The billion plant of VKG Oil allows the higher valuation of oil shale

VKG OIL AS

Entrepreneurship Award 2009 - Main Prize
Exporter 2009

In these days Kohtla-Järve is in anticipation – VKG Oil soon launches the brand new shale oil plant with the cost of 1.1 billion kroons.

In autumn 2008 when the economic crisis already ravaged the Estonian companies, Jaanus Purga, the development director of Viru Keemia Grupp, stated in the same yearbook that crisis has not yet reached Kohtla-Järve. He talked about several new ideas, e.g. the production of cement and diesel fuel.

Now, a year later, the situation has changed. Some plans have been temporarily frozen, so that the subsidiary VKG Oil could terminate the construction of the oil plant started at the top of the economic boom by the deadline. In a couple of months the latter works on mine waste for testing, thereafter on oil shale.

"You can stop the repairs at home. You postpone it, no problem. But such construction as oil plant cannot just be stopped,” Nikolai Petrovitš, the chairman of the management board of VKG Oil, says.
The macroproject involves approximately hundred companies and half a thousand persons from several different countries – from Finland, Germany, Russia, Switzerland etc besides Estonia. Petrovitš: “Imagine that this mechanism will stop even for a week .. the restoring of the working pace would be practically impossible!” According to him the launching of the plant should surely take place in autumn, not during winter frost.

Last year VKG Oil had several problems. “It was really difficult from last autumn up to this spring – we yielded the net loss of about 28 million kroons within five months,” Petrovitš admits. The main concern is the low price of petroleum which fell from the level of 140 dollars per barrel as the starting level of the last year to 40 dollars at one time this year and then slightly increased. The latter has a direct impact on how much the company can ask for its shale oil which will be mixed with black oil and is used as the ship fuel.

Also, there have been major problems with raw material. Eesti Energia decided to temporarily close Narva Power Station and related to that the supply of oil shale to VKG decreased. “We had nothing to make oil of and the plant practically was at a stop for half a month,” Petrovitš says.

The situation where practically the competitor Eesti Energia supplies raw material to VKG should end according to Petrovitš. The company should launch its mine in 2012. Otherwise the supply of the new fancy oil plant would be seriously disturbed. The purchase of the oil shale from Russia is complicated due to its logistics and the relations between two countries.

And this is not all – the markets of coke, bitumen and pitch have also not offered anything pleasant to VKG. The consumption of coke fell for example in Ukraine and Russia and related to the latter also the price decreased ten times last year. It was so bad that at some time there was no sense to produce coke. True, in the last months the metallurgy industry of the neighbouring countries have started to recover.

For already several years the company also contributes to the future – production of expensive oil shale phenols (oil shale is though “Estonian Nokia”). One of the phenols- honeyol looks like honey. The other – 2 and 5 methyl resorcin is like sugar. These have been sold by couple of tons to the car producers of Japan and Germany, such as to the noise suppressor mats of Lexus, also to hair dye producers of India and other countries. The last exciting news is that with high probability one well-known giant of chemical industry will start to buy 2-methyl resorcin from Kohtla-Järve.

Tens of millions of kroons can be strongly invested to the business of phenols, as the usage area of these chemicals is expanding. But now there is no money for everything. VKG employees have major faith in the future of the new oil plant, as the best possible team has been involved in the project.

Petrovitš says that if the price of petroleum remains at the level of 50 dollars per barrel, the oil plant will be profitable. “We get the bread, butter and very thin slice of sausage”, he smiles. If the price is lower, it would be difficult.

If it occurs that world economy recovers and the price of oil rises, half a million ton of oil can be produced in Kohtla-Järve in the future instead of the current approximate 240 000 tons.

There is no wonder that VKG Oil became the winner of the Entrepreneurship Award through the title of Exporter. Estonia has no many companies which can annually export for 1.1 billion kroons and increase by 48% in sales.

Nominees for the Exporter 2009

We acknowledge the companies which export sales, growth in export sales and added value per one employee in 2008 was the highest, which have contributed to the product development and uses the recognised quality management system.

AEROC AS
Aeroc AS has developed out of the group of companies based on the Estonian private capital having started in 1991 which has successfully operated in several sectors of construction material industry within more than 11 years – design of equipment and technology, production of lime and intermediation sale of pore concrete products.
In 1995 the import of Siporex- pore concrete products made in Finland was started together with Kivilõvi Engineering Agency in Estonia and since 1997 the company has been in parallel also the exclusive representative of the plant of pore concrete products working on the German Hebel- technology in the vicinity of St. Petersburg. During these years more than 150 private houses have been established in Estonia, in constructing of which the uptodate complex system of the house box of pore concrete products has been used. Siporex-blocks and partition boards have also been used in the walls of several representative buildings in Tallinn.

In summer 2000 the establishing of the new up-to-date plant of pore concrete products near Kunda was started. The investment of about 100 million kroons was completed at the end of 2001 and since spring-summer of 2002 AEROC products are available in all major Estonian stores of construction materials. Besides Estonia, AEROC blocks, partition boards and glue mixtures are also sold at the markets of Sweden, Denmark, Norway, Finland, Latvia and Lithuania, the export sales will be about 84 percent.

The news introduced at the market of 2009 is the ceiling panel of Aeroc pore concrete, with the help of which the whole stone house can be built by using the local Aeroc materials.

The main quality indicators of AEROC products – volume weight, compressive strength and measuring preciseness – comply with the highest requirements of the European standards.

DEMIDOV INDUSTRIES AS
Demidov Industries is the unique metallurgy company in the Estonian conditions, being specialised in the production and export of aluminium and ferroalloys. The company’s production is used by the industrial companies as alloying accessories in the aluminium industry, ferroalloys in steel cast industry, the potential clients are any companies of these sectors.

The company uses the most uptodate high technological equipment in the plant located in Ülemiste City. The continuous contributions are made to the product development and completion of technology. The advantage for that is provided by the high qualification and long-term experience of the personnel and valuable feedback from the foreign markets. The sales of the company in 2008 was 352 million kroons, 99 percent of which was export. Demidov Industries AS provides work for more than 60 employees.

1EUR = 15.8466 EEK; 1 EEK = 0.0639 EUR; based on 2008 data

The living conditions of the 17th century will be restored

NARVA MUUSEUM

Tourism Innovator 2009

Narva Museum has major plans to make history live. Among other things, the ancient ship will be built with stone axes and the printing press of Gutenberg will be established. Andres Toode, the director of Narva Museum, talks about the exciting undertakings between the castle walls.

What is Narva Museum?
We are the city museum, institution of memory which deals with preservation of culture and history of Narva and the surroundings. The exposition is more-or-less the same in all city museums, as the Estonian history has developed the same way. But we have a slightly more extensive meaning, as the castle attracts tourists for us. We are in a very good location, as the tourism transit between Tallinn and St. Petersburg passes the front of our door. Therefore we started to develop the historical experimental centre. The objective is to revive the 17th century – the Golden Time of Narva.

What does the restoration of history lie in?
We are not going to make moulages – to bring a pile of boards from the sawmill, attach these with wooden screws and say that this is the centuries-old shed. All should be prepared manually and of quality. In the course of the last 60 years the three u-shaped wings – southern, western and northern wing - of the convention building have been restored in Narva castle. In order to be successful today and get money from EU, the wish to restore something is not enough. The question: “What is the new quality that you would like to achieve?” We searched for ideas in the Scandinavian countries. The Danes are the revolutionaries in the field of historical centres in Europe. The outcome of their purposeful work having started in 1960s provides us even farther aim. For example, at the archaeological excavations the Danes found the carbonized pieces of board of the then building from the ground. They built different houses and huts, covered with different roof material, set them on fire and covered with earth. 20 years later they excavated and made chemical analyses which is most close to what was found by the archaeologists. Also, the arrow wounds have been also examined in the near history. The half of swine was hung up and dressed with chain armour and different arrows were shot thereto to see the holes made by different weapons. The idea of the historical centre is though the playing-through of history, making the experiments, discovering some new or forgotten old knowledge.

Which experiments have been made in Narva?
We prepare the experiments. We have an environment where these can be conducted. The aim is to move closer to the era. The time machine could be created: you step in and understand how the things looked like at that time. This provides, for example, a good alternative of the academic education for the schoolchildren. This year we have been building the ancient ship. We pursue to make the even earlier form of boat – dugout – with stone axes which would be enormous work. Also, we have the distillation project. The local people have been excited that the museum will start to produce vodka. No, we do not start vodka production. I do not know how the ovens of that time functioned and which receipies were used. But in the 17th century the basis for the current strong alcohol culture was established.
Also we would like to make the printing press. Gutenberg lived considerably earlier than in the 17th century, but the books became more available just then. The result of all experiments should remain at the disposal of the tourists.

Is the objective to sell all this to the tourists?
Surely. But we also need to acquire new knowledge and skills. The seminars and research publications should follow the projects. We just do not want the simple tivoli and circus, we want to go deeper.

Who are the visitors of Narva Museum?
This year the percentage of domestic tourism increased. But generally large tourism groups visit us who travel between Tallinn and St. Petersburg. We have a lot of Asian tourists, especially Japanese. We sell approximately 30 000 tickets a year. 85% of the sale is made in summer. Our budget is 12 million kroons, of which about two million is earned by ourselves. The museum is foremost the institution of memory and we do not have to make the ends meet. But if we are lucky to gain more money through the visitors, this is just outstanding.

What are you offering to the tourists now?
This year we set the herb garden in order, rather the garden of the Swedish botanist Carl Linne. He promoted in the 18th century the idea to value the manors and castle ruins with beautiful plants. The garden is used in the educational programmes, also the tourists can do some sightseeing here. In the northern yard the apothecary of the 17th century works in summers where the herbs, infusions and extracts are sold. They can also use the garden. This summer we hade a thematic event practically on each weekend. There is the area of handicraft with five workshops. We have prohibited to sell the plastic and other accessories. All that is sold should comply with the era. The souvenirs are here unique, not like the ones which are sold on Tallinn Town Hall Square. The tourist gets the coin with the ticket, one side of which depicts the coin engraved in Narva in the 17th century and the other side the coat of arms of the northern yard. The coin can be exchanged in any of our workshop against the souvenir or service. We always recommend the service – there is a blacksmith, potter, chemist, fretworker and pillow lace. As to us it is special that we do not pay salary to the craftsmen and they are not paying the lease to us. They are at us as the entrepreneurs, but not only the sale of souvenirs can be dealt with, but they should provide also services to the tourists. The coins will be repurchased by the museum at the end of the month. The sum paid for the coin is practically divided into halves – half remains for the museum, half for the craftsmen. We collect money to the common cash for these coins which will be lost with tourists. The premium will be paid from there to the best workshops each month. This is extraordinarily motivating cooperation model.

How do you choose the master craftsmen to the northern yard?
At the beginning we had no choice, as the local entrepreneurship activity is low. The blacksmith is up to now employed from Southern Estonia. The ceramist was also from the south, next year comes from Tallinn. No one has left. Only one had to be replaced as he started to sell some Lithuanian and Polish bauble.

Do you have also crazy ideas?
One idea is considered quite crazy by the heritage conservation. In our opinion the northern yard should become the quarter of craftsmen of the 17th century. This would also mean the buildings of that time. Heritage conservation interprets the plans as house construction. In our opinion this would be the exposition which will be taken down when the northern yard would terminate its activities. The old buildings will preserve only when they have any function. If no people would visit the castle, no one would dare to put money to its preservation.

Which historical centres in Denmark are the examples for Narva Museum?
Foremost Lejre, where the Stone Age, Bronze Age and Iron Age have been restored. One target group of visitors are the schoolchildren, as the Danish Ministry of Education supports the active studies. The children study among other things how to make porridge of the milled flour. But they are not used to it, as they eat only hamburgers and French fries at home which were not existing during the Stone Age. When they go home, they demand porridge from the parents and the parents are really worried – the children start to eat normally. Also, the chickens are slaughtered in the Danish historical centres. I do not know how this is possible in the European Union and the tourists make big eyes, but it has no negative impacts. The Danes make the history live. This is also our aim in Narva.
 

Nominees for the Tourism Innovator 2009

We acknowledge the capable companies which have developed innovative and quality tourist products and which are competitive among both the foreign tourists visiting Estonia and domestic tourists.

EESTI KONVERENTSIBÜROO MTÜ (ECB - ESTONIAN CONVENTION BUREAU)
MTÜ Eesti Konverentsibüroo (ECB – Estonian Convention Bureau) established in 2008 is the roof organisation of the conference tourism, the aim of which is to introduce Estonia at the foreign markets as the international destination of conference and increase the number of conferences held in Estonia, by contributing to the decrease in seasonality of tourism demand and growth in the number of foreign tourists. The task of the Estonian Convention Bureau is the promoting and creating of the image of Estonia as the conference country, advising the clients and assisting in planning of the events and international cooperation. ECB is the neutral Estonian-side partner for the international associations, possessing the role of advisor and information mediator. ECB is the first instance to where the conference organiser, company, association, travel agent or event marketing company located in the foreign country turns to get the objective overview of the Estonian conference opportunities.

ECB represents the companies directly or indirectly related to the organisation of the conferences and the state and local governments. Today the organisation has 25 members. For the first time in Estonia the public and private sector have gathered their resources: local governments of the largest conference cities (Tallinn, Tartu and Pärnu) and the private entrepreneurs with different interests (hotels, travel agents, event organisers, airline company Estonian Air, leisure centre Solaris) to jointly actively market the possibilities of Estonia as the conference country at the foreign markets. Also, the Estonian Convention Bureau has cooperation with the state, local government and research establishments, non-profit organisations and movements. The result is a very good sample of the cooperation of the private and public sector which has a considerable impact on the development of the Estonian tourism.

Prior to the foundation of the Estonian Convention Bureau in Estonia there has not been joint active marketing activities of the conference opportunities and attracting the new conference clients to Estonia.

Conference tourism is considered the tourism sector with internationally very high potential which in addition to the increase of export also contributes to the creating of the image of the state. Approximately 14 000 regular conferences of international associations are held in the world which constantly search for new destinations. Many of these conferences could be also organised in Estonia. In addition to the novelty as the conference destination Estonia has conference places required for organising, hotels and the advanced technological equipment.

The development of conference tourism is important for Estonia to decrease the seasonality of tourism and increase the export of tourism products. According to the recent statistics the conference tourist spends in average 565 USD a day and 2568 USD per conference (ICCA data for 2008).

The Estonian Convention Bureau is the member of the international roof organisation ICCA (International Congress & Convention Association) since 2008.

TORI KURADID
The entrepreneurs from Tori created the voluntary cooperation network “Tori Kuradid“ (Tori Devils) for providing the tourism services with the following members: KlaaraManni Holiday House (Klaara Manni), Tori Hiking Centre (Santon OÜ), Tori Hobusekasvandus OÜ, Tori handicraft chamber (Arteljee OÜ), Sookolli Diner (FIE Maigi Loite), Matogard OÜ, FIE Anne Borkvel, Rahnoja Hunting Association (Aadi Saar), Madi farmhouse (FIE Ülle Parm). The initiator of the association is KlaaraManni Holiday House. In cooperation with 4-7 entrepreneurs the integral moments of experience through the local heritage, nature and cultural story are offered to the visitors through the activities.

The joint activity is the outstanding sample of the local cooperation where the entrepreneurs cross market each other’s products to win the clients and offer them the best service with the diverse choice of services. By combining the different services (accommodation, active holiday, different activities, catering etc.) the original and varied product package is offered to the clients, being flexible at the same time and by making maximum use of the strengths of the district.

The cooperation network is a voluntary self-initiative association. The precondition of influential functioning of the network is the fact that all participants are equally strong partners who have clearly developed differentiated services and who are interested in strengthening of the sustainability of the district through the joint activities. There is cooperation with the local government to make Tori rural municipality and Soomaa district more attractive.

4 different main packages are offered which can be always also recombined by considering the clients’ wishes, weather, client’s profile etc. The packages have been built based on the topic (go rather to hell, spa of country woman, hunter’s stories in Tori bog, master class of handicraftsmen at the edge of hell) and involve the important sightseeing and natural resources of the district. The events and activities are carried out with the local guide sharing information and stories regarding the district. The guests are actively involved in all activities by enabling them to get closer familiar with the peculiarity of Tori district and at the same time experience the joy of joint activities through personal direct experience.

Different services have been connected with each other: canoe trips on Soomaa rivers (Navesti–Pärnu River), horse riding, trips with horse carriage, sauna pleasures (terrestrial or ferry sauna), development of needlework skills in handicraft chamber with instructor, hunter’s stories near Tori bog with picnic from the local caterer etc. The local raw materials are used in the food list, the providers of services are all local entrepreneurs.

The cooperation network functions proceeding from the principles of saving tourism and practices green way of thinking (sorting of garbage, notifying the guests of the principles and rules of saving use of nature, taking care of the cleanliness of the surrounding, organising the events without so-called traces).

The sale through cooperation network improves the quality of providing the service and the route of the client as the client can comfortably book all services from one service provider, regardless of the service provider the client first contacts. The feedback system has been used in client service, on the basis of which the development activities of products and services and the improvement of service quality take place.

Most of the clients are the Estonian citizens, the percentage of foreign tourists is lower as there are less of them in the rural districts. In order to increase the percentage of foreign tourists there is cooperation with the accommodation establishment of the City of Pärnu to provide the products of nature tourism to the city and spa tourist.

Modesat offers internet for the military aircrafts or express train

MODESAT COMMUNICATIONS OÜ

Innovator 2009

The title of the Innovator of the Year goes to Modesat deservedly. As the first in the world, the company solved the technological challenge to forward the broadband internet for the plane moving 1200 km in an hour.

Modesat is one of the most ambitious technology companies in Estonia which patented the efficient modem technology for radio and telecommunication solutions and breaks through to the foreign markets now with it. Peep Põldsamm, the chairman of the management board of the company and the business manager Tarmo Pihl call the company the typical development company which has dealt with the scientific and applied research and as a result found the technological solution which is to be marketed now.

There is nothing typical in the radio communication solution called PilotSync. This is both simple and ingenious at the same time. Its authors are the Byelorussian radio communication researchers and engineers of Modesat who developed the radar and rocket systems during the Soviet times. The Estonians took the patents necessary for the technology and entered the world market with this.

PilotSync is the solution of synchronising the revolutionary radio channel which makes the communication channel much more effective and resistant for use. It allows the higher data speed and reliability and is also much cheaper.

Rain, snow and leaves’ fall could have an impact on the mobile range in Estonia, as the signals could disperse, reflect, be disturbed in some other way. Though these are not influencing the communication based on Modesat technology.

“During the period when the people become more and more mobile and wish to be online everywhere at any time, the data-handling capacity of the communication channel and reliability become increasingly important,“ Põldsamm states.

The market required by Modesat can be divided into three. The main market is telecommunication. 1.9 million radio links were sold in the world in 2008 and this number can increase by estimates in the pace of 20-30 percent a year. The lion’s share of 3G and 4G mobile operators should thoroughly update their networks within 2-3 years to be able to offer mobile broadband internet. E.g. Estonian mobile operators set the restrictions of mobile internet data volume for the clients so that the overload would not incur in the network.

The trend where mobile becomes the main means of mulitmedium before the computer and the domestic internet online connections are exchanged for mobile internet can be estimated everywhere. This though presumes the increase in reliability and data-handling capacity of networks.

The second segment is satellite communication, more exactly broadband internet to the fast-moving objects such as airplanes, ferries etc.

The third market focus is the military sector including the demand for the technologies functioning in the difficult conditions. Here the interesting topic is the confidential communication. Modesat offers here also good alternative for the current complicated radio communication encryption solution – the technology of frequency hopping enables to change the carrier frequency 10 000 times a second so that the listener is not able to establish any communication.

In the fields where many have failed with tests, the employees of Modesat can confirm: they have the technological solution how to forward the broadband television signal to the very fast moving terminal, e.g. for the passenger plane moving 1200 km/h, let alone the express train racing 300 km/h.

A number of different modems can be found in the product portfolio of Modesat, beginning from the radio communication modems and finishing with the satellite communication, cable and Ethernet modems. The company established itself at the market last autumn. The current development has been as planned according to Põldsamm. The understanding of the need and requirements of the market and clients has considerably improved.

The negotiations are held with the tens of companies all over the world – from Italy, China, USA, Great Britain, Germany, Canada, India, Israel and elsewhere. Many of these are major publicly traded companies. Modesat has no need to actively sell already since spring, as the negotiation partners possess 85 percent of the market as a whole.

The company is searching the clients neither from Estonia nor the region, as these are non-existent here. The largest possible players are at sight, mainly the producers of cable modems and radio links, e.g. Huawei, Ericsson, Nokia Siemens Networks, Alcatel-Lucent and other major producers of network equipment. In the satellite and mobile communication side for example ViaSat, iDirect and the plane producers Boeing and Saab. But these are only part of the potential clientele.

The last major milestone for the company was the establishing of the representation in Israel through the partner. Thanks to the latter the cooperation is developed with one Israel’s military industrial company in the sector of satellite communication. The new technological solution and another patent application of Modesat have been already created according to Põldsamm.

Many well-known companies have shown their interest towards the Estonian company. Boeing was attracted by getting live-television to the board of the plane in the air over the Internet, then Saab was interested how to decrease the number of cables in the plane with more efficient wireless communication. The weight of the aircraft would fall with it, but the efficiency would improve.

The breakthroughs though require effort and patience. It is not easy to get to the “portfolio“ of some major producer of equipment. Põldsamm says that in this business the purchases and supply chains have been created so that the replacing of one technology supplier in the whole chain should be well justified and takes years. Thus the real development leap for Modesat is still ahead.

In addition to Estonia the company has the representations in Byelorussia, Russia, Israel and Silicon Valley in USA. The main research-development work will be carried out in Tomsk, Russia and in Gomel, Byelorussia.
 

Nominees for the Innovator 2009

These companies which have achieved economic success with the help of the outstanding innovations to thereby motivate the Estonian entrepreneurs in their companies to start, support and carry out the innovative activities are recognised.

EMT AS
EMT is the subsidiary of AS Eesti Telekom which started its activities in the year 1991. The sector of activities of EMT is the establishing and management of the mobile communication networks and systems and the production, distribution and sale of the related services. In 2008 AS EMT redeveloped 3G network which enables the fast review of the data communication, videocall and teleclips and live shows in the mobile. The number of contractual clients as at the end of 2008 was 487 thousand, the calling cards with prepayment made total of 292 thousand.

EMT submitted the innovative service of EMT – internet calls of EMT to the competition of innovator. The internet calls of EMT are the uptodate communication environment offered by EMT (such as Skype or MSN) which enables to use several services such as call, videocall, express messages and status information regardless of the geographical location over the public internet and save the expenses. The solution is based on EMT mobile number and also Elion’s phone number can be connected with the solution which enables to optimise the expenses.

In the viewpoint of innovation this is an essential step where the provider of communication service goes beyond the frames of classical business model and makes the first step towards the multifunctional solution where the use of the service is not dependent on the equipment with which it is turned to the service, as both the mobile, desk phone and computer can be used on the same bases and with the same price:

* The system always looks for the cheapest tariff for the client using the service (e.g. when calling from abroad from mobile to mobile the call is with the cost of local call of the package of short numbers inside the company; when calling from mobile to desk phone with the cost of local call between the desk phones);
* The business clients having joined the system communicate with each other free of charge (the monthly fee of 99 kroons is paid for the service).

In the viewpoint of EMT the service has the impact of improving the clients’ loyalty. The service is useful for EMT clients and foremost abroad where it is possible to call and receive calls free of charge or with the local price of using WiFi (WiFi is often chargeable abroad, but still cheaper than the mobile call). 

NOW! INNOVATIONS OÜ 
In 2008 the Belgian holding company Mobile-for was sold to the Belgian largest telecom operator Belgacom Group. 10% of the local operator company MobileNOW! LLC was acquired in USA.

The company submitted the parking system ParkNOW! ParkNOW! to the innovator competition which is the diverse digital system enabling both mobile parking and other digital solutions of payment for parking, incl RFID, NFD, Internet:

• RFID (Radio Frequency Identification): by using RFID-stickers on the car, the entering and exiting of the car from the parking area is automatically fixed and the payment for parking is made automatically from the account of the mobile phone;
• NFD (Near Field Detection) system: RFID receiver in the mobile is directed to NFD-sticker by fixing the beginning and end of parking in the given parking area, the payment of invoice is made automatically from the account of the mobile phone.

  The company was established in 2003, the activities were started in 2006. The main activity of the company is the development of the management systems of digital permits and selling of licences in different countries. Foremost this means the development and sale of digital parking organisation systems. The sales of the company was 4 million kroons in 2008, 5 persons were employed.  

The system has been created by considering both the administration, reporting and analysing needs of the parking operator (e.g. city) as well as the comfortable use by the end users. Major focus has been placed on the flexibility of the system, i.e. this can be relatively easily, fast and cheap implemented in any business, legal or technical environment. E.g. the physical activities (installation of parking automats, collection of coins etc.) will be changed digital, at the same time in the poorer countries the parking regulation can be started without major investments. This is the main product of the company and provides 99% of the company’s sales. At the moment there is business in already 7 countries and the negotiations are held in 20 countries. As to the number of users ParkNOW! has risen among 5 world leading mobile parking systems within three years. In addition to the increase in the satisfaction of the consumers ParkNOW! contributes to the environmental thriftiness (the providers of parking service require no expensive additional investments for the acquisition of parking systems or additional human resources for the service control).  


  

Boom company which did not get greedy

FLOW SERVICE OÜ

Developer of the Year 2009

Flow Service rendering services to the food industries sailed along with the success of its clients during the boom, but did not get greedy. Differently from many other Estonian companies having developed very fast during the economic boom and which have taken too many risks, over-invested and are today in difficulties, Flow Service could stay cool, heading now more vigorously to the Latvian market.

The company, established just a couple of years ago, deals with the production, installation and maintenance of the equipment for the Estonian, Latvian and Finnish food industries. It also deals with the moving of such equipment. The loyal customers of Flow are major players, mainly the milk and beer industries - for example, Olvi group companies A. Le Coq Tartu Brewery and Latvian Cesu Alus, also Coca-Cola HBC and the companies of Tere group. One of the major clients of the recent times is Maag Piimatööstus.

Liisi Laanet, the managing director of Flow Service, says that the company carries out the “all-in” works. The company organises everything from the design of the equipment or solution up to the automation works, launching and maintenance. If someone needs the connecting of the equipment of the filling workshop, cabling of ventilation, mounting of the equipment of the yeast preservation and growing room, exchange of the pumps of the washing line, replacement of the covers of the cheese tubs or reconstruction of the meat loading line, Flow is the right place to turn to. Flow also helps to organise everything if the bottle washing machine needs to be demounted in Holland and moved to Estonia as was required by Coca-Cola. For example, the brewer has been moved from Latvia Cesis to Germany. The latter was taken into parts, put on the truck, taken to Germany and there also mounted.

“We pursue to provide quality and as integral solutions as possible,“ Laanet says. Different solutions – more expensive and cheaper, more effective and less effective – are offered to the client. There is quite a pile of different product catalogues on the office desk of Flow. “The client says what it wants. We find the solution, offer the variants and complete these,“ Laanet says.

The main cooperation partner is one of the world’s leading providers of special solution of food industries - the Swedish major group Alfa Laval which has representations in Estonia and Latvia. Flow also deals slightly with production, by making the pipe collectors, smaller containers etc in Tallinn.

What is most important in this business? “Reliability,“ Laanet says. If you prepare an unreasonably big invoice for the client, it would search someone else as a partner next time. Also, all equipment should be faultlessly functioning so that the producer would not lose money. But the highest risk? As the works are project-based, the next project might not come.“ The projects planned long in advance could be unexpectedly changed or cancelled, depending on whether the plans of the industries are successful. Up to now the company has been operating only in the period of economic growth. Now one should adjust to the new situation.

“Our growth is partly due to the success of our clients. They have been able to invest a lot. If they are doing well, so are we and vice versa,“ she says. The company has not experienced considerable fall in work volume. In the opinion of Laanet the reason is that no one leaves the food products non-purchased, whatever the circumstances might be.

One of the most recent plans of Flow is to enter more powerfully to the Latvian market. The Latvian economy is still in deep crisis, but this is just the best time according to Laanet. No major risks will be though taken in the south.

Flow Service has twenty employees, the majority of whom are the locksmiths and welders. All employees are the specialists of their field who often participate in the trainings and visit international fairs to be well aware of the most recent solutions.

Works performed by Flow Service

• Norfolier AS – cabling of oxidizer and ventilation
• Värska Vesi AS – connecting the equipment of the new filling workshop, construction of water treatment systems and tube plates, installation of mixers
  
• Cesu Alus – matrix for 8 measure tanks, reconstruction of mixer of soft drinks, distribution knot of syrup, construction of the new CIP line and reconstruction of the old ones, expansion of brewing cellar – 8 new brewing tanks including the reconstruction of the old part, installation of GEA beer separator, installation of the new labeller for PET line, changes of conveyors and installation of roll tracks in bottling line of the glass bottle, installation of the equipment of the yeast preservation and growing room.
  
• A.Le Coq Tartu Õlletehas AS – moving and installation of the mixer, installation of the new PET line, mounting of the transporter tracks, reconstruction of mixture
  
• Kalev Paide Production Unit – construction of CIP line
  
• Coca-Cola HBC AS – exchange of the pumps of the washing line of the glass bottle
  
• Delimeat OÜ – reconstruction of meat loading line, platforms
  
• Steelmans OY – replacement of the covers of the cheese tubs of Valio Lapinlahti
  
• Pärnu Õlu AS – reconstruction of the water collector and brewing tank cooling system
  
• IMCO – moving of Idealplast from Sweden to Tallinn including installation
  
• Põltsamaa Feliks – installation of pasteurization and washing centre
  
• Põlva Piim – pasteurization connection pipes, connection pipes of mixer, connection of containers
  
• Saarek AS – connection of the filling equipment of kettle and containers, pipelines of the washing centre
  
• A Le Coq Tartu Õlletehas – fittings of the new logistics centre
  
• Coca-Cola HBC Eesti AS – dismantling of the bottle washing machine and transport from Holland; construction of the new CIP centre
  
• Cesu Alus – installation of the new brewer
  
• Bayerische Löwenbrauerei Passau – moving of brewer from Cesis to Passau
  
• Maag Piimatööstus AS – construction of CIP centre and installation and launching of the production line of cottage cheese.
  

Nominees for the Developer of the Year 2009

This category pays recognition to the lately started and well-developed companies which are sustainable with fast growth and deal actively with product development. The third year of operations is often the critical period in the company’s development and the operations of more than three years have mostly longer term success. Therefore the state and business organisations require to present the companies which have appeared to be fast –growing and developing within the first three years of operations and which can be considered sustainable. The specification of the winner helps to bring the new small company having entered the market most successfully to the fore.

GSM VALVE OÜ
GSM Valve OÜ provides wireless home and car alarm systems which notify the client and the persons appointed by it of the emergency situations by mobile communication. The GPS-based logistics services are provided as the second business branch.

In case of emergency the security system calls to the contact numbers set by the client to arouse interest and the SMS arriving to the mobile phone includes the exact information from which sensor the signal came from. Thus the client knows exactly what kind of room and emergency (movement, smoke or other sensor) is dealt with in his house and also knows how to respond.

The company operates since 2005, having indicated considerable growth each year. The competitive advantage of GSM Valve OÜ is the good product, right timing and intensive sales policy which has made the company well-known with short time and it is taken as the experienced partner at the market. GSM Valve OÜ provides services all over Estonia, also it has subsidiaries in Latvia and Lithuania where the leader position will be achieved with a couple of years. In Estonia and Latvia GSM Valve has over 4500 private clients and over 300 business companies using GPS-logistics service. GSM Valve OÜ used the grants offered by Enterprise Estonia in its development – consultation grant, start-up company grant, export marketing grant and the development personnel secondment grant.

KUUSK OÜ
Kuusk OÜ was established in 2005 as the company providing the event marketing services. Aivar Kuusk, the founder, manager and visionary of the company, had operated in the sector already for more than 10 years by that time. Kuusk OÜ has developed stable, having preserved the loyal clients and by establishing the dignified moments for the prosperity of their business. The secret of the company’s success could be the good knowledge and perceiving of one’s clients, also devotion and conviction that just that work should be done that you love.

The sales of Kuusk OÜ reached 12.7 million kroons in 2008 and gained the profit of approximately 0.5 million kroons. The company provided work for three employees.

 1EUR = 15.6466 EEK; 1 EEK = 0.0639 EUR; based on 2008 data
 

Bo Henriksson: “Estonia is still an attractive economic environment“

ABB AS

Foreign Investor 2009

Bo Henriksson, the managing director of ABB Baltikum, believes that in spite of everything Estonia is continuously an attractive economic environment. Though, even more should be contributed to the innovation and education and the relations with Russia should be improved.

ABB takes the titles of the competition of Entrepreneurship Award every year. What do these titles tell you?
The company’s owners and managers continuously believe in investing to Estonia and we have good employees – nice skilled workers, capable specialists, engineers and capable managers who create sufficient added value. ABB has invested to Estonia more than a billion kroons within 17 years, the major part of it within the last seven years. We produce in four plants in Estonia which employs the total of thousand people.

In annual FT Global 500 ranking list of the business newspaper Financial Times which lists the companies according to the market value, ABB group is located on the 123rd place with the market value of 32 billion dollars and leads in the sector of industrial technology. No one among 122 companies in the table above have comparable production or development activities at the Estonian market.

How have the economic crisis and the abrupt amendments of law in Toompea influenced the activities of ABB?
We are mostly influenced by the processes at the world market –approximately 70 percent of the sales is related to export. The investments of our private clients are to a large extent dependent on the balance of the money market. Some of them have postponed their investments. The situation is much more stable in the business sector related to the establishing of the transfer and distribution network. This year we somewhat decreased the production. The record result of 2008 (the sale of 2.6 billion kroons) will not be repeated this year or also next year. But since 2010 the situation should become stable. This year our investments would obviously remain smaller than last year which reached 260 million kroons. I do not believe that the processes in Toompea could damage the economic environment so that this would have an impact on our activities. Only political earthquake, replacement of democracy with totalitarism would make ABB to terminate the activities of its plants here. The situation where the state would decide to nationalise ABB. But maybe not, as the group functions successfully in the conditions of different regimes and economic models.

If you could be the Estonian prime minister now, which five decisions were the first to be made by you ?
In order to change the economic environment I would warm up the relations with Russia. This would provide many new opportunities. I would also review the current policy of education, by contributing more to the engineer-technical specialties. I would support more innovation and export, by offering export benefits. Export is one of the main economic engines of Estonia. Also, I would search more compromises which would create higher political stability.

Do you believe that Estonia is continuously an attractive economic environment in the future?
Surely at least as attractive as up to now and this thanks to the flexible economic policy and open business climate. The government sector has not hindered the development of economy, the indicators of freedom of economy stay high. The favourable economic geographical location and closeness with the key markets is also important for us. The Estonian labour market offers many choices today, by enabling to respond operatively to the changes. The Estonian employees have a good qualification and knowhow, also the specific cost advantage in the region of the Baltic Sea. The high taxation of labour – one of the highest in Europe – is a serious risk. The government should deal with the latter, otherwise Estonia soon becomes the country with high price level which is not able to compete.

ABB is a mammoth group. What is the role and importance of the Estonian unit in its hierarchy?
ABB operates in approximately hundred countries, i.e. practically in half of the world’s countries. 120 000 people have been employed in the group. Estonia makes a small part of it. But we have fulfilled the objective of ABB, according to which it is essential to achieve the strong position at all markets where we operate. Thanks to our high percentage of export we are in the stronger position in the group. I would bring the plant of electrical machinery and industrial electronics to the fore where the considerable part of the wind generators and frequency transformers for the world’s leading windmill producers and developers of windparks is produced.

What is the starting point of ABB’s more forceful direction towards the renewable energy?
Our vision is to be the world’s leading energy companies and help the clients to use the electricity in a more efficient and sustainable way. According to the estimates the electricity consumption increases by 2030 from the current level by about 100 percent. At the same time the potential of energy saving is enormous. The losses could reach up to 80 percent. ABB’s technologies decrease the losses up to 30 percent. The greenest energy is the saved energy. As to renewable energy ABB is represented both in hydro, wind, sun and wave energy. For example in China, in the project of the Three Gorges Dam, ABB built the network connection, supplied transformers to the US wind energy company, provided the launch-ready solutions for the sun energy station in Spain and the specially adjusted generators for the Portuguese wave energy company. The potential of renewable energy is immense and there could be no losers wide-scale in the process of increasing its percentage.

What else is important for ABB?
Our main competitive advantage is innovativeness. ABB group has in the recent years invested to the research and development activities more than a billion dollars a year. Approximately 6000 researchers and engineers work with the new products and solutions in cooperation with 70 universities. For example, ABB invented in China how to transmit the hydro energy to the distance of 2000 kilometres. In India, where the reliability of electricity network with 53 million consumers was to be improved, ABB built so-called smart network which regulates the load in real time. ABB has created several revolutionary technologies which shift the current understandings beyond the limits of technologies. Lately the switchgear which allows more than million volt electricity was completed. This is the new record of voltage level. The importance of our products is hard to be explained to the regular consumer. The definition frequency transformer says obviously a little. But if we compare the car’s gear shift system - if the gears cannot be changed and the driver would push the gas constantly to the full, it would end bad. The same applies to the electric engines. The regular engines without additional equipment work always on full capacity, but up to 70 percent of the energy of the engines can be saved by varying the speed of the engine proceeding from the actual need of energy. Today only 5 percent of the engines have been equipped with the energy-saving frequency transformers.

Nominees for the Foreign Investor 2009

We pay recognition to the companies which have specially outstood with the volume of direct foreign investments made to Estonia and the contribution to the Estonian life of economy through the involvement of new technologies and creating of jobs with high qualification.

WENDRE AS
AS Wendre was established in 1996. The owner of the company is Peter Hunt, the foreign Estonian residing in Sweden, through Wendre Scandinavia AB.

AS Wendre produces the blankets, porolone products, pillows and mattresses. The company’s production units are located in Pärnu and Vändra, also the plant in Poland and sales representation in Germany belong to Wendre.

Several development projects are in operation, by which the production will be changed more complicated and the choice will be expanded. The company has constant active product development, many components are purchased from other Estonian producers, by providing thus work to them. About 96% of the production is export.

Wendre is well-managed and balanced developing company which is not fulfilling only procurement works, but deals with the independent product development and sales work and new development projects – in 2008 more than 5 million kroons were invested to the new products and technologies. Also, the company proceeds from the environment-saving production (waste management project is planned). It is also important that Wendre would provide work for approximately 700 employees.


JELD-WEN EESTI AS
JELD-WEN Eesti AS is the part of JELD-WEN Door Solutions which in its turn is the part of the world’s largest door and window producer AS JELD-WEN.

JELD-WEN was established in 1960 with 15 employees as the small company in Klamath Falls in Oregon State in the western coast of USA. Today JELD-WEN produces both windows and doors and the company has production units in 22 countries by employing more than 20 000 employees. The main products of the plant located in Rakvere are the inner and outer doors and doorhandles. More than 700 persons are employed in total of three shifts in the plant.

The company located in Rakvere was established in 1997 by the Danish company Vest Wood AS. In 2006 the American door and window producer JELD-WEN Inc. purchased Vest-Wood AS and in October 2007 Vest-Wood got the new name of JELD-WEN Door Solutions.

The sales office of the Baltic countries is also located in Rakvere which markets the products of JELD-WEN AS under the trademarks SWEDOOR and JELD-WEN. The sales of the company reached approximately 650 million kroons in 2008 and the profit 53 million kroons. The work is provided to more than 700 persons by being one of the major employers in Lääne-Virumaa.

 1EUR = 15.6466 EEK; 1 EEK = 0.0639 EUR; based on 2008 data