Interview | Wednesday, 26 March 2008

Multi-cultural workforces boost efficiency

Karlheinz Knapp first started building computers and networks in his father’s garage, while he was still living in his German homeland. Now headquartered in Malta, he runs Infratec - an electronics engineering firm generating a turnover of €6 million per year. Interviewed by David Darmanin, Knapp explains that his growth is mainly attributed to a human resources setup that is diverse, multi-cultured and therefore efficient.

Describing what his firm stands for, Knapp immediately broke the ice by explaining what the projects recently entrusted to Infratec entailed. Judging by the names dropped, the two examples chosen must feature in his portfolio top ranks.
“The Munich Airport commissioned us to install a system that is used to keep track of all air-traffic,” he casually said. “From both control towers at the airport, operators have access to our system enabling them to work in a failsafe environment and keep the operation under control.
“At the BMW plant in Leipzig, if anything in the production chain fails, our system will make sure that nothing in the manufacturing line stops. Our system there monitors and controls all the production. We have provided them with a solution that was developed completely in-house.”
Knapp is self-made. Explaining how his business activity grew from a garage-operation into a multinational boasting of a very respectable client-base, he said : “Believe me, it was not easy in the beginning, until at the point when we managed to get a big project for the European Satellite Control Centre, and that is when we really found a demand for our core business. There, we had built a complete networking and data centre, realising that this type of work was very much in demand. It helped us build new markets and that is how we grew.”
Originally based in Bensheim, a small city located 50km away from Frankfurt, Infratec opened a small manufacturing plant in Malta towards the end of the year 2000, employing a team of less than 18 people. “Until I decided to move here last year,” Knapp explained, “we used Malta only to manufacture electronics. We have now moved our entire back office here, including our development, marketing, a substantial part of our sales department, purchasing and finance.
“What initially attracted me to this idea was Malta’s vast knowledge of the English language, which is very important for us as now we can reach more and more people around the world. Personally, up until setting up our first base in Malta I did not know a word of English. I have learnt throughout the past eight years, by practice.
“There are also great tax conditions here and since Malta is now a full member of the EU, customs duty is no longer an issue.
“In the beginning our Malta operation employed 18 people, whereas now we employ 55 to 65. We currently have vacancies in every department.”
Foreign investors are often reluctant to admit with Maltese journalists that one’s main motivation in opening shop in Malta is because salaries here are substantially lower than what is forked out at home. Knapp however, seemed genuine when explaining that although cost-saving is an important matter, it is more important to look into the advantages one stands to gain when setting up in locations where a culturally diverse team may be employed, thus contributing in boosting efficiency.
“You cannot see just the actual salaries in Malta, although one must also consider the money saved on overheads on net salaries in Malta. In Germany we have a higher taxation system and, along with additional fees, for the same type of work you get to increase your human resource cost by 30 to 40 percent there. When we start talking about efficiency, it would be pointless to discuss the Maltese employee as a stand-alone. It is diversity that makes us more efficient. We employ people of different nationalities be they Maltese, German or otherwise. When you combine different cultures working together you will find that your staff forms a very efficient structure enabling a satisfactory return. Just to mention an example, let us say that Maltese bakers are more efficient in producing bread but Germans are better at developing the product. To get the best of both world in terms of cost, product and efficiency, I would employ a Maltese baker and a German developer.”
For a many foreign entrepreneurs, moving to Malta comes at the cost of culture shock, and this is often inevitable. When asked to explain whether he feels restrained by certain drawbacks in Malta, Knapp said : “In the past, working with the Maltese Lira was a drawback to some extents since we had to use two balance sheets, complicating our lives. Now that Malta is in the Eurozone it is much easier for us to operate from the accounting front.
“At times in Malta you also stand to come across difficult logistical situations. This can hardly be changed however as such drawbacks are normally caused by size and geographical restrictions that one may not have control on.
“We found it difficult, for example, to find a larger building for our manufacturing process, as with a hi-tech production line you need your buildings to be equipped with specific features. For the past one and a half years, we have been looking for larger government-sanctioned premises, as we need more space if we are to enhance our operations. Unfortunately, very few have fit into our criteria. It was only recently that we managed to put our hands on a building in Marsa, which we shall soon be moving into.
“Another threat I envisage does not only belong to Malta but to the whole of the EU. In Europe, we must make sure to optimise human resources if we intend competing with Asia – China and India in particular. Even with cost reductions, across the EU human resources are still extremely expensive when compared to salaries of $80 monthly in China. We must therefore invest in innovation. In Germany we have experience with automisation. Mixing such skills with the good workmanship in Malta follows a model that may provide a more favourable position to safeguard European workplaces for the future.
Now weighing his words carefully, Knapp called for good practice and a cleaner business environment : “We would also need to ensure that in the future, the setup offered to foreign investors in Malta becomes more up to standard. If you take a plane to Switzerland you’d think that you’re in a different world. Work here needs to be cleaner and more structured.”
Turning back to the value of Maltese human resources he said : “I really like the attitude of Maltese employees. You are very open to foreigners here. I have worked in several countries with people of different nationalities but I have never witnessed such a friendly environment as that created by the Maltese. When I first moved here, I sent my kids to a local independent school and judging by the way they integrated I immediately saw good indications, not only for my personal life but also for business. I have never seen any of my employees show negative feelings to different cultures – and you need to have this attitude if you are to work in a culturally diverse environment. Just imagine how difficult purchasing would be if you are not in a position to employ someone whose mother tongue is Chinese, or to deal with sales in Europe if you are not in a position to find different people fluent in different European languages.”
Infratec is currently working on a project for EKZ, the largest energy supplier in Switzerland. Also, the US company ATG has recently contracted them for a considerably large project. “We also deliver to the Asian market now,” Knapp said, explaining that in recent times, their worldwide sales network expanded.
“We are where we are also because two years ago we floated the company on the German stock exchange, a move that provided us with enough resources to grow. Our target now is to sell our products to all major English speaking countries, enabling us to double our sales this year. We also aim to double our staff compliment by the end of the year. We are very confident that our current targets our attainable, as orders that have come in so far already indicate that we should be in a position to reach our objectives for the year.”