Agris Smelteris, owner of "Līvas grupa", speaks with Māris Liopa, Chairman of the LMSP, and Pauls Rēvelis, editor of zemeunvalsts.lv

It can be read about "Līvas grupa" that it was founded in 1993, meaning the company is now in its 28th year

That is indeed the case; we have been operating for quite some time now. The beginnings of the business can be traced even further back, to the late 80s, when we started out in agriculture and began to expand. It was a time when quite a few energetic and, in a good way, "crazy" farmers began establishing their own farms. By the time the large and much broader wave of farm establishment came a little later, I had already seriously turned from agriculture to production. The turning point in our direction (from agriculture to house manufacturing) happened very simply: in 1991, I visited Germany, where I saw some beautiful wooden houses. Admiring them, I thought: "Oh, devil! If only one could build things like that in this lifetime..." Now the time has come when we produce about one a week. Over the years, we have manufactured quite a few of these houses; the start was by no means easy, but now we are recognised, people know what we do and what we offer, and our work rhythm is quite steady and consistent.

What about resources, for example, wood?

Up until now, everything was more or less normal and understandable, but now there is a "price storm" where everything is swaying, fluctuating, and there is no clarity about what is happening. I understand the situation, and I think the market volatility is temporary; it won't be long before the market stabilizes.

You primarily work for the Latvian market. Is that intentional?

Definitely! I believe that we have not tried to create a cheaper product just for the foreign market. For the most part, Latvian house manufacturers try to compete in international markets on price, which is the main motive for why buildings are bought. Quality does not suffer because of price; it cannot be said that we produce cheap "rubbish" here, but... Not all Chinese manufacturers are bad either.

I think an entrepreneur must first be competent and fully capable in the domestic market. For example, in Germany, a German knows which washing machine to buy, and usually, we cannot buy that kind in Latvia, or one has to look for it specifically. For manufacturers who make the kind of (high) class products that a German wants to buy for themselves, export is often not necessary; the local market is quite sufficient. Of course, one can talk about the size of the German internal market, but... If someone says: "Latvia is small, is it worth doing anything here?", in my opinion, that is very strange. Let the speakers try to produce even one product that would be enough for every Latvian. The problem lies elsewhere: the manufacturer is unable to produce a sufficiently competitive product, it has no sales outlet, and the local – Latvian – market is blamed.

How has the company managed to employ locals, the people of Jaunpils?

There aren't many options; people won't come to work for us from Riga! The company's production facility is right here in Jaunpils, and about 60 people work for us. As I mentioned at the beginning of the conversation, we have been operating long enough, people know us, we don't deceive them, and our staff circle is stable. The 2009 crisis was not easy, but we survived.

Cooperation with banks, which is important in our industry, has become stable; in fact, we provide them with clients. Banks are interested in working with us; things are going well with Luminor, with SEB, and other banks also want to be friends with us.

I have concluded that the people who work in banks in Latvia are not always the decision-makers, which, in turn, can hinder or even complicate the situation and the speed of resolution. By this, I don't mean that the banks dictate their terms too much, as is often heard, but many simple matters are handled in an overly complicated way. Why? There is a lack of people with decision-making power here in Latvia, and to the "uncle in Sweden", we are far away and of no interest. I assume that bank employees working in Latvia are not allowed to show that things can be done differently, not "as they should be". I don't think credit should be given to everyone who asks, but the service should be convenient and simple.

Līvas grupa, Jaunpils Dairy, the Brewery. Activities in and around the castle have quieted down a bit, but Jaunpils is a quite bustling municipality

Yes, I am very happy about that! I call it the "supermarket principle", where many things are in one place and seem to compete, but... people flock there, the place is alive, and if there are people, everything works much better.

The restoration of the Tukums municipality...

I can't say that I am sorry to part with Jaunpils municipality, and I can't say that everything is going perfectly... There is no real need for a merger, and there is no malice either. I think reform is truly appropriate if a municipality is not successful. Much depends on the municipal leadership, which, of course, is different in every place. I cannot say anything bad about the Jaunpils municipal leadership; like all public structures, we also have a slight lack of owner-feeling: "It's a little easier to divide money that isn't yours!" Therefore, not everything runs efficiently enough, but... In no case can one assume that by electing a private entrepreneur to the Council, they will do everything three times better! That is not so! Considering the resources the municipality has, everything in Jaunpils is in good order!

As an entrepreneur, I am relatively well-informed about what is happening. In a small country, small territorial units do not need separate administration with a fixed number of employees. It would be better if some municipal employees turned to business and, for example, started producing houses. I don't think it will become much easier and better after the municipal reform; in Jaunpils, we know each other well enough, and it is clear what to expect from whom. I personally do not need to explain or prove anything to the people of Jaunpils. That is good! They know me quite well in Tukums too.

It should be added that during the preparation for the previous reform, I was the one who firmly stood for a separate municipality: "Under no circumstances should we attach or hook onto anything – there must be a Jaunpils municipality!" Back then, we were even prepared to go to court if they didn't allow it! The municipality was created. As the head of the municipal council has said several times, the following years were the best in Jaunpils. The situation slowly changed. But I don't think anything bad can be done by merging, or that anyone will think of doing anything bad. If the people of Jaunpils are sensible enough, they will be able to scoop more from the "big pot" of the Tukums municipality than they do now. Jaunpils, as we talked about and as can be seen, is a quite active place, and that activity will not disappear anywhere.

The problem with small municipalities is often that the main source of income is the school and the municipality, which... are not producers, but consumers who do not earn but redistribute what others have earned.

Looking at the big picture: Jaunpils is "tidying up"... The infrastructure is organized; within the financial capacity of the municipality, roads and paths are being fixed. I include the work of the municipal leadership in infrastructure, ensuring that residents have something to do in their free time: there are quite a few interest clubs. People are in a way lethargic, and an incentive to do something or get involved somewhere is a very good thing! One goes, another, and... everything happens.

The Jaunpils municipality will be about 12 years old. What is the most important thing that has been achieved in the municipality during this time? On the way here, we rejoiced at the road from the Liepāja highway (Annenieki) to Jaunpils

The fight for the repair of that road was epic, if it can be described as such. The question of its repair was raised and considered with varying success for about 20 years. The result is successful; now the road is there, and it is the straightest and most convenient one to Riga. One of the most valuable and awaited infrastructure objects in Jaunpils.

Why did the repair "drag on" for so long? The money blanket is too short! Latvia is a bad place for road construction. Why? Low population density and not exactly suitable weather conditions: while we are humanly accustomed to ground freezing and thawing, these processes, which also repeat regularly, damage roads quite significantly. To yell: "Bad! Give us good roads!" That is easy, but... from where and with what money? I know how much roads cost and how they are made, because for the needs of my company, I have both built and repaired them. It is not cheap! I don't know if I would do better with the resources available to me. As I mentioned, there is a small blanket, and it is understandable and normal for everyone who can reach it to pull it towards themselves, but... the blanket is too small and short. To fix this shortcoming, one cannot simply decide: there will be more money for roads today. The decision will be made at the expense of something else, for example, we will buy fewer anti-Covid vaccines.

Efficiency in processes involving state procurement is quite sad. I fundamentally do not participate in state tenders. Complicated actions, unclear outcomes, incomprehensible "fussing", excessive control. Who needs it? If one works with a state tender... It is not that there is no corruption in Latvia at all. If we, entrepreneurs, are forced to operate in a scheme where the main thing is not the produced product but the technology (scheme) of how it is bought, and the profit is made not from the product but from the product purchase technology, that is a business in which I am not strong! If the point is not about the product or production, but the way of who will get the money and how... Is that necessary? My goal is to produce a good product.

A long time ago, when we manufactured plastic windows in the company, we tried to start in one or two public procurements: we couldn't understand why we weren't successful in tenders. More accurately: we "couldn't" understand. Then it became clear that one has to start playing by the rules that I don't like, that I don't understand, and that I don't want to either understand or follow. Money must be earned, not stolen!

How do Jaunpils entrepreneurs get along with each other?

Very well! We have no problems. We also don't compete with each other. I don't remember any serious misunderstandings.

I will add that in one respect we do compete: in the labour market! We haven't agreed, we haven't reached a pact, but we all behave decently and politely. The labour market is free for us. However, Latvian labour legislation is a bit one-sidedly oriented, which is understandable, because if we compare a "decent" entrepreneur and an "ordinary" employee, the latter is relatively less informed and less protected. Not all entrepreneurs, of course, are honest; a certain part are fraudsters. Not everything can be blamed on the system; dishonest people are to blame. That, however, will always be the case, and it is doubtful anything will change it. Therefore, legislation must be logical and understandable. For example, if an entrepreneur or organization has invested seriously in a person's training and knowledge, there must be a specific and understandable mechanism for how the person compensates for what has been invested in them if they decide to work elsewhere. In my opinion, the funds invested by an entrepreneur in training must be recovered, which is both fair and understandable. In the relationship between an entrepreneur and an employee, the game cannot be one-sided.

Is agriculture still a side occupation?

I don't earn money with it. The land that I owned 30 years ago is still in my possession; I rent it out. At home, we engage in various hobbies, for example, my spouse likes to grow grapes. We grow them in a greenhouse; there are plenty of them, and they are of high quality. Even better grapes grow in a greenhouse in Latvia than in France!

How does the situation "with and around" the virus affect the company's work?

Results are mixed. Actually, for almost a year, things were going very well; some time ago, a few virus cases "appeared", we detected them very quickly, "catching them in time". The order in the company is quite strict; we work on it, it's not simple, we have analyzed the situation at least four times. As soon as everything started, I bought all available tests so that we could look after our own employees. Fighting the consequences cannot turn into fighting windmills. People are not very organized creatures, especially if you go to work in the morning where you precisely carry out what is necessary. One shouldn't wait and hope that everyone will perfectly understand the current situation.

Vaccination...

Everything is "great" with that! In my life, I have worked for a salary for only a few years; for the rest of the time, I have lived off what I have earned myself. It is unclear to me in what way and what kind of fools one must be not to understand the current priority. They tell us that one vaccine was ordered and another refused, with one it's difficult, with the other the logistics are complicated and... Stupid! Has it been compared how much the economy is slowing down and how many "pennies" can be saved on one or the other vaccine? Many decision-makers lack entrepreneurial thinking, and instead of explanations, we hear "water bubbling". But... what to say about people who have never done anything valuable in their lives? That, of course, is no excuse, but if the problem is clear, understandable, and known, it must be solved, and that's it!

The only correct path is vaccination, which should have been and must be loudly talked about everywhere!

Lack of entrepreneurial thinking...

I shouldn't be allowed to manage the country. By nature, I am not an altruist, but the country's leadership must be clever altruists. If we are talking about the state administration system, there must be powerful consultants who are taken into account and not ignored, and who perfectly understand what is happening. Democracy as a system is quite poor and weak, but... there are really no other options. Democracy is meant for adults with adult thinking.

Last year, I had the opportunity to be in Finland for a considerable time. The Finns have "created" the country for themselves; they don't mess with people's minds and don't complicate things, they don't measure grass length in centimetres by houses, etc. In Finland, everything runs in cool peace, but... if we look at the statistics, the number of vaccinated Finns is very high. Very rational people who do not sink into various stupidities. In my opinion, we should have used the New Year holidays, shut everything down, and that would have worked. In the not very densely populated Latvia, that would be a trivial matter to organize.

If I "mess something up", I can lose what I have built and organized for 30 years. What can the decision-makers in our country lose? There is no answer!

The most serious contradiction I see: there is great authority, "great responsibility" on paper and... the possibility of acting like a fool perfectly. I would gladly agree to a system: if someone really, really wants to be a minister, let them deposit, say, 1/2 million euros in the state deposit. If big trouble is brewed during the "ministering" time, this money stays in the State Treasury.

You mentioned that you have started something new...

Back in the day, I was actively involved in motocross; 20 years ago, I crashed, underwent long treatment, struggled, but I still want the adrenaline. There is the Extreme class of buggies Extreme: a very light machine of about 300 kg, acceleration to 100 km/h in 3 seconds. I bought one such buggy manufactured in Spain, but... I see it is very poorly constructed. As I have been doing some metalworking for the last 10 years, I have a small laboratory for such purposes where I can create various prototypes. The Spanish buggy has an incorrectly constructed suspension. We analyzed it in a special computer program and concluded: it is indeed so.

Currently, we are concentrating on the production of sports machines; various equipment has been ordered, and we plan to build a small factory by the end of August. We are thinking of producing buggies; the first prototype will be ready soon, and we will start testing it. The problem is the lack of tracks; we must think about where one could be created. The track should be similar to rallycross: part asphalt, part dirt surface. I hope my plan will succeed because motorsport is a very expensive joy, but buggies are not. The plan is to produce about 50 machines a year; of course, one must look at the market and the situation. We will build it right here in Jaunpils, and I hope it is a "project" for the next five years.
Used photographs from "Līvas grupa" and zemeunvalsts.lv