Impressive expansion plan of the Teltonika company group: 11 new projects and 33.000 employees
In 2030, 33.000 employees worldwide and a turnover reaching €3.5 billion in 2030 – the founder and president of the Teltonika company group Arvydas Paukštys shares his plans for the future.
He reveals his intention to implement 11 projects in the near future, including the construction of a semiconductor fabrication plant in Lithuania. After elaborating on what new jobs to expect, A. Paukštys estimates that by 2030 the company group will invest around €3.7 billion in Lithuania alone.
The pandemic and supply chain disruptions have actually benefited the business, he says.
“We have doubled our turnover this year,” he says frankly.
– Recently businesses worldwide have struggled with tough challenges related to COVID-19. How did your companies fare? Did crisis have an impact on you?
– We are always waiting for a crisis so that our company group could grow. And this crisis wasn’t an exception. In 2020, we grew by 40–50%, and in 2021, our turnover increased by 101%. In 2019, it was €70 million; in 2020 – €110 million; in 2021, it will reach €215 million.
– What was the cause of such growth?
– There were many reasons for our growth. First of all, the supply chain was disrupted. The shortage of components, especially semiconductor chips, led to huge problems for all our competitors.
We have always had enough stock. And for 20 years, we’ve had a very friendly relationships with our suppliers. That is why we were able to secure supplies when others could not.
– Is that how you succeeded?
– Yes, we got the components, and we were able to sell twice as much.
Certainly, we got only half of what we needed. Maybe we could have tripled our turnover, but the component shortage was too severe, and suppliers could not ensure on-time delivery. This year and next one will still be disrupted in terms of supply, but we will regard it as an opportunity to grow. I think the pandemic helped us. Every crisis shows what you are worth and how prepared you are. A year ago, in August, we reorganized Teltonika into five separate companies. Each company’s manager was empowered to operate completely independently. This helped us to increase our speed of operation, while regional expansion allowed us to double our growth. We planned to grow by 70% this year and increase our turnover to €175 million, but we performed even better than expected. In addition, our team grew rapidly. We recruited 850 new employees. Last year we had 1200 employees, and now this number will exceed 2000. The agreements are already signed, and the new teammates are starting their work. I hope that next year we will welcome 850 more talents. While others say that they face employee shortage, I can’t say the same.
– During the pandemic, you have started the production of artificial lung ventilation devices. Was it a reaction to what was happening in the world amid COVID-19 or a planned project?
– It was a complete impromptu. We had planned to start producing bracelets that measure the pulse, but seeing such a huge shortage of lung ventilators and the situation in Italy, we thought that maybe it's okay if we invest a million euros in a pulmonary ventilation machine. And if we don't succeed, we'll just throw it in the trash, but we will at least take the risk of producing it. We managed to create this device, and in the state of emergency, it can be manufactured and used. However, when there is no such state, this device must be certified like any other.
– Does it mean that you perceive such challenges as opportunities rather than difficulties?
– We’ve found opportunities even during the 2008 crisis and in 1998 as well. It is said that we always have a chance to stand up. And we don’t need to change what’s out of our control. Difficulties are the same for everyone. If there is a shortage of components, then everybody experiences this shortage. However, if you work and search for a solution, you always find it. There is no problem without a solution. There’s no need to panic. Two years ago, when the pandemic just started, I wrote a letter to all my employees and asked them not to worry because all salaries would be paid on time, and together we would achieve some unreal results. And so it happened.
– At the moment our political relationship with China is somewhat strained, and it has an impact on business. The supply chains are still disrupted, and the prices are rising. What are the biggest challenges that your company is facing right now?
– The greatest challenge for us right now is still the shortage of chips and components. We have no guarantee that we will receive enough components in 2022. Therefore, observing the risk of the world splitting apart, with China, the USA, and every other country separately, we look for possibilities of manufacturing components in Europe. Of course, we are working with China, Taiwan, and many other countries, but today our investment plan is about how to manage the risk of not receiving components in, say, 10 years. The investment is definitely significant, and we are not capable of implementing it in 2 or 3 years, but we will accomplish it by 2030. Today, our total investment portfolio of all planned projects amounts to €3.7 billion.
– With regard to eliminating the risk of lacking necessary components in the future, are you specifically referring to the construction of a semiconductor fabrication plant?
– Yes, but our plans involve 11 projects. First of all, we have started building a Teltonika technology centre in Molėtai. We intended to build it in Liepkalnis, Vilnius, but we lacked enough land. I am myself from Molėtai, and there is no industry there. As I sometimes joke, there is only SoDra, which pays the benefits, and Maxima, which collects them, so we need to step in. The average salary at the Teltonika company group is €4.000 before tax. Imagine if those €4.000 would be paid in Molėtai too. Then 500 jobs would bring about €20 million to the town every year. This is the total budget of Molėtai. Everything would revive. So, this social project is the only hope. Of course, there are no employees there; we will need to train them. But we look at it altruistically; we do it to help people. The investment in 10,8 thousand m2 building with offices, production facilities, and laboratories will amount to €34 million. Networking equipment and telemedicine devices will be manufactured there.
On Saltoniškės street, we are building our headquarters with 500 workplaces. The total investment is about €26 million. This office will connect all Teltonika’s offices around the world. Another large construction project – Teltonika High-Tech Hill building complex in Liepkalnis – will start in March. The 64 thousand m2 area will locate laboratories and offices for 2.000 employees. This complex will be connected to a 28 thousand m2 electronics production plant, where 700 employees will work. The total investment for the period 2022-2024 amounts to €221 million. With the Ministry of Economy and Innovation, we are looking for opportunities to set up a plastics manufacturing plant, where 100 people would work, and it would need a €20 million investment. We are planning to establish a 40 thousand m2 PCB manufacturing plant with 700 jobs. It would need an investment of €110 million. We are planning to build a Teltonika High-Tech Hill complex in Kaunas as well. 1000 employees will work there. The investment is €90 million, and the area is 30 thousand m2. We also want to set up a laboratory for semiconductor chip development. The investment would be €40 million, the area – 8 thousand m2, and the number of jobs – 200. In 2025, we intend to start the construction of a €500 million semiconductor assembly and testing facility. It will need a 30 thousand m2 territory and will create 500 jobs. In 2026, we would like to start the construction of a semiconductor fabrication plant. It will need a €2.2 billion investment, a 100 thousand m2 territory, and 1500 highly skilled employees. Anykščiai could be the site of a silica sand refinement plant, which would enable the full chip production cycle. This would still require around €460 million. We are currently considering this possibility. All in all, by 2030, we will have invested around €3.7 billion. We will own a 388 thousand m2 territory and have 8.200 employees. And I am talking only about Lithuania here. Without a doubt, we are planning to have more offices outside of Lithuania as well, where 15.000 employees would work and sell our devices. We estimate to have 33.000 employees and a €3.5 billion turnover by 2030. We are exploring ways on how to create €2 billion of added value to Lithuania every year starting from 2030. It would amount to around 5% of Lithuania's GDP
– Regarding the semiconductor plant, do you know where it will be built? Is there a plot of land provided?
– We are addressing this question together with the Ministry of Economy and Innovation. There is vacant state land in Liepkalnis, but a prison is planned there.
If the prison is more important than the semiconductor plant, then we will search for another place. You know, you can’t bring 1.000 highly skilled workers to the countryside, so the plant has to be built in Vilnius or Kaunas.
– What is and will be the role of Taiwan in regards to the intended construction?
– At the moment, we are doing everything on our own, but if anyone, like Taiwan, shows their intention to help, we will consider it. In the meantime, we are cooperating with them by buying their components.
I think we will be buying them both from China and Taiwan for a long time to come. The factory won’t be built in a year or two. So, we will have to cooperate for another 5-7 years.
To build our manufacturing plant, we are consulting with European companies.
– You have mentioned huge investments, but current times are not calm. Aren’t you afraid of taking such risks?
– None of our projects is done with taking risks. Where is the risk?
Now we are building with our own money. We are not in debt. We can raise funds from the bank. If you really want to do something quickly, there are investors who would be happy to contribute to your projects. I don’t see any risk at all.
The question is, however, how fast you can implement it. It is important to know what you are doing, where you are going, and what you will do after you have done this and that. That's consistency.
We didn’t come up with anything just because we want to – it’s all out of need. We do it because we need to, and we can’t do it without those factories.
– At the beginning of our talk, you mentioned that the company group doesn’t experience any problems with finding employees. In you opinion, what is the reason?
– There are a lot of people who want to work for us. I’m not saying there are too many or not enough. Maybe our salaries make people want to come and work at Teltonika. For us, there is no major shortage. We recruit 800 new people a year.
In Lithuania specifically, it may be more difficult because there are not enough professionals in our field. Therefore, we grant scholarships for students who choose engineering studies.
Still, we will have to look further, as it will be difficult to gather such a group with Lithuanian resources alone.
Nonetheless, I see no problem with that. Maybe the English or the German will come here to work for us. We pay the same salaries as in Europe.
– You mentioned that the average salary in the company group is €4.000 before tax. What are your future plans in terms of salaries? Do you have a growth target?
– The goal is €5.000 on paper.
In 2017, we were paying €1.800 before taxes. I have gathered all the managers and said: “Let's make the average salary €5.000 in five years.”
They thought it was insane, but we almost got there. I believe that next year it will be €5.000. My condition is that the salary increases as much as productivity.
– How do you see the company’s activities in the long run, e.g., 15 years from now?
– At the moment, we are working together with researchers and exploring the possibilities of 6G technologies. Then we will research terahertz frequencies, sensors, various radio-controlled models, and satellite networks, which today are not fully mastered. There is plenty of possibilities.
Robotics, for sure. Self-powered objects are not far off in the future, and Teltonika will probably work on such flying or driving devices. It is all in the hands of talents. I only give the resources and the authority to act.
Author of the article: Raminta Rakauskė