TatVoylok to stop felt boot production that started 90 years ago
The oldest Tatarstan producer of the Russian national footwear is stopping the production to avoid bankruptcy
The legendary Kazan company Tatvalenok, which will be 90 years in 2022 — TatVoylok — will stop the production because the production threatens the enterprise with bankruptcy, claims the owner of the business, one of the first Tatarstan entrepreneurs Alimas Valeyev. In a column written exclusively for Realnoe Vremya, he tells us about the reasons why the production of the popular boots became unprofitable in Tatarstan, about a staff shortage, problems because of an outflow of labour migrants for all Tatarstan businesspeople and the measures that can save Russian businesses.
There are sheep, there is no wool
The production of felt boots at TatVoylok reduced twice, and it became unprofitable to make them. And one cannot work at a loss — the enterprise will get bankrupt. Therefore I think we will stop making them in a year. We will leave only the production of industrial felt and its parts. We supply them to many Russian enterprises. We can raise prices for these parts unlike felt boots, and the products will be purchased.
The price growth is a consequence of the absence of Russian wool in the market. Earlier, we used to buy it in Russia, but today there isn’t Russian wool in the market. There are sheep in Tatarstan, but there isn’t wool. Previously, an office of the Tatarstan Consumer Union collected it, now nobody deals with it.
500-600 tonnes of wool used to be collected in Tatarstan 10 years ago, now we don’t even a tonne, and the republican Ministry of Industry is solving this problem. If you collect a tonne of wool, you earn 20,000 rubles. It is much more profitable to travel across districts, purchase and sell metal scraps. A tonne costs 15,000 rubles, and money is earned easier — you go to a farm, take an old plough, equipment, and that’s it.
We have to bring wool from neighbouring countries. We have to pay for it in dollars. Moreover, only washed wool is permitted to be imported to Russia, and it is more expensive than unwashed we used to buy here and washed ourselves. Moreover, there are additional costs when bring wool from abroad — on transportation, customs documents, veterinary documents.
Who will resolve the tax issue?
TatVoylok, in fact, is a seasonal enterprise because the products are sold during the high season, nobody needs felt boots in summer. But from a perspective of the tax code, the enterprise operates all year round.
To work in a normal mode, we have to take out loans — for salary, taxes and so on. But we need to not only pay salary to the workers but also keep the shops. Energy providers demand 90% prepayment, while our production is energy intensive. The enterprise work in spring and summer when it makes felt boots, but it gets money and repays loans in autumn.
A loan rate in a bank is high and keeps growing, it is very costly money. This year, we have taken out a loan at 26%. Industrial enterprises, Russian Railways, other public companies are key clients. We have deferred payments, up to 90 days. But we cannot take advantage if tax deferral — it is available only for enterprises working seasonally.
Fewer felt boots, shorter path to bankruptcy
How to survive if the price for felt boots cannot be raised anymore? We have already raised it twice but the production has fallen threefold.
Steam is needed in felt boot production, energy is consumed. And the fewer products we make, the higher the prime cost. It is unprofitable for the enterprise because costs on energy, maintenance of a four-storey building and equipment, hot water and gas are the same, it doesn’t matter if 3,000 pairs or 300 are made in a shift. It turns out to be a vicious circle: as few as 1,200 pairs of felt boots have to be made per shift so that the felt boot production pay back, but we haven’t have people for this, two in three containers are staying idle. We are making less and going towards bankruptcy.
Expensive dollar scared migrants
It is often said that COVID-19 provoked a deficit of staff, like migrants 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 salary in rubles, but in their homeland — in Uzbekistan, Tajikistan — they use dollars for settlement. In our enterprise, they earned 40,000 rubles a month on average. It was profitable for them to work here with the dollar equal to 60 rubles — for $600-700. But when the dollar reached 100 rubles, their salary turned into $400. And after going home in January-February as usual when the factory is closed for repairs, they didn’t come back in March. They don’t work for less than $500, it is unprofitable because the salary in their homeland is $300-350.
Migrants can be returned by creating friendlier conditions for them. Taking this road, first of all, it is necessary to free them from excess costs related to employment. We calculated that a person pays 1,500 rubles for initial registration for three months, 500 — for a Russian language certificate that is valid for three years, then it has to be renewed. Also, a migrant pays for a patent giving them the right to work — 4,572 rubles a month, which is 57,000 rubles a year. To obtain a patent, it is necessary to download a package of documents in the Ministry of Internal Affairs, and this service is charged — 3,000 rubles. The prolongation of registration after obtaining a patent and employment is 1,500 rubles. So the sum reaches 75,500 rubles a year — it is a monthly salary. I think it is possible to reduce this sum with our functionaries’ goodwill.
Staff doesn’t fear dirt
I am asked why I don’t hire locals because we have enough jobless people, why I don’t work with job centres. I do work with them, but it is pointless. Locals do work in our enterprise. But the staff problem is urgent: we have 180 jobs, more than 70 of them are vacant. In the last three years, the average number of workers in the enterprise has just reduced. There were 137 people in 2019, 109 in 2020, 106 in 2021. Today we need 49 people — felt makers, operators, locksmiths, tinsmiths, electricians, engineers.
Additionally, we have very dirty production — wools comes unwashed and it is washed during the processing. It stinks many consider unpleasant, to put it mildly. Therefore many locals come here, work for 1-2 months and go to look for more comfortable conditions. As a result of a deficit of labour, two in three conveyors are staying idle. If five-six people quit, there will be nobody to work, the production will stop.
And those who work are representatives of the older generation. The average age in our enterprise is 51 years. Some specialists are over 70, we bring such masters, for instance, a lathe operator if something needs to be made by car and take them home. And this specialist work not only for money but also for pleasure — to feel a necessary person. Engineers and operators of the enterprise are younger, but nobody is below 41 years.
Not only we lack workers — there is a shortage everywhere, and job centres cannot help us solve the problem of staff deficit — nobody wants to work.