The oldest production of felt boots will stop in Tatarstan — RealnoeVremya.com
Tatarstan’s oldest producer of Russian national footwear halts production to avoid bankruptcy
The legendary Kazan company Tatvalenok, which will turn 90 in 2022 – TatVoylok – will stop production because production threatens the company with bankruptcy, claims the owner of the company, one of the first entrepreneurs in Tatarstan Alimas Valeyev. In a column written exclusively for Realnoe Vremya, he tells us about the reasons why the production of popular boots has become unprofitable in Tatarstan, a shortage of personnel, problems due to the exodus of migrant workers for all men of business of Tatarstan and measures that can save Russian companies.
There are sheep, there is no wool
The production of felt boots at TatVoylok decreased twice, and it became unprofitable to manufacture them. And you can’t work at a loss — the business will go bankrupt. So I think we’ll stop doing it in a year. We will only leave the production of industrial felt and its parts. We supply them to many Russian companies. We can increase the prices of these parts unlike the felt boots, and the products will be purchased.
Price growth is a consequence of the absence of Russian wool on the market. Previously, we bought it from Russia, but today there is no Russian wool on the market. There are sheep in Tatarstan, but there is no wool. Previously, an office of the Consumers’ Union of Tatarstan collected it, now no one cares about it.
10 years ago, 500-600 tons of wool were collected in Tatarstan, today we do not collect even a ton, and the Republican Ministry of Industry solves this problem. If you collect a ton of wool, you earn 20,000 rubles. It is much more profitable to travel through neighborhoods, buying and selling scrap metal. A ton costs 15,000 rubles, and the money is easier to earn — you go to a farm, take an old plow, some equipment, and that’s it.
We have to bring in wool from neighboring countries. We have to pay it in dollars. Moreover, only washed wool is allowed to be imported into Russia, and it is more expensive than the unwashed wool we used to buy here and wash ourselves. In addition, there are additional costs when bringing wool from abroad – on transportation, customs documents, veterinary documents.
Who will solve the tax problem?
TatVoylok, in fact, is a seasonal business because the products are sold during the high season, no one needs felt boots in the summer. But from the point of view of the tax code, the company operates all year round.
To work in normal mode, we need to take out loans — for salary, taxes, etc. But we not only have to pay the wages of the workers, but also keep the stores. Energy suppliers require 90% prepayment, while our production is energy-intensive. The company works in the spring and summer when it makes felt boots, but receives money and pays off loans in the fall.
A loan rate in a bank is high and constantly growing, it is very expensive money. This year, we took out a 26% loan. Industrial enterprises, Russian Railways and other state-owned enterprises are key customers. We have deferred payments, up to 90 days. But we can’t take advantage of the tax deferral — it’s only available to businesses working seasonally.
Fewer felt boots, shorter road to bankruptcy
How to survive if the price of felt boots can no longer increase? We have already increased it twice but the production has tripled.
Steam is necessary in the production of felt boots, energy is consumed. And the less products we produce, the higher the cost price. It is not profitable for the company because the costs of energy, maintenance of a four-storey building and equipment, hot water and gas are the same, regardless of whether 3,000 pairs or 300 are made in one shift. It turns out to be a vicious circle: only 1,200 pairs of felt boots need to be made per shift to make felt boot production profitable, but we don’t have staff for that, two out of three containers remain inactive. We earn less and go bankrupt.
The expensive dollar scares migrants
It is often said that COVID-19 has caused a staff shortage, as migrants have left because of it. No, it started here much later, this year when the dollar started to cost 100 rubles. Migrants work here, we pay their wages in rubles, but in their countries of origin – in Uzbekistan, Tajikistan – they use dollars to settle. In our company, they earned an average of 40,000 rubles a month. It was profitable for them to work here with a dollar equal to 60 rubles – for 600-700 dollars. But when the dollar reached 100 rubles, their salary turned into 400 dollars. And after returning home in January-February as usual when the factory is closed for repairs, they did not return in March. They do not work for less than 500 dollars, it is not profitable because the salary in their country of origin is 300 to 350 dollars.
Migrants can be returned by creating friendlier conditions for them. By taking this route, they must first be freed from the additional costs associated with employment. We calculated that a person pays 1,500 rubles for an initial registration for three months, 500 — for a Russian language certificate valid for three years, then it must be renewed. In addition, a migrant pays for a patent giving him the right to work — 4,572 rubles per month, or 57,000 rubles per year. To obtain a patent, it is necessary to upload a set of documents to the Ministry of Internal Affairs, and this service is charged — 3,000 rubles. Extension of registration after obtaining a patent and employment is 1,500 rubles. Thus, the sum reaches 75,500 rubles per year – this is a monthly salary. I think it is possible to reduce this amount with the good will of our officials.
Staff are not afraid of dirt
People ask me why I don’t hire locals because we have enough unemployed people, why I don’t work with Pôle Emploi. I work with them, but it’s no use. Locals work in our company. But the personnel problem is urgent: we have 180 jobs, of which more than 70 are vacant. Over the past three years, the average number of workers in the company has just decreased. There were 137 people in 2019, 109 in 2020, 106 in 2021. Today, we need 49 people: felters, operators, locksmiths, tinsmiths, electricians, engineers.
In addition, we have a very dirty production – the wools are not washed and are washed during processing. It stinks that many consider unpleasant, to put it mildly. Therefore, many locals come here, work for 1-2 months and go in search of more comfortable conditions. Due to a labor shortage, two out of three conveyors remain idle. If five to six people leave, there will be no one left to work, production will stop.
And those who work are representatives of the older generation. The average age in our company is 51 years old. Some specialists are over 70 years old, we bring these masters, for example, a lathe operator if something needs to be done by car and bring them home. And this specialist works not only for money but also for pleasure — to feel needed. The company’s engineers and operators are younger, but no one is younger than 41.
Not only are we short of manpower — there is a shortage everywhere, and the Pôle emploi cannot help us solve the problem of the lack of personnel — no one wants to work.
Alimas Valeyev. Photo: Maxim Platonov