Alright, welcome to the Neuvottelija channel. I have Veli-Matti Kurkela
as my guest. You came all the way from — is it Pyhäntä?
No, I actually came from Oulu, even further north.
Ah, okay. Right. But don't you have several locations? So you're Salvos's
CEO? Yes, yes. Well, in Pyhäntä
we have our factory, but then we do have offices. We have them
a bit all around Finland. We have some of our administration in Kempele.
Right — mainly just to cheer you up, I brought out
this Tappara mug. Now we're really twisting the knife in the wound, yes,
yes. Tappara keeps steaming along — from an Oulu perspective a little
too well. It's wonderful, wonderful! But our topic is the construction industry's
distress — though couldn't you say that your business, this kind of garden and
leisure and summer cottage construction, isn't quite as dreadful — but
could you share a couple of observations about the construction sector in Finland?
Yeah, well, construction has really taken a beating in recent years, and
the market there has been carved up anew — there's been an absolutely staggering number
of bankruptcies. Especially single-family home and residential construction is
still in a pretty difficult situation, but then on the other hand
there are certain sectors — road and infrastructure construction seems to be going quite well,
and it sounds like commercial premises and these wellness facilities
are doing more or less okay. And then of course, in our market,
garden buildings, and in leisure-time buildings too a certain
segment, are still, let's say, okay — so the situation is somewhat
polarized, let's put it that way.
Yeah, that's how it is. So everything's just awful. I mean, as someone who owns
an apartment in central Helsinki, it's a bit nasty to look at that minus 20
percent we've seen here. But since it hasn't been realized, it
doesn't affect my life. This episode really is made in commercial collaboration
with Salvos. But let's discuss that a bit more, then,
from a personal angle. Over the years I've been having discussions with the board — that is, my wife —
about whether we should have our own summer cottage too. So
the situation we have is — greetings to my mother, by the way —
there's a zoned waterfront lot over in Sysmä. There are a couple of
cousins' summer cottages already standing there, and okay,
it's about — is it 2 hours 40 minutes — so I suppose it wouldn't be
a completely unbearable trip. You probably see situations like this
quite a lot — so how do you tackle something like that?
Well yes, I can certainly say that I can take your wife's
side. Yeah, probably — even Mauno the dachshund would like this.
Absolutely. Absolutely. Yeah, for sure. And maybe, well, yes —
especially now that there's been migration toward these urban centers -- I mean
housing is concentrating and the countryside is emptying out, and that trend seems
like it's just continuing. So there's this thing where there's an inheritance
plot, or there's an old family homestead,
if you have good memories and you'd want to build something there,
or, let's say, there might already be a cottage there, or an old detached house,
or something like that. But that distance of yours is actually pretty normal --
I don't remember exactly. That cottage barometer came out
from the Council of State just recently, and I think it actually defined the
average distance to the cottage. I don't remember -- it probably wasn't quite that long, but
it was, I believe, well over 100 km on average, if I recall,
so we're well within, let's say, the margin, so to speak.
Yeah -- Petri Roininen, who's been my guest the most times,
well, I've joked a bit that my idea of a Northern Finland holiday is
going to the Flamingo Hotel in Vantaa. But, well, I am a bit of a
village nature person, so to speak, and I do have good memories from there, but
then during COVID there was this huge boom, and back then it kind of
tempted me -- wouldn't it be great to do this kind of second-location work
out there in nature. But hasn't that trend faded a bit --
at least a little, that trend has turned downward a bit. Well, maybe from its very
peak, but if you think about it, when it comes to living --
living in growth centers, these days, when the per-square-meter construction costs are
genuinely still really, really high, and
consumers still prefer to live in the centers,
want to live close to services, and then they're willing
to compromise on square meters, and then things like these extra little conveniences
are pure luxury in a growth center, so then as a counterbalance to that,
the payoff is that you get outside the growth center,
so that you have your own beach or something like that -- these days that's quite a
luxury thing, yeah. And there's just a bit of a
peaty, humus-type bottom there, but I suppose you can dredge those too. And -- well, maybe
we'll get to that 30-square-meter rule later, but there I had a friend
and board member and owner, Petter Fredman -- he, in one
earlier episode this year -- it hasn't even been a year yet, but
he was raving about northern Finland, and then I happened to read that Helsingin Sanomat
article about the Rovaniemi Airbnb dispute, so maybe there's
maybe something to that too, apparently -- when people want more usage efficiency out of these apartments and
then maybe bring in garden buildings and other things too. But at the same
time our decision-makers don't really know what kind of
laws to put in place for these. Have you looked into that? Well, yeah, that's of course
a bit related to my own question -- it's more about the accommodation business
not quite directly about the cottage business itself, but yeah,
that's -- well, the situation in Rovaniemi is quite peculiar. I mean,
the same situation exists in bigger cities too, generally,
when it comes to short-term rentals, but in Rovaniemi it's really
escalated, because the problem there, as I understand it, is that
the tourism business is so seasonal -- let's say it's
four months, say, but that's still such a short time that if
you look at it from a hotel developer's perspective, then, because of that
season, it's not really sensible to build. And then again,
on the other hand, no hotel capacity gets built, which then leads to
these resort-type alternatives being used instead, which have of course
increased a lot. So someone buys a piece of land and there
invests in these separate small cottage-type units, sort of
studio-apartment-sized or a bit bigger with panoramic windows, and then there's some
bigger -- say some restaurant-and-spa facility there
where people go to eat and so on. So that's another
concept -- a whole story in itself as to why it's really taken off, but
even that capacity has grown too slowly relative to visitor numbers,
which somehow leads to a situation where, since demand is greater than
supply, it drives up short-term rental rates. Mm.
which of course, in an extreme case, leads to there not being
enough other capacity there, and then of course there are also these
side effects -- if you live in the same apartment block that has 25 units,
of which 20 are used for short-term rental, that can make your life quite
unsettled, which partly disturbs
the residents. And then, on the other hand, you also run into
zoning regulations and things like that -- whether you're even allowed to run this kind of
accommodation business there. These are really awkward, difficult
yeah, difficult situations, and there it's now
threatening to escalate quite a bit in Rovaniemi. Yeah, and I was recently
I always do a long trip every couple of years, usually a bit around Norway,
hiking, and up there in the northeast, [unclear] --
in northwestern Finland -- actually, this is embarrassing, I still have to admit, I just --
well, anyway, we traveled through there, right around the Levi
area, and there was exactly the kind of thing you mentioned -- it's sort of
a hub like that, and then cottages around it. But isn't this -- by the way, isn't 'salvos' itself
some kind of terrible log-construction term? Yeah, it's like, well,
logs need to be joined together at the corner somehow. There are
dovetail joints, cross corners, and then there's a miter corner and all sorts. So
that joint is called a 'salvos' [a corner-notch log joint].
Yeah, folk tradition. Right, right. But doesn't this concept, in principle,
fit that too a little? It's sort of like -- well, I don't know, at Vierumäki
I visit sometimes. I'm not very athletic, but in a way it's
a nice sort of cottage-village thing too. Yeah, yeah,
yeah, yeah, yeah. And we, this year,
actually just -- well, delivered -- a 40-accommodation-module
complex -- or rather, we delivered the modules, it wasn't
built on-site. That's the more precise term, but anyway,
to Ounasvaara in Rovaniemi, for this kind of use, and
yeah, exactly. Well, this year -- last year we had 600 modules
come out of the factory finished. We have quite good capacity to make
solutions like that, so we were able to deliver -- if I remember correctly,
it was maybe at the end of March when we reached the agreement with this
client, and then it had to be delivered by the end of October, so that's a pretty
fast pace. And we made it in time -- it worked out. Mm.
But that's exactly the point there -- the investment
in that room capacity, compared to when you build
a hotel, mm,
the per-square-meter cost -- the return on capital is completely different
in this kind of less heavily built space, which nevertheless
is a very luxurious, good solution.
So that's the point -- that's exactly why it tends to go toward this resort model, especially
given a season like this, toward this kind of resort-type approach instead of that hotel
investment. Of course, one solution could be that
up in Lapland too, I've thought about this a lot -- how
you could get -- because right now winter is the big thing there, but
Finland's nightless night [midnight sun] is quite a unique case, especially since Central Europe
seems to be having pretty hot summers. Mm.
so there's already some amount of foreign tourism just because of that, since
conditions there are humane. Yeah. That autumn-foliage ['ruska'] tourism is totally
top-notch. That's exactly when the midges have died off. It's sort of
the perfect, perfect moment. I haven't
actually been there during summer, during the worst
black-fly season -- I haven't visited then -- but I do hear
some stories about it, so that's maybe a small downside.
Yeah, but that autumn foliage tourism is at least totally top-notch, and it
is definitely growing. But actually what interested me there was that production model. Maybe we could
play that a bit in the background here. So in Petter Fredman's
video, this was shown. We had set up these sort of
robotics for coffee filters and things like that. But isn't that kind of
modular leisure construction of yours probably --
sorry, this is around when he was a guest -- sorry, this question jumps around a bit, but
I just thought of that Lapland concept -- those were like Lego-type things.
Don't you have a bit of the same kind of setup? Well, yeah, with the
difference that we finish the buildings completely, but
it's the same in the sense that this industrial manufacturing is
interesting, because it's been tried, and it's been
developed -- it's been developed a lot in recent
years, I think, but the challenge there is exactly this:
logistics -- if we're talking about bigger buildings, like
a residential solution for your own home,
some of that is done -- they're brought in ready-made, or
ready-made modules are brought in. That's been developed, but there's exactly this
challenge -- the logistics. Logistics are challenging and really
expensive, so the industrial-manufacturing
cost benefit gets eaten up by that logistics, and then still you
end up having to do on-site construction anyway. But then when
we move to leisure construction, if we think about, say,
the average floor area of new leisure buildings, based on Statistics Finland's
data, was something like 60 square meters. Mm, which for us too is kind of
our so-called
bread-and-butter work in cottage buildings. Yeah.
So that's a solution that can, in turn, be industrially
manufactured quite well. And then of course, when we connect modules,
we have the ability to join them in a properly sealed way, so we can
combine two spaces into one, and then we get those
parts small enough that we can transport them
cost-effectively too. So we get the benefit of industrial manufacturing, and then
the transport as well. And if you think again about
traditional single-family home construction, prefab building has
been around there for a long time. But move-in-ready suppliers, in turn, aren't
hugely interested in -- sorry, this leisure-home construction -- for the
reason that there are actually a couple of reasons. They're quite small,
and then leisure construction is located out
outside the growth centers. So you have to haul materials and
labor out to the countryside, the regions, which is really expensive,
and so it hasn't really been made cost-effective that way, so
this industry has traditionally been pretty conservative -- it's been about
traditional materials supply, where materials are delivered and the customer themselves
then organizes the construction, either themselves or through subcontractors, or however
they organize it. So this has really been fertile ground
for this kind of industrial manufacturing, which is what we've gone into -- we
-- but we started this first with
garden buildings, garden saunas, these kinds of storehouse-type buildings, and from there
we then quickly started developing
cottage solutions too -- this has changed. So I
remember -- greetings to my mother's brother, uncle Pate -- I remember
in my childhood, out there, it was completely built by hand from logs, sort of
put up as a square. Their cottage, out there -- it's still
there, and I remember how the guys just hauled those
long logs there themselves, and then some help came along, and
they were dragged around the cottage site with a tractor, but
of course today's people couldn't handle anything like that, no
way -- you'd have to be quite
Rambo to build something like that yourself.
But isn't this -- couldn't you say it's actually become
incredibly easy now. And in a way, hasn't the municipalities'
attitude improved too -- that the zoning processes and
systems have become more sensible -- not to sound too encouraging as a word choice, but
it's not that big a deal, even though many people fear it'll turn into
financial ruin and a long project where every budget overruns.
Of course that can always happen in construction, but it is
reasonably easy, this kind of leisure-home
-- well, if you think about it, today we're able to
-- part of our own service concept, in marketing terms, a genuinely turnkey
concept -- we apply for, say, a leisure home permit, which
is still subject to a permit -- we apply for the permit on the customer's behalf and take care of
the necessary groundwork, foundations, and deliver a completely finished building.
The average delivery time from order
to handover is roughly about half a year, so that's the timeframe,
and all the costs are defined in advance. So that product
-- this manufacturing approach has brought that. But imagine, for example, a situation
where you started building out there in Heinola
a cottage, and tried to organize it constantly from here.
Then, say, materials get taken to the site, and this too is
a challenge -- this material management. If you think, say, that you
have a felt roof going in there, you need to order enough of that felt,
well, Heinola doesn't sound too remote yet,
but you still have to order enough of that
felt, say, in such a quantity that it doesn't run out, because if
it runs out, that's an insane cost. Then if you have to go
in the best case hundreds of kilometers to a hardware store to get that
material, that's expensive, so you end up ordering
extra of it just so it doesn't run out.
Yeah. And then there's the question of how cost-effective the whole thing is, and
then also how much waste gets generated and how
problematic that is in that sense. So --
yeah, in that sense, if we think about our own operations, we're
still able to -- well, take that roll of felt: when it runs out, we cut
the roll right where it's
enough for this building, and then continue with the next one. It's
just so much more efficient and handy with an industrial process
to do that. That distance really
often makes organizing leisure-home construction really challenging, if you don't
get it delivered fully finished. There might already be
cottage-road infrastructure there, but in our
situation, everything would already be done, so in that sense
it sounds pretty scarily easy.
Just great. We can talk about it in more detail over lunch.
Yeah, I'll have to look into it and fine-tune the budget a bit. Speaking of
budgets -- a while back, or a bit further back, when I came back from London,
I bought, out in Suvisaaristo, back then, together with my wife,
a plot, and had a house built on it by, I think, a competitor of Pohjola's design-house company --
Kannustalo -- a mansard-roof house. And then there was a surprise:
since we got a sloped plot, an extra 100 [square meters] suddenly popped up in the basement, and
there was a site foreman who worked all that out, but
I remember it would definitely have been bankruptcy for young Sami,
but then help came along, and the plot was sold, already zoned,
at a profit, and then the next owner made a somewhat smaller,
somewhat less grandiose setup out of it. Yeah. But I do remember there was
-- even though there was that site foreman -- it was quite
painful, because you still had to weigh in on pretty much every single thing
and sweat over it -- like, where's some
block-built basement going to be built here, and who's going to dig it, and so on. There's
a lot of advantage, then, in your model.
Absolutely. Yeah. So, generally speaking,
what's a typical customer like? I've been rambling on a bit here, but
when I was thinking about this most actively, like 10 years ago,
I thought, well, I'm 55 now, so is this maybe a bit
too late -- right in the core age bracket. Exactly
in the core bracket -- actually even a bit young for this.
Let's wait a couple of years. But yeah. What was that thing you mentioned earlier?
Uh, that was the interesting Council of State's cottage barometer that just came out --
was it that over 50% of cottage owners are pensioners, and 80% are over
50 years old? That's interesting in itself -- there's
a pretty big generational shift coming on that basis, so to speak,
but yeah, as for the question of whether you're 'too late' -- well, that's an easy
word to use. So is this a typical situation --
a lot of people think about this: the cottage stock is old, but it's
such that some of it was of course built with great care,
using traditional methods, but expectations have risen quite a bit too,
since people want, for instance, year-round
livability, and electricity, and heating, and fiber-optic internet, so
yeah, yeah, well, especially this remote-work thing has
brought that along, and then there's this consumer attitude where, even if
people say they're not going to live off hauled water, they still
want a fairly upscale solution. Well, exactly --
on cottage condition -- since about a third, according to this same cottage-barometer study,
still -- and it's a really good study, worth reading --
are, so to speak, only in use for a few months a year,
meaning they're left unheated in winter, and especially if it's a board-frame
type of construction, at best there's mineral wool insulation or
something similar -- so a large share of them probably aren't in
great condition, which really raises the question of whether it's worth
renovating or whether you need to replace it. This has quite often been the case where
we've handled the demolition through some subcontractor, and
brought in a completely new solution. But yeah, it's clearly
-- COVID definitely added to that -- people want exactly this:
good internet connections, and these kinds of -- there are these
directional cottage antennas, so that you can get 5G reception a bit
farther out, and so on. So it really
-- people probably want a better level of amenities, but then
the size doesn't need to be so big -- people accept smaller.
Of course families are smaller too, so you don't need that much space either. But
small is actually quite a luxury these days --
small, so -- actually, didn't this come along --
this new Building Act, so Finland actually got something done -- under 30 square meters
it's now easier to build. At first that 30 sounds like
quite a small [area], but it turns out to be enough. Well, it's not just
the only one who'd say so. We do get some of that, where
people want that garden sauna or garden building, and it's 30 square meters and
then, say, a garden sauna of 30 square meters -- okay, so what -- well, then you don't
need much beyond the sauna itself and maybe a small changing room. 30 is pretty generous, so
here you'd have this sauna-cabin thing, with a living room and then a sauna. Ah,
yeah, this is really good, but this is 60 [square meters]. This is half of what we were talking about,
so hopefully we'll often see it done with something smaller too, but yeah,
I do have to say about that -- lawmakers always get criticized, but in my
opinion that -- I think that relates to the new Building
Act and the related bureaucracy-cutting drive, so
I'd assume it relates to the Sipilä government's
bureaucracy-cutting effort -- that it's
a remnant from that, or an end result of that.
So I have to say it's a great reform,
and there had been a lot of worry about what it would
cause -- whether it would make construction go wild and so on --
but at least so far there's no sign of that. There was just an article --
I don't remember which paper -- saying nothing of the sort has been observed.
I do think this kind of thing should be done more boldly
in general too. So indeed, the new Building Act came
into force at the start of the year -- January 2025, so a year ago, at the start of the year,
to clarify. And the point there was that
of course a big reform covers a lot, but the part that's maybe
relevant to this context is that these under-30-square-meter
utility buildings are exempted from the building-permit requirement, meaning
if you have building rights, you can build a garden building under 30 square meters
without a building permit, of course while following the building regulations,
and that's a really great thing -- it shows in
the market too, demand grew, and I think Sweden did
a similar reform earlier and it's been a good thing, and
as a result, purely good things happened -- everybody wins, so
the load on municipal building-control departments eased, and
demand grew, because applying for a building permit is now easier
these days. It's actually a pretty bureaucratic process -- back before,
if you went straight to the local building
office and said, 'Hey, I want to build this, how do I
get a permit,' that doesn't happen anymore today. Now you can go to
various services, permit points and the like, where you then apply for the
permit, and there are still quite a lot of steps, and many people do it
for the first, and only, time in their life, so that's a pretty
difficult thing. Here we saw that when that
bureaucracy was cut on this smaller end, vitality increased,
everybody wins, demand grows, and in my opinion it's just a
great, great reform. Whenever lawmakers get blamed for adding
bureaucracy, here they really deserve credit -- it's just a great thing.
So does this apply in urban, built-up areas too? Yeah, yeah, yeah, yeah, yeah.
Okay. See, I remember that about Suvisaaristo. It was just completely
megalomaniacal. There we had a 5,000-square-meter plot. Back then the zoning allowed 10%, meaning
500 square meters. So then I did it so that I set it up so that
I somewhat assumed it would rise to 20 [percent] at some point, so you'd get a free
extra half, sort of. Okay. Yeah. And then I remember
thinking about it, well, cars -- this megalomaniac place of mine was 274 [square meters] plus a basement,
on top of the 'giant' concept, so I figured we'd probably need
to fit a car in there too, and so on -- and now you can actually do things like that
pretty freely. And this has also increased
-- think about your own home, for instance -- this is, first of all, this remote-work
point there too, where people want to be
working remotely, but then a separate, say, garden
sauna building with a remote-work space, mm,
so, for example, in a family with kids you can go
out there to work remotely and then come back home. It's not a long commute from
your own plot. And there's maybe a sauna too, or otherwise you could
use that same garden building -- say when the teens grow up and you don't want
them hanging around at the ABC [gas-station chain] in the evenings, they can stay there instead, but they're
still under the parents' eye. So that's this kind of extra space in the yard,
and they're really versatile hobby spaces --
band-practice rooms, some use them for painting, some as a podcast studio,
a home gym, yeah -- there are various uses for it. But the point is
that if you have building rights,
you can build it without a building permit, and that's just
a great thing, and this reform is definitely worth
taking advantage of. Well, that's really something -- I'll have to
look into that a bit. I'm actually already pretty content with this
urban life here in central Helsinki. I did live in London
for 13 years. Over there, actually, it's surprisingly free -- people have been able to
build things like townhouse basements and other
stuff in a pretty random way. Whereas here in Finland,
the old culture is that everything has to be really strict, so that's
actually a bit of an outlier globally. Yeah,
it's good if it moves in that direction, because you could of course think,
that if you have, in a way, the cost-effective solution, and then maybe
the other related construction work
is a bit cheaper now that demand has dropped elsewhere,
this could actually be quite a favorable moment. And then maybe the project's
conceptual risk is a bit lower too, since there's more capacity out there
outside your own operation, so it could be a pretty good moment,
so you're not in a boom period where everyone's fighting
over the same resources, so you don't end up watching the costs tick away
absolutely. Yeah. And that's also, in a way,
-- I was just at, uh, Mikko Nurminen's table
over at FiBAN, and about that Airbnb thing we were discussing, that in
the apartment-block side, as a side effect, things like cottage-sharing groups and so on --
if you're not using it yourself all the time, it's
become pretty painless to rent it out too, actually.
Yeah, yeah, yeah. Funny -- I have, out in Puolanka, this
small little sauna cottage, and
well, I bought a plot out there at some point, and
then I built, on-site, out of solid logs, this
well -- 'the cobbler's children have no shoes' -- of course it wasn't industrially prefabricated,
it could only be built on-site, but it was this kind of solid-log
solution. And I built into it a sauna cabin, meaning
there's, say, a ten-square-meter living room, a small kitchen, and then
a sauna and washing facilities. So I thought,
I'd build that first, so that our family would have some kind of
base there, and then maybe later a cottage solution on top of it, and
well, then, because of the busy family years, in the end actual visits
out there have been pretty rare. So I tried it out once I got the place
into shape so it could be rented out, and I've since listed it on Airbnb
and rented it out there. There's really been very good demand for it, in that
of course you need electricity and drinkable water and so on, of course,
for it to actually work. But I was genuinely surprised,
because I thought it was such a small space -- okay, it's about 25
square meters of floor area there -- but there's really been a lot of interest, and even
foreign tourists. Really good reviews have come in, and lots of
thanks for the place. I thought, no, this is too small for that, but
on the contrary, it's been really, really good, and I've
been surprised by it. Then maybe, something I've generally followed -- take, for instance,
Puolanka as an example, which is quite a cottage-rich municipality,
and where, say, Airbnb-style rental hasn't really been used all that much. It's
interesting in that sense -- surprisingly, when you notice how
popular it actually is on the demand side. Yeah, this Mikko Nurminen's
business is Hostaway, which supports Airbnb -- so basically exactly those
-- it handles just that cross-border management. I mean, a unicorn
business -- the guy has really built an incredible business, and
yeah, that's -- I had, as a guest,
Holmström -- was it Timo -- who was a high-school teacher,
and he does this young-entrepreneurs business, and writes
books about it too -- a great guy. So we do have quite a lot of
this kind of expertise in Finland, and maybe digitalization
in general too -- maybe I could do a little rant about
Salvos and its subsidiary Lapeland Oy, in the sense of
how you've organized things -- this instantly-finished
concept seems to be at the core of it, but
well, yeah, yeah, on the Salvos side we make
leisure buildings out of logs -- log construction is our thing -- and of course
on-site building, and the point -- the added value -- is precisely that we
manufacture the buildings industrially to completion, which makes it
easy for customers. And we've wanted to make the whole
product-and-service concept as easy as possible, so if you need a
building permit, we get it on the customer's behalf, and we can do the groundwork, and
make the whole thing as easy as possible -- and this industrial
manufacturing is what makes that possible. And in addition, we also have
a subsidiary, Lapeland, which also has its own factory, and it's its own
operating company, part of the same group,
and what's distinctive for them is that their equivalent buildings are
movable -- they're on wheels, and of course the building material isn't
log -- they're what's called trailer saunas, trailer cottages.
older folks might remember Paavo Väyrynen's thing -- what was it called --
well, I just blanked for a second, but he had some kind of towable cottage
-- because as an MP he had to, in a way, determine his home
municipality, so he had this kind of mobile log
cottage building -- a skid-mounted cottage. Yeah, yeah, a skid cottage, exactly, that's what it was,
yeah. But it's actually been a surprisingly popular,
well-growing business. There's of course an advantage in that
movable solution -- you don't need foundations, and
it's specifically movable, so, for instance, there are a lot of
family-shared plots, and
then you have your own small trailer cottage there, which has
a sauna and living space, a couple of beds, and so on, and
you can then move it if you need to -- it's not tied down
to that plot in any way. There's also a lot of cases where someone likes to
be in Lapland in the winters, but then they also have, say, a
summer place somewhere else, maybe in Kainuu, so they can
move it when needed. Is there, in a way, the issue related to foundations
-- rot and so on -- somehow solved so that
-- well, I myself don't really know much about construction, but
quite a lot of those moisture-damage problems and so on come, I think, from
poor foundations. Well, the Lapeland solution doesn't need
a foundation at all, since it's basically a traditional trailer, and that's
mainly the ease of it -- you don't have to drive a single stake into the ground at all, if
you don't want to. You can level it with, like, caravan-leveling technique,
if you want, or you can also hook it up to conventional building services,
if you want -- it makes it easy. And then, for our side, we use
what's called a pillar foundation -- the underfloor space is ventilated all the time,
so nothing can start rotting in there -- it just keeps ventilating
continuously. Because mold damage
is constantly used to scare people. Of course, with old
housing stock, if you buy one of those, it's an even bigger problem, because they were
built however it happened to turn out. Yeah, yeah, there's plenty of that,
going back decades -- there was every kind of
hidden-plinth foundation solution, those are
-- but what's started to interest me is that production side of things -- I'm on
the board of Redman Group, and I was really blown away when
I got to think through those robots and other things myself, like whether we'd take
plan 2.1 or 2.2 here, and of course 2.2, since it had more
line changes and so on. And then I remember, with
my Translink hat on, when Norsk Hydro was listed, and they got
IPO proceeds and built a whole new production facility with them, and it was
great to watch them design the flow in there --
is this the kind of thing that's your everyday work, tuning the production line,
or was it born perfect from the start?
Definitely not. Definitely not. And this is exactly the thing -- since with us
-- this is actually funny -- every single building solution of ours
is, in practice, a bit customized, but by far the largest part of the solution
is tailored by the customer themselves. Yeah.
So this kind of modularity is what makes that possible, and that's
a significant added value. If you have a plot, it's
always a bit unique -- which way the windows face, how the cottage is
brought in. So every solution is practically unique, especially
on the cottage side, which of course creates a challenge in the production
process. There's constant small variability. So that
variation keeps coming up, and at the same time you have to combine it with
this kind of industrial manufacturing anyway. We do of course have
a strict concept for how it can be varied, so that it supports
the production process. But managing a big supply chain like that
really does involve quite a lot of variables --
what buffers are needed at different points in production,
and then how the production is planned, how it's
loaded. That's one of the biggest, most central things for production efficiency --
how the production is loaded, and it's at the planning stage
that the biggest factor in production efficiency is decided -- if
it's loaded poorly, then problems show up on that line and it shows immediately
in the output. And especially in a setup where
everything is different -- whereas if you think of a traditional
car factory, that's repeating the same thing over and over, and there's
a certain rhythm you can follow. But here, the situation
is constantly changing and evolving, so you have to track the data pretty closely.
Yeah, I actually visited that Valmet factory in Uusimaa, and of course
there too, even with robotics, you get an incredible amount of
customization, since the cars change and so on. Now
they're about to start making, like, weapons too there, so
those modern factory environments are really fascinating. And isn't
this Oulu and North Ostrobothnia region -- there's
quite a lot of really sharp people around, in this same kind of scene,
there are smart people to be found, and you'd think everyone
-- if they're not competing directly with each other -- would still share
ideas a bit too. Yeah. Yes, yes. Yeah, yes. And
a lot really is shared, even among pretty close competitors --
news and updates, those who aren't directly in exactly the same
market, among these industrial players. And take, for instance,
Lapwall, right next to our factory -- it's a really
interesting concept of theirs -- there's still an analogy to
our own operations, even though they're an element manufacturer, and they've
been really smart about conceptualizing exactly this -- that they
share out design guidelines, so that you can design the
building using their own building-block-style system,
so, in practice -- it's great, it's really great, and
it improves the construction industry's otherwise weak
productivity growth -- that modularity. I, back
at one point, many iterations ago, looked at Evac, which makes
-- it got sold off recently, at a high price, to foreign owners, which is a bit of a shame in these cases, because
they end up going that way after a certain point, but at the time it was really
good, this, in cruise-ship toilet technology --
the modular approach in those solutions. And then maybe, as
a cautionary example, there's Lehto -- they built a really nice concept
around that modular construction, but then there was
some poor execution. But still, the basic foundation --
that kind of modular approach, say if you now do this
bathroom efficiently by standardizing it a bit, you get
efficiency gains, for sure. Definitely, definitely. And Lehto was
genuinely great in residential construction -- really strong momentum
in that work. It's a shame the outcome was what it was, but
it wasn't their residential-construction expertise that was the problem -- they were
really, really skilled at that. Other issues came up -- maybe they
expanded too aggressively into other
areas that they no longer had a handle on. But that
residential-construction business was a genuinely great thing. And we too
did the same thing ourselves -- say, we outsourced the bathroom units, those room
solutions, and tried to standardize them so they'd always be the same, so that
you get certain production benefits, so we get
efficiency gains. But this is already quite far along --
it's already being done -- there are these bathroom-module manufacturers who
specialize purely in that, and can
bring that into residential construction too. It'll be really interesting to see
when that market eventually starts picking up again, what
has been developed during today's quiet period. Because surely
that side of things is definitely moving forward too.
Yeah. I should actually get in touch with those Paasikivi people. They had
this sprout/seedling business, and then those pipe-related things too, so
in Finland there's actually a lot, when you think about it, of this kind of
innovative expertise -- there has been, and still is, in those kinds of
technical fields. Exactly. Exactly. Yes. Yes. Yeah,
that's true. For us it adds its own particular twist to that
whole thing -- if you think about residential construction, or
single-family home building, they still have the same standard -- you always have to
build the building according to certain standards. But then
on the cottage side, things are considerably freer, and then there's exactly
this: a significant share of owners use it only for a few months
-- most cottage owners use theirs just for those few months
a year, so there's a huge amount of variation in that, in terms of
level of amenities -- so a genuinely bare-bones summer cottage,
you could go with, say, just a log frame
and gravity-based ventilation, and no running water or electricity. That's
-- then you've got an outdoor sauna, all the moisture management, and everything is
really simple. And then, as the complete opposite of that,
there's a purely second-home-type solution, and
in between there's a huge amount of variation, which makes this
on one hand interesting, on the other challenging. And we've
managed pretty well -- we're able to vary the equipment level quite a bit,
but for example from a production-loading standpoint, that's also quite
-- if you think about it, one building might get
tiling, bathroom tiling, and that kind of
work in a big proportion relative to the building's size, and another one
gets none of it at all -- so you understand what that means
on an industrial line -- drying times and everything like that. So it
takes quite a bit of juggling sometimes to make it all work.
Well, let's think about this now -- let's come back to this, thinking about
the second home there in Heinola -- or rather, in Sysmä. So, there,
uh, indeed, these cousins have taken care of the
road and utility infrastructure in a way where it already runs to one or two cottages,
the road, and of course they maintain it,
then there are a couple of options for using the other cousin's
road, and from both it's still under 100 meters
to the shoreline. There's a bit of pine forest there, but
you could probably clear it and sell that at a profit. And then indeed,
both of them have shoreline -- one has a rocky shore, and
the other has this kind of peaty, organic shoreline. Yeah, but then that 30 [square meters]
sounds a bit stingy after all. So then, would it
be the typical 60 square meters, and then again the sauna is
of course a question there too -- is it the main building and
sauna building, or something like that -- could you sketch this out for me a bit?
Well, first you'd need to start from what kind of use it's meant for --
will it, say, for example, be used in winter --
well, yeah, maybe, of course -- I'm the type who goes for maximum, really,
always, before I start a project like this, it's always like:
of course it's year-round, of course it has every treat, and
honestly a bit over the top, if you're listening -- but for that summer-only
spec, you can imagine me going full maximum on it. Of course. But
that's a totally different kind of solution -- take, for example, this
one we have right now, say, in production -- this 60-square-meter cottage where
it has its own bathroom, and then, say, two bedrooms
and a big combined living-room-kitchen, and
that kind of thing -- so it's practically made of two modules,
installation on-site takes one or two days, so it arrives completely
finished. Then there'd be a sauna, and you'd just put in the door for it, because the sauna
at a cottage always has to be a separate
outdoor sauna, of course -- so could you fit that within the 30 [square meters]? Of course this
-- 30 is too much if there's already that 60-square-meter main building.
Well, if you have -- yeah, but how much building rights do you actually have there?
Uh, well, now you asked a tough one, but it's, in a way, already been
set in stone -- those building rights were applied for, as far as I know they're
in force. I don't really know, but there's -- it's quite a large area,
and, well, a caveat here -- hopefully, if the relatives aren't listening
too closely to this -- I'm not actually the owner of this yet. So
it's small, but still, same thing here --
the cousins have built there, sort of gradually improving things over time,
so this isn't
-- it's really just a matter of negotiation. But that 30-ish you mentioned --
the law's premise is that it's a utility building under 30 square meters.
So if you're putting a main building on the plot,
meaning we're talking about
a cottage building -- whether it's 30 square meters or
60, it always needs a permit, because it's a leisure residence,
and there's been a lot of misunderstanding about this, and
what determines whether it's for residential use or not -- there's
no direct law on that as such, but it was clarified during the
law-drafting process, from quite a high level, that if the building has
a fixed stove, mm,
then it's considered a building intended for residential use.
If it doesn't have one, then under certain conditions it could be a garden building, but
that's not written in any law as such. But this was just so that consumers could
assess whether they need to apply for a permit or not. But that's roughly
how it goes. So in principle, if you had that [30-square-meter] cottage there,
you'd need to apply for a permit for it, but for the garden sauna you wouldn't need a permit.
It's completely permit-free, and you can build it -- as long as you stay under 30 square meters, and
as we were discussing, that's actually a pretty big deal -- it would be
practically a beachside guest cottage without any of these
stove installations. Right, right, right. But
that would actually be really good if you think of a kind of two-section layout,
with a sauna on one side and then a living area, and then when
friends come to visit, there's space for them there, and then there's
the main cottage building there. Hey, great -- Sami, let's go, lunch is -- Mauno the dachshund --
-- ask your wife along too, a joint lunch, a shared lunch --
yeah, yeah, well -- unfortunately she had the flu around then, so
but yeah, she doesn't normally watch these episodes anyway, but maybe this is
an exception then -- some sales work has been done here
on her behalf, yeah.
But maybe let's take, to close this out, a quick glimpse at
digitalization. And we do have mutual friends,
for example this Mikko Alasaarela, and with this agent concept,
he's now digitalizing everything with these agent farms. So could you give a quick glimpse
into your own IT infrastructure a bit here,
and whether you have thoughts on that. And I think we could save
the deeper vision talk for the inner-circle segment.
Okay. Okay. Well, yeah. I actually have to say, while listening to this,
-- was it summer, when I listened to Mikko Alasaarela here
as a guest -- and he talked about this productivity leap with AI assistance
and talked about these agent farms, and I was a bit -- I'm still
a bit lost when it comes to that world, so I listened to
that whole thing -- it's such an interesting topic. And we've since been
cooking up a bit of collaboration with them too, but
yeah, you might quickly think, well, surely AI wouldn't
help a hand-craft workshop like this -- can it even make use of AI? But
when we sat down with them, we arrived at the
conclusion that there's a genuinely shocking number of things you can
use to improve productivity
with the help of AI. So we really, we really
do intend to invest seriously in that going forward,
and, well, I have one
friend whose wife is an architect, and she started
coding a new architecture database, so it's
sort of a small customer database, or some kind of
customer-history management thing, and
sort of profiling, persona types, and marketing
integration -- it's lightweight work, and you can really go very deep
into those processes with it. Definitely -- so digitalization,
actually, combined with AI on top of that, yeah, recently
one thing I've concretely noticed is how
-- the kitchen design, for instance -- with us too, all the designs, we can
have a sales rep draw up the design and it's immediately with the customer in 3D
-- they go and look at it: ah, this is like this, maybe that space could be, you know,
completely realistic. It's an incredible pace of development, how
-- yeah, and so, in a way, you already see the future direction right now,
so it's not just some illustrative rendering, but really something built specifically for you --
say, for that Sysmä plot, sort of -- I mean, this isn't -- this isn't quite
reality yet, but it'll probably come soon -- so if you go to the plot,
you can think, this will go there, and you look out from that window,
yeah, yeah, definitely. And for something like that you could use, like, a QR code, so
scan it with the camera, model the space, and then create your own
virtual world of it, and then you can go ahead and sketch out the
cottage in it. I do believe in that, and it doesn't even have to be very expensive.
Definitely not. No. Yeah. But maybe we could
save that for the inner-circle episode. But maybe, now that we started on
the political note, that good things have been done here, like this 30-square-meter
exemption -- would you still have some message for the current government,
and especially for the next one, which looks, unfortunately, or
happily, depending on your point of view -- it'll be blue-red [center-right/left coalition] -- what kind of
things could our public authorities perhaps do on this front of yours? Well, I don't
think I'll start criticizing, because in my
opinion the reform that's happened was really great, and
I think, hopefully, this encourages
lawmakers to cut some bureaucracy, to cut some regulation,
even from the harder end, because that doesn't necessarily
lead to everything turning into a free-for-all. Finns are still
a pretty rule-abiding people. We're a pretty, pretty
rule-raised people. So, the fact that
-- that was a bold, big change, and there was
a lot of scaremongering, saying you can't deregulate something like that,
that these are already sizeable buildings, and it'll turn into a completely wild
Wild West. And well, of course, there's only about a year of history behind us now, but
there's no sign at all of it running wild -- quite
the opposite: vitality has increased, everyone wins. So my message is just
more of this. Yeah. Well -- there is something, in my opinion,
like that AVI [Regional State Administrative Agency] fee of 25.50, it could definitely be walked back down a bit lower
-- because, well, all these things that raise prices
reduce demand. That's just an economic-theory fact -- that's how it
is. Remember, girls and boys: the more something is taxed, the less
you get of it. Yeah, that does tend to be roughly how it goes,
so, yeah.
But then again I do understand that the overall situation for Finland's
economy is so challenging that good advice here
comes at a cost. That's already what you hear out there. But anyway, I suggest that
Veli-Matti Kurkela, let's actually go to that lunch to think through these
cottage matters. But before that, let's do this short inner-circle discussion about
making use of AI. Thanks for the visit.
Yes. Thank you very much.