Alexander K. Kopetsky , 欧洲轴承公司
Release Date: 2010-10-01
Alexander Kopetsky, General Director of EPK Managing Company, has been interviewed by Russianavia.net to discuss the latest positive developments in the business of Bearing Corporation EPK, its newest strategies on the Russian market and the international partnerships that promise to further drive its growth.A few months ago EPK has restructured its debt with the support of the European Bank of Reconstruction and Development (EBRD). What market conditions led to the need to refinance the debt, particularly in the bearing niche?
Our objective was to refinance the debt under better conditions. As a result, EPK Managing Company carried out the refinancing independently obtaining a six-year loan with a lower interest rate. Therefore, we defined the main financial characteristics declaring stable growth for the next six years and an annual sales and production increase. This is a certain figure that is annually stipulated in EPK’s sales plan and EBITDA. Also, we’re obliged to improve our supporting processes according to international standards and implement practical activities. For instance, we need to build an environmental control system across all companies to improve the environmental situation in all directions concerning such aspects as industrial waste dislocation, the ecology of the working places, reactivation of the soil and energy saving, and we commit to undertake all that during this period across all our companies.
Our main objective and commitment is to ensure growth of business with results improving year after year.
Does it mean that going greener has a positive impact on the cost component of the business?
It does, but in an indirect way. In terms of today’s international environmental requirements, the Russian companies are not yet ready to implement the international production standards. This entails additional costs like high payments for waste dislocation and maintenance, high fees for non-compliance with the environmental standards which makes an indirect impact on the cost of business.
Two years ago, in the wake of the financial crisis, the market in your area contracted 40%. What is the situation in Russia today? What decisions were you forced to take as the General Director?
The decline was different across different industries. For instance, the crisis did not affect the production of aviation bearings whereas the decline in the automotive sector of our production was about 30-40%.
Besides, the crisis did not affect the client base of the company. We have acquired new clients because some of EPK’s smaller companies took on the supplies that their sister companies failed to cope with. For instance, the Aviation Bearing Plant (ZAP) in Samara had an equal supply quota with Volzhskiy Bearing Plant (VPZ) in the Volgograd region for AvtoVAZ. During the crisis, when the Samara Plant experienced serious difficulties, VPZ increased its output 60% to compensate that. As a result, we have increased the supply quota and took on new clients.
In general, the year 2009 was not productive in terms of business. We were forced to optimize the personnel due to a smaller operational load. However, we made sure it was efficient and timely, starting as early as November 2008 when we were already aware that the crisis was approaching.
We also froze all investment projects with no specified start of financing. In fact, the only projects that were not suspended were those transitioning from 2008 or the most important ones that would render revenue in 4-6 months.
Thirdly, our companies had large turnover assets in terms of ready products and semi-made products. We minimized purchases of the necessary materials thus economizing on acquiring the main raw. We cut the stock of ready products and were selling the stock in priority. As a result, we managed to close 2009 with a positive balance. Decrease of production was in proportion with the decrease of profit.
2010 seems to be a positive year for the bearing industry worldwide… Growth is driven by roll bearings 13% in the world this year according to the world statistics. Did you notice any changes or progress in Russia and the CIS?
I don’t think it is correct to generalize if we speak about the bearing production industry but, according to my data, EPK has grown about 20% in terms of the sales volume.
Which sectors were driving the growth?
Firstly, Aviation Bearing Plant, that had no decline in 2009 and has shown about 15% of growth in 2010 due to different factors: increase of external military and industrial contracts and development of aviation construction in Russia. Volzhskiy Bearing Plant, representing bearing production for the automotive industry, increased its output 60% as compared to 2009. One of the positive factors that drove to it was the car utilization program.
The growth started as from March 2010 and we expect to remain here till the end of the year.
According to the conditions of your agreement with EBRD, EPK is committed to post stable growth for the coming six years. In the mid-term, what strategy has been established to reach this growth? Are you focused on the Russian market or adventure to do partnerships abroad?
Talking about our largest existing projects, we have a joint venture with Brenco for production of a new type of tone bearing units with enhanced cargo capacity. EPK purchases Brenco’s equipment on a parity basis. It was thanks to our efforts in implementing Brenco’s leading technologies in the railway segment of the bearing market that Brenco has received global recognition and enjoys the leading position in the North American market. At the current stage, this project is already close to accomplishment.
EPK also has a few agreements with German and American partners for technological support that envisage audit of the production facilities and production certification according to the international standards. To name a few, Volzhskiy Bearing Plant is involved in international exports for Daimler AG (Germany). We have audited our facilities, purchased the necessary equipment, digital programmed mills, chose a supplier to secure the stock of materials, they audited and we received a certificate of approval. One of our other German partners is ZF that has a subsidiary in Naberezhniye Chelni – ZF Kama - for production of automatic gearboxes for Kamaz. We also have an agreement with General Motors (USA) for production based on their standards.
As you mentioned, Aviation Bearing Plant has currently shown some of the best results within the entire Group. How do you see it developing in the short term?
Aviation Bearing Plant develops customized aviation bearings improving the precision and endurance of the bearings and offering new constructions developed at our special in-house design bureau that uses new materials. Here our task is to anticipate the expectations of the customer and to maintain our technological level in the military and industrial complex working to create new Russian engines.
What projects would you like to realize in the short term?
Our priority on the Russian market is our long-term agreement with the Russian Railways. In fact, EPK accounts for 70% of all bearings supplied for the railway cars and locomotives. It is important to mention that railway bearings require significant investments, and we plan to offer Russian Railways a few developments. Besides, technologically speaking, Russia is transitioning to another type of railway carriage, and the further development of railway will have a strong impact on EPK’s further development. The railway transport accounts for 80% of the transport in Russia due to its extensive geography and a lot of remote areas, so there is no doubt that this part of business will prevail for us.
We also expect considerable changes in the automotive industry which needs a state policy to support the Russian manufacturers of bearings and other components. Besides, new joint ventures will bring new technologies and equipment. All companies from the bearing industry are involved in creation of a new strategy of development that is coordinated by one chosen company that receives suggestions of the industry.
What are EPK’s suggestions?
In the long term, we need a legislative framework to localize production of spare parts for the automotive industry, better import conditions due to the planned overhaul at some enterprises and lower interest rates.
| Company: | 欧洲轴承公司 |
| Position: | General Manager |
| Country: | 俄罗斯 |