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Massive order from China intimidates Estonian firms

  • 2004-12-22
  • Baltic News Service
TALLINN - AS Ritsu, a leading manufacturer of log homes, announced it has received an enormous order from China that would require the firm to combine forces with several other log home-producers to carry it out on time.

The Aripaev business daily reported that a framework agreement signed by Ritsu with a Chinese construction company in April this year calls for Ritsu to supply 200 log houses with an approximate floor area of 150 meters each over the course of two years. The houses will go toward building a recreational village near Beijing.

The deal is worth some 150 million kroons (9.6 million euros), the newspaper said.

The company, based in southern Valga county, has not accepted the order yet since it fears that it might not be able to do the job.

"An order of this size is obviously too big for one company," Ritsu's manager, Ants Randmaa, said. "It's also unthinkable to neglect all the partners found in the course of the 10 years that we've been in business because of the Chinese order," he said.

Ritsu manufactures a little over 100 large log homes annually. In addition, there are three or four other companies that produce 60 - 100 log homes annually, and about 50 that build just two or so per year. In all, an estimated 600 - 700 log homes are assembled each year in Estonia.

Randmaa said he had spoken about the prospect of working closely on the Chinese order with some competitors but hadn't made a formal proposal to anyone.

"The main problem is that each producer of log homes has its own technology, a product of its own, and what is most important - a different attitude to quality requirements and pricing," he said.

Urmas Leisalu, CEO of AS Palktare, a log home producer, said his company had nothing against cooperation. "Everyone's interested in contracting if it pays," he said.

The managing director of Mountain Loghome, Tarmo Leisalu, said the company would be keen to subcontract for another Estonian company. "We'd save the marketing, advertising and other costs," he said.

Enno Kuldkepp, manager of AS RPM, said his company's strategy was not to produce log homes for sale as merchandise. "We want to erect all the houses that we've manufactured on our own so we can be sure that our company's good name isn't tarnished," he told the newspaper.