on such issues. There are very many positive things and developments that strengthen the team.
In parallel with the events already mentioned (C19, war), major changes are slowly taking place in the European Union regarding the climate and the Green Deal. How is the company adapting to this situation?
If we talk about Latvian (and not only) forestry, then it is effectively a question of land use. Latvijas Finieris as a company agrees with the major climate and biodiversity goals, and with the fact that we must transition to using other energy sources instead of fossil fuels. However, the question is about the speed of change, about a balanced equilibrium between the way we achieve these goals and the opportunities for companies to work and develop. For business to be sustainable, constant investment and a sense of stability regarding resource availability are required. Latvia has great potential to become more productive, including in forestry. If the changes are sufficiently balanced, in the medium term there could be a certain drop in the volume of raw materials, but in the future, it will certainly be possible to obtain the same volume of resources in Latvia’s forests, or even more than today.
There are no sharp discussions about the major goals, but serious and important goals are becoming overgrown with a large layer of descriptive documents, which worries Latvian entrepreneurs (not only in the forest sector)...
Very correctly said, if it worries them – the bureaucratisation process is very heavy. If we want to achieve higher productivity, a certain freedom of action is necessary. The more territories in Latvia we choose to direct towards solving environmental issues, significantly restricting economic activity, the greater the reduction of bureaucratic restrictions needed in areas used for economic purposes. This is also a question of balance.
In our direct competitor countries, such as Finland and Sweden, this system exists – in territories where management proceeds productively, the freedom of action is greater.
Speaking of rational land use, we have a very good example that can also be watched on video** – in the 22-year-old birch stand planted by Latvijas Finieris employees in Ukri, we already obtained the first veneer logs last year.
Why are there more of these restrictive regulations in Latvia? Is there any logical explanation for this?
I will not be the expert to answer this question very clearly and precisely. Intuitively, I feel that over time, at the state level, former regulations that stemmed from state-level planning have merged with those regulations that restrict economic activity for some specific, local purpose. This can, to a certain extent, be considered historical baggage.
Latvijas Finieris works in the Baltic region. Recently, the comparison has been heard often enough that Estonia and Lithuania are slowly, but very definitely, overtaking us in economic development. Is this justified and why is it so?
There is not one reason why we are currently a little slower. In my opinion, many and various issues have accumulated in this slowness, which is why it is not easy to change this situation. It is certainly not only about taxes, although taxes (for example, labour tax) are “one of...”. In Latvia, we have only recently started to tidy up the financial sector. In terms of energy costs, we are “slightly more expensive” than the Estonians. We can view sector by sector in this way and put together justified and logical arguments as to why we are faring a little worse. If we find even a small problem in every sector, they add up to an unpleasant result overall.
One thing that must definitely be emphasised when talking about the differences between Latvia and its neighbours is the healthcare sector and people’s attitude towards their own health. It is evident that healthcare is becoming increasingly difficult to access, which leads to neglected or untreated illnesses. In turn, problems in the healthcare sector result in lost working time. We see the situation from sick leave certificates. If we evaluate official statistics, the recovery time in Latvia is on average 5 days longer compared to our neighbours. These are 5 days lost by Latvian employers. This is a lot, and its impact on GDP is significant.
If we look at this number, for example, in the Latvijas Finieris system, the difference between our companies in Estonia and Lithuania is even greater.
This issue is little highlighted, but it should definitely be evaluated and looked at on a national level. People should also think more – how does the fact that I stay at home even one day longer than necessary affect the country’s overall prosperity? For example, recently in Denmark – quite the opposite – it was decided to swap one public holiday for a working day, thus directing 400 million euros to the national defence budget.
In society in general, we should talk more about positive leadership, about productivity, about the ability to build value growth, about exports, and their faster increase. In Latvia, the often-heard style of speech “Everything is bad!” should be changed to “We can! We know how!” The best should be highlighted and we should learn from it. To a certain extent, this is lacking for us. For example, instead of praising the Estonians or the Germans, why can’t we praise our own?
I know there have been companies that have tried to highlight this; for example, LMT had an advertising campaign “Latvija var!” several years ago. Understanding and a common striving towards growth are very important.
Speaking of growth and development, what would be the immediate plans for Latvijas Finieris?
A broad investment programme has been approved for us for the next three years. We will certainly highlight two projects – the development of the company “Verems” in Rēzekne and the creation of a lignin resin production facility at the Chemical Products Factory in Riga, which we consider a big leap in our technological development. At the same time, we are planning smaller investments in almost every structural unit of the company. The planned investment volume this year is €70 million.
A very positive piece of news in the light of recent events (for example, in connection with the “liquidation/reorganisation” plans for Daugavpils University) is the company’s development in Latgale, especially the investment in the company’s development in Rēzekne.
Of course, it will be development for the Rēzekne municipality, and the company’s team will grow. We will invite locals to work, because we believe that in this regard, we should rely on the local community. The production facility is located near Rēzekne; of course, the largest number of employees come from the city. If there is an understanding of cooperation and development, staff turnover is low. Our company’s staff composition is sufficiently stable. Furthermore, the “Latvijas Finiera fonds ilgtspējīgai attīstībai” foundation operates there, which supports education and cultural issues in Latgale; in this way, the interaction becomes broader. Relationships must be stable and engaging in many issues.
Recently, celebrating the company’s 30th anniversary, Latvijas Finieris has carried out an interesting calculation (study) on pensions.
Yes, preparing for the 30th anniversary, we tried to understand how many people had worked with us during this period and how their income had developed by the time they reached retirement age. We realised that if a person works in a stable company for a long time, their pension ends up being significantly higher than the average in the country. We looked at the data for those who had worked at a/s “Latvijas Finieris” and “Verems” (and are now retired) who had been employed with us for at least three years. In total, these are 1,360 pensioners whose average pension is €773. If we group them in more detail, about 220 pensioners receive under €500, and for the rest, it is above €500.
If we talk about at least five years worked at Latvijas Finieris, these are respectively about 1,000 pensioners who receive on average slightly over €800 in retirement.
I will repeat myself, but it is all the more significant in the Latgale region.
Of course, but I want to emphasise that the policy of Latvijas Finieris is for equal remuneration. There is no difference in wages for the same professions whether a person works in Rēzekne or in Riga.
* https://satori.lv/article/rietumi-nemacas-no-vestures
** https://www.youtube.com/watch?v=VVu9DoH3JOI