CEO of Eesti Talleks Kaido Padar, who also chairs the state company supervisory boards’ appointments committee, talks about why he decided to quit his job during a difficult time and why he believes diesel cars will triumph instead of electric ones in the near future.
Eesti Talleks is involved in a lot of things, ranging from real estate to car sales and oils. How has the crisis affected you?
My good friend Jüri Mõis said a few weeks ago that executives should be walking around with grim expressions these days as difficult decisions are needed in terms of layoffs and cost-cutting. I have managed it.
Car sales have taken the severest hit. The turnovers of City Motors and Fakto Auto were down 80 percent in April. When I was asked how much car sales would shrink toward the start of the year, I suggested it would be around 25 percent. Today, I believe the annual hit will be as big as 60 percent. That’s tough.
The other side of the business is real estate. We have 240 tenants with whom we have been seeking arrangements. We will press on with our new Mustamäe tee campus despite everything. (A new business and residential campus the cost of which is around €150 million – ed.)
Let us talk more specifically about car sales. What other trends can be seen?
I think that talk of diesel cars disappearing is nonsense! On the contrary, I sincerely believe diesel cars will make a comeback in the coming years. They are considerably less environmentally harmful than gasoline cars. They are also more efficient as they have better fuel economy. It matters to people in a crisis. People will stick with their tractors! (Laughs)
What about electric vehicles that you have been promoting?
We sold two Nissan Leafs in April. I believe that the crisis will simply postpone the wave of electric car sales, I still believe it’s coming.
Another trend I see is the used cars market picking up. We are asked whether we have second-hand cars increasingly often. The rule of thumb is that one used car is sold for every three new cars. I’m sure this ratio will change now, perhaps not to 50 percent, but it will change. Even if Estonia will have 100,000 unemployed by fall, people still need to drive.
How many people have you laid off and what have you cut at Talleks?
I have laid off over a thousand people in my life. It’s definitely not something that gives me joy, but it needs to be done. We laid off 13 percent of staff at Talleks when the crisis began. We cut the salaries and bonuses of everyone else. Cuts were made across the board.
Some of our employees have turned to the labor dispute committee as they find we have mistreated them and owe them money. I can assure you that as an employer, I never save at the expense of people and rather try to make their final settlement as motivating as possible.
We could say the cut has also hit you as you will be leaving the helm in August. Why are you leaving Talleks?
I’ve been taught that a good executive always leaves their own ambitions outside the door, no matter how complicated the situation, and concentrates on making sure the company thrives.
What happened at Talleks was that we created a new strategy for the company two years ago. We decided Talleks would concentrate mainly on real estate. The focus will be on developments in the coming years, especially considering the Mustamäe tee campus. However, I am no construction expert. We could say I have been hacking away at the very branch I’m sitting on. Talleks has been around for 75 years, and if we want it to be there for another 75, it needs different competency. We could say I laid myself off during the toughest of times.
Does the thought of finding yourself out of work during a crisis frighten you?
It does a little. I’m only human. Luckily, I have had some phone calls and meetings, while there is still time left until August 1.
You launched ferry traffic between the islands and the mainland for the state. What is on your mind, looking back?
I sometimes visit a good friend of mine who lives in Leisi Municipality in Saaremaa. I must admit that nothing clicks anymore when I board a ferry. Sailors and other staff whom I worked with very closely for a time no longer even recognize me! Therefore, I’m not keen on running TS Laevad again. (Laughs) You seldom go back to a book you’ve already read as there are new and exciting ones out there!
What kind of business would you like to run?
I have worked in the backrooms of three Tallinn mayors (Jüri Mõis, Tõnis Palts and Jüri Ratas – ed.), advising them. I remember thinking when I quit that being an adviser is the best. You just give advice while being responsible for absolutely nothing. That is not possible as an executive! You must make decisions and take responsibility always.
We built TS Laevad up from scratch, we closed 200 post offices and laid off 1,200 people during my time at Eesti Post. I have plenty of experience and I’m sure I’m needed somewhere.
The field doesn’t really matter to me. The important thing is to have a good relationship with the owner and a shared vision. Secondly, I need to feel useful where I work. And finally, the work must be exciting. That said, I do not miss the adrenaline of the ferry business.
What are the principles you deem important as an executive?
Keep your promises. Always talk to colleagues as equals. Ask people how they are doing. Encourage and inspire!
Have these principles changed during the crisis?
Rather, I have been talking with employees more often during the crisis. I send them letters with my ideas every week.
A leader is revealed in a crisis. Everyone wants to be an executive when the economy is booming, to take pretty pictures and pose with colorful charts. A true leader shows their colors in a crisis, in how they communicate with employees and the decisions they make.
You are the head of the Appointments Committee. What are some of your observations there?
It is very time-consuming. None of us thought it would end up taking up so much of our time.
The second observation is that people want to help the state. Even in situations where candidates are running or own another company that needs rescuing, they still want to help their country. The pay (between €500-2,000 – ed.) is not the primary motivator.
Thirdly, I would say that all the horror stories told about what would happen if politicians would be allowed on the Appointments Committee (Reet Roos and Argo Luude – ed.), that it would become politically motivated or biased, are absolutely not true. The entire committee is highly professional and hardworking!
A lot of noise has been made lately over Estonian Railways’ decision to pay its executive bonuses exceeding €20,000 during the crisis. Do you think it was the right call?
The important thing is to have an agreement in terms of what merits a bonus. It is called a performance map. If an executive hits those targets, the company must honor the agreement and pay out the bonus.
A crisis changes nothing in those terms. Perhaps the company had a record year! It is difficult for me to comment on Estonian Railways directly as I don’t know the indicators bonuses were based on. All I know is that the state subsidies have been growing while goods volumes have been shrinking from one year to the next.