While all around him people were making careers out of the bountiful natural resources in Kirkenes, he had a plan for something completely different: he would start an electronics company in the little town, high above the Arctic Circle.
To his parents it was an unrealistic dream, but 13-year-old Geir Torbjørnsen was in the early stages of a business plan that would ultimately lead him to take advantage of another of Kirkenes’ natural resources – the town’s proximity to the Russian border.
Today at age 50, Torbjørnsen is director of Barel AS electronics company. Founded in 1993, Barel is based in Kirkenes with a major assembly plant a three-hour drive away in Murmansk, Russia.
Barel is located 1,700 kilometres from its nearest customer and even further from its nearest supplier. It was an unusual decision to open an electronics factory in such a remote place, but Torbjørnsen did it anyway.
- Because I was born here, he says plainly, as if it was the obvious choice.
Back then, that simple fact was reason enough for him to set up shop in Kirkenes, but as the years went on, the border town became a more ideal place to do business.
Making Barel make sense
All large-scale production of Barel’s lighting units, battery packs, heating regulators and the company’s popular explosion-proof light ballasts is done in Russia, where labour is cheap.
- It didn’t make sense until 1999 or 2000, Torbjørnsen says.
It was around this time that Torbjørnsen began to forge relationships with people in Russia and take advantage of the inexpensive labour in that country.
Wages in Murmansk were approximately one tenth the cost as in Norway in the late 1990s. These days, they have crept up to about one quarter of Norwegian wages, but still represent large savings for Barel. This helped keep the company competitive despite being located so far from customers and suppliers.
Still, doing business in Russia is tricky.
- It’s a difficult place to navigate, Torbjørnsen says.
Overwhelming bureaucracy and corruption can stifle business.
- But I don’t want to change the system. I accept it, he says.
A “white guy”
Torbjørnsen says it is important for him to be upfront about the fact he wants to follow Russian laws and will not accept bribes. He calls himself a “white guy” because he refuses to take part in any black market.
When he calculates how many hours he has been behind the wheel over the past years, it is clear why he has been successful as a foreigner doing business in Russia: face time. Torbjørnsen says he has spent about 1,800 hours traveling back and forth between Kirkenes and Murmansk to be at the factory in person as much as possible.
If you aren’t going to participate in any bribery, Torbjørnsen says getting to know people on a personal level is important to do business in Russia. It also helps if you share common interests with people, like fishing and nature, he says.
Over the years, Torbjørnsen has learned conversational Russian. His teacher was a book titled ‘Learn Russian in 10 minutes a day,’ and with its help Torbjørnsen became fluent, slowly but surely.
Speaking Russian helps him connect personally with people in Murmansk, but Torbjørnsen generally doesn’t talk business in his foreign tongue.
- I don’t do any serious negotiations in Russian on my behalf, he says, preferring to leave that to a native Russian speaker.
Steep challenges
Torbjørnsen opened the Murmansk factory in 2004 and formed ZAO BR Electronics, a subsidiary of Barel, in 2005. Now, 45 people work at BR in Murmansk and there are plans to add 10 more workers over the next two years. It took dedication and persistence to get to this place.
- I’m a person who likes it better with a steep hill. If there are no challenges, I cannot survive, Torbjørnsen says.
The largest challenge on the horizon for Barel today is the increasing Russian bureaucracy. The environment in Russia is returning to one of tighter control, Torbjørnsen says. Murmansk is roughly 1,500 kilometres from Moscow, but increasingly all bureaucratic decisions are made centrally in the capital city.
- As long as the politicians are businessmen they will provide for themselves, Torbjørnsen says.
Being a foreigner doesn’t make things easy in an environment like that.
While the border between Russia and Norway is much more open today than it was when Torbjørnsen was growing up during the Cold War, he still finds the cross-border rules today a nuisance.
- I want these borders deleted, he says.
Barel seems able to overcome these challenges though. The company was just awarded a five year subcontract valued at 10 million NOK (about €1.3 million) annually to supply LED lighting for emergency exit signs to aircraft manufacturer Airbus.
The new subcontract has international prestige and Torbjørnsen says it will test and prove his company’s ability to supply goods of extremely high quality.
It looks like the small boy with a big dream got just what he wanted. His Arctic hometown is now home to a world-class electronics company too.
