Long-time head of the Estonia Piano Factory and pianist Indrek Laul tries to strike a balance between business and art, while he always goes for the latter if forced to choose. “We are not after profit at all costs as we cannot compete with Asian manufacturers and their low costs anyway. There are many ordinary pianos in the world, but we want to make instruments every single one of which is a work of art!” he says.
The Estonia Piano Factory has a very long history. How have you fared in the coronavirus crisis?
It has been a singular time. Demand for our instruments spiked in the USA that is our core market in January. Next came March and with it an unprecedented situation in America. Our San Francisco dealer told us that the police came by to make sure the shop is closed. They were forbidden from opening doors and showing their instruments to customers even on the weekends! Imagine being told you have to close your own shop after growing up in free America!
March was both special and insane, which is why we tried to dial things back to weather the storm. I received a call from our dealer in Washington in July telling me they were selling one or two pianos a day! People watch TV for four hours every day until they just cannot do it anymore and find that it would be fun to play the piano for a change.
That is to say our business has been a real roller coaster lately.
Did you work on product development, a new piano when sales channels were closed?
Product development is indeed underway. We are currently putting the finishing touches on a new walnut root instrument. It is like a Wiiralt painting with beautiful shapes created by the natural contour of the wood. Once we apply the lacquer, it really comes alive!
The turnover of the piano factory has been very stable in recent decades. Does anything ever change in your business?
What matters in the piano business is the league you’re in. That in turn is determined by what type of pianos you make. We were selling three models up until 2010. We introduced two new larger models in the two years that followed, the 210 and the 225 (length of the piano in centimeters -ed.). Even though we could build smaller models, like the 168, four times faster and in greater numbers, we decided in favor of the larger pianos as it took us to the big boys’ league so to speak. These are instruments for true pianists.
It does not seem to be reflecting in turnover. Growth is not what you’re after?
Ours is a field made up of art and music on the one hand and business and finance on the other. We need to strike a balance. One cannot be too much of an artist or a businessman.
Which way do you usually lean?
I must say that the art and quality matter so much that business comes second. We are not out for profit no matter what because we cannot compete with Asian manufacturers and their low costs anyway. There are many ordinary pianos in the world, while we only want to make excellent ones! We listen to and check every single piano by hand. Every piano must be a work of art in itself! Quality is paramount, while I hope we can handle everything else too, especially the financial side of things.
You mentioned Asian manufacturers. Have they taken an interest in you? Or is running a piano factory a matter of values and principles, meaning that selling it is out of the question?
Yes, the latter half of your question includes the answer. There have been prospective buyers, but we are not looking to sell. I believe I work in a very exciting and beautiful field – making traditional grand pianos.
Let us talk about USA that is your main export market. Are you still the largest European piano manufacturer there?
While we have tried to maintain that position, the coronavirus crisis has created so much confusion that I cannot really tell you where we stand. Indeed, the States have been our most important market in the last few decades. We have sold thousands of pianos there. I highly recommend businesses to try that market out.
You are also the president of the American Chamber of Commerce Estonia (AmCham Estonia). How many Estonian companies have what it takes to make it there?
I definitely recommend trying it out. It is a vast market. It is good to do business there. I know that Nortal, Cleveron, Datel and Transferwise are doing great in America. Their success could encourage other Estonian firms. I am also very glad that Enterprise Estonia (EAS) sent James York to be their east coast representative in USA late last year.
How are looming presidential elections affecting business?
I can give the piano manufacturer’s perspective. Uncertainty is not helping sales in our segment. I received a letter from out Atlanta dealer this morning (the interview took place on Wednesday – ed.) telling me that customers are postponing orders because they want to wait for election results. Buying a piano is a major decision as it is a luxury product, which is why people prefer to wait for clarity.
How would you rate our government’s effort at containing the coronavirus crisis? How well have we fared?
We had an impressive period in spring when for a month and a half it seemed the coalition and opposition almost managed to work together, at least as viewed from afar. It was clear that it was a once in a century crisis, which is why people stuck together and thought about how to move on. We have now returned to the status quo in time for state budget deliberations.
Did the Estonia Piano Factory ask for state aid?
Yes, we took advantage of the Unemployment Insurance Fund’s salary support instrument. While we did not lay off a single person, sales disappeared in USA in March. The measure went a long way. I am grateful and would commend the government for the decision.
What should Estonian companies learn from this crisis and where are greater efforts in order?
Export is very important. And my recommendation would be to export to major markets, such as USA, China and Australia. Once the initial effort and investments into introducing oneself are made, there is immense potential.
I hope that the previous crisis taught entrepreneurs to prepare for tough times. You need to build up reserves and be prepared to weather a slump. How well a company is doing today does not depend on what they did in July or August last year, it depends on what they’ve been doing for the past decade.
Many failed to save up and went to the state for help instead?
I do not want to be critical, but entrepreneurs are also responsible for preparing for crises. One cannot be so naive as to hope the economy will only grow, even though quantitative easing might create this impression.
For example, we decided to increase our stockpiles during the pandemic. It is the opposite of what companies usually do in a recession. You usually dial back production to have greater cash reserves. But the crisis made us think what would happen if some of our partners were unable to fill orders. A piano has 12,000 components and missing only a few means you cannot assemble the instrument. That is why we moved in the opposite direction and created additional stock.
In addition to product development that I already mentioned, we are also working toward new markets. We are working with Singapore and we also want to sell more to Japan.
Do you also sell pianos in Estonia?
The Tabivere Basic School that also includes a hobby school was opened just last week. They got an Estonia 210 for their assembly hall. I was so glad to hear others say how beautiful it sounded. We will soon be shipping a piano to the Tartu Municipality Music School and another to the Haapsalu Music School. But we also have private clients. The trend was the same here as it was in the States: people started playing the piano more often, taking private lessons and ordering new pianos.
You are chairman of the supervisory board of the Church Fund that collects donations for the Lutheran church. Are companies and individuals forthcoming with donations these days?
I am surprised by the sheer number of entrepreneurs who want to contribute and see the church as part of Estonian culture. Churches host so many concerts and cultural events… It is truly breathtaking to listen to beautiful piano music in a picturesque church. It is divine and worth making the effort for!