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Interview with JUDr. Rostislav Dvořák, President of the Union of Czech Production Co-operatives

PragueConnect.cz in cooperation with Czech & Slovak Leaders Magazine


“New Career Challenge Came After My 59th Birthday Celebration“

 Did you know that the tradition of production co-operatives in the Czech lands dates back to the middle of 19th century? That the longest functioning Moravian Central Office Brno has had an uninterrupted production since 1909? That 2012 was proclaimed the International Year of Cooperatives to underline the unique role of cooperatives for the economic development of a state, but also villages? And that the study undertaken by the EU Parliament Council for science, development and industry confirmed that cooperatives prove to be the most stable companies having the lowest fluctuation in both production and employment as opposed to other conventional types of enterprises?

The Union of Czech Production Co-operatives has a member base which consists of over 200 production co-operatives from across the entire Czech Republic. Production co-operatives are Czech firms and important exporters not only to the EU countries, but also to the USA, Canada, Brazil, Kuwait and other countries. 

Meet Mr. Rostislav Dvořák, President of the Union of Czech Production Co-operatives. Prior to becoming President in 2011 and being re-elected in 2015, he was the President of the successful production co-operative “Vývoj Třešť”, a company with 300 employees. Our interview focused on the issue of production co-operatives that proved to be much more complex, thus demonstrating the complex and unique role of this type of enterprise, unfortunately not sufficiently acknowledged by either public or the media.

Mr. President, how would you describe your career journey and your current role?

I understand career as a period of growth to follow visions and aims. However, when you turn 60, then comes a period for us to use the acquired experience and attempt to apply it for the benefit of people or issues. Such was my purpose when I decided to sell the majority of shares in various companies and accepted the challenge to come to Prague to support Czech production co-operatives. It was not an easy decision, and even after two years in the office, I still had doubts. My father used to say: “Son, hold on to the chimney”, meaning do not get entangled in political issues or debates. Despite the fact that my function is not political, one third consists of important negotiations to achieve better entrepreneurial conditions for our members in civil sector as well as political representation on various levels – from the Office of the Government to regions and other bodies such as the Chamber of Commerce, Union of the Confederation of Industry of the Czech Republic and others – so there is politics involved to a certain extent. The remaining two thirds of activities are linked to managing our Union. We provide services to our co-operatives members, we help them with economic issues, cost and profit development and influence on the overall economic results. All these tasks are natural continuation of my involvement in the Vývoj Třešť cooperative.          

Your interest in economics was not straightforward, you originally graduated from law school. But it was thanks to your economic strategy that the Vývoj Třešť proved to be such a successful co-operative.      

You are right, I have never worked either as a lawyer or in advocacy. However, I believe that the connection of both economic and law education was very useful and quite essential for my work I myself used to handle all the judicial matters that were truly essential to the functioning and even existential. This was particularly useful in the early 1990s when claims for property restitutions started, which had direct impact on the functioning of existence of many enterprises. Our company, in contrast with many others, had never lost any restitution claim brought to the court. When I joined the production co-operative in Třešť, this enterprise with 350 employees was of an average size; nowadays, it belongs to the largest enterprises in the region. We need to go back to the history and remind ourselves that at the beginning of 1990s the whole Czech market unprecedentedly opened to the whole world and Czech companies were not prepared to face such reality. 300,000 employee positions were lost in the textile and clothing industry alone. In total, one half of the production co-operatives disappeared. In Třešť, we realised that we cannot continue to supply the products which will be valued only for “hired labour”. At first, we concentrated on specialised products such as blazers for men, and as you can see, I am still proudly wearing the garments. Then we followed with special unique products, such as protection clothing for firemen, the police and even the army. We have managed to get NATO licences and certifications that until 2005 had been held by other two companies in the whole Europe. Thanks to such approach, the production co-operative has stable sales and today it belongs to the top enterprises in its field not only in the Czech Republic but also on the European scale. For eight years, I did not have vacations and I also used to work on Saturdays.              

You are known for open and frequent criticism of the conditions for small and medium enterprises in the Czech Republic.

As I have already mentioned, in 1990s, there was a sharp decline of consumption of Czech goods. As much as this was substantiated with regards to electronics, design and consumer goods, unfortunately there were cases where our products were comparable to the ones coming from the West. I am quite bothered by the fact that our 100% food sovereignty was lowered to 50% and that we import too much low quality food products. Some companies went bankrupt, some companies decided to specialise on “hired labour” production for foreign companies. What we need to mention is that Czech companies did not receive any kind of support or protection, which is in sharp contrast to the approach with regards to foreign companies. The current industry structure is therefore a legacy of the beginning of transformation and as such it is very fragile and vulnerable in the context of the global open world. Not only are we dependent on direct foreign investments but we are also dependent on the one and only industry, which is the automotive one. Both dependencies bring severe risks when connected to economic crises. It would take a whole book to discuss this issue.        

So how do you see the situation 27 years after the Velvet Revolution from the perspective of production co-operatives?

Production co-operatives are part of economy, like any other production company.  So when the economy is growing, the results of co-operatives follow the trend.  However, only few people realise the role and the tradition cooperatives have and play in the state economy. In sharp contrast to Great Britain, Austria or Germany,  cooperatives in the Czech Republic are perceived as a result of the so-called “collective agricultural socialisation” which gave existence to agricultural co-operatives. People do not know about production co-operatives that represent one type of enterprises, next to the limited liability companies and joint stock companies. Production co-operatives have historically belonged to the most stable organisations.  This is why the EU puts pressure on national governments so they pay attention and support production co-operatives and small and medium enterprises. In times of crises, they handle the challenges not only with regards to employment but also profits. Their production includes engineering, construction, automotive products, production of robots for processing industry, electro-installation materials, all types of furniture, cosmetics and drugstore goods, fashionable clothing for women, men and children, but also kitchen utensils, gardening tools, equipment for hunters, fishermen, the police and army. They also produce jewelry, Christmas decorations, toys - simply an inexhaustible range of products. The turnover of the largest cooperatives goes to several billions, and staff numbers range from hundreds to thousands employees. Our government and politicians should support these enterprises unless we want to be dependent on the decision making of foreign corporations regarding what to produce or even whether the production will remain in the Czech Republic at all. Therefore, we need to support the whole segment of SMEs with links to research and development, new technologies and marketing. We should help these companies find and develop production of own proprietary products, so they are not dependent on “hired labour” production. 

Your final words for Czech and Slovak Leaders readers?

Your readers come from various spheres ranging from politicians and civil servants, to top personalities in management, cultural sphere, science, so it is difficult to make one appeal to fit all. I am not naïve to believe that people in general would make the overall society interest as a priority, since personal interests tend to prevail, even if people do not like to talk about it openly. That being the case, let us try to make sure that the society’s overall interest comes second and that we all will support it in a meaningful way. Such appeal goes to politicians, civil service administration, spheres ranging from culture to health, and all the way to us, representatives of employers who are the ones who create the value that enables to cover all social activities.     

PragueConnect.cz in cooperation with Czech & Slovak Leaders Magazine - Prague, 10.01.2017