Managing a move to Eastern Europe

Involved in the telecommunications industry for more than 25 years, Aran Islander Michael O’Toole knew drastic measures were needed to save his family business, Arantronics.

Spiralling production and employee costs in the mid-1990s meant an alternative site to their west Galway location was required for the business to continue supplying parts to the electronic, computer and automotive sectors.

The alternative chosen was the Czech Republic, and the difficulties O'Toole encountered should serve as valuable advice for Irish businessmen contemplating similar moves as an increasing number of Eastern European states aim for EU membership.

"We didn't have much time to hold on to our contracts, so I came over here, found a company that could do the work we were doing, and sub-contracted it out to them."

O'Toole found work practices still very much rooted in a communist psyche, and overcoming this was his first major obstacle.

"After we arrived and trained the local staff, we found the management very domineering and strict, terrible to the workers, who in return gave nothing back.

The financial drain on O'Toole's resources was also becoming apparent.

"They knew I was not making any money as such," he explains.

Sub-contracting clearly wasn't working and in order to hold on to business, O'Toole knew he had to oversee the whole operation himself, which meant locating a site and moving to the Czech Republic.

"After all these episodes, I knew if I didn't set up in a short time and control the operation myself 100%, we would lose the business anyway. So I started searching for a business premises. There is a shortage of good manufacturing premises here, the place has many old buildings from the communist heavy industries."

O'Toole eventually found the right premises, but it came with a cost.

"I eventually found onebut in order to acquire it I also had to buy the textile business that was there."

The biggest problem with O'Toole's new workforce was trying to change communist-era attitudes.

Workers started at 6am and finished precisely at 2pm.

Work on Saturday or Sunday was unheard of, and O'Toole says it took about six months to change those attitudes.

Dealing with officialdom was also a problem, as officials are still very much in charge in most Eastern European countries.

"People are afraid of standing up to them," he says. "There was also a lot more paperwork here than in Ireland.

All in all, the move has been a huge success for O'Toole and his business has flourished as a result.

With operations on both sides of Europe, he now finds himself ideally placed to capitalise on the Czech Republic's anticipated entry into the EU, as well as easy access to the US market.

For anyone considering a similar move, he offers the following advice.

"Anyone setting up here will need themselves or someone from Ireland to oversee the operation, and train any management positions from the ground up.

"If you need to transfer production from western Europe for any reason, it is best if you have a long time to plan, as it takes a long time to get the various licences and legal documents. It can also take a long time to get a suitable building. But if you have time it will come together.