Incorporation of customer’s requirements is on the front burner

Interview with Valery Nazarov, Electronmash CEO

– What circumstances required an expansion of the production unit of your company? What kind of expectations is associated with this decision?

– The production department was founded in Electronmash in 2000. From then on the plant load increased every year. Thuswise, we had to increase the production capacity and increase the production efficiency. At some point we realized that the further growth without a brand new step, a large, well-balanced and technologically elaborated full-scale manufacturing facility is impossible. In 2007, we began construction of a new plant. Today the first phase is commissioned. It consists of two workshops with a total area of 4300 square meters, a warehouse with an area of 1,200 square meters and a building with an area of ​​2,400 square meters. Construction of the second phase has been designed.

– What are the advantages?

– First of all, at present in terms of our production capacity we have approached the situation when we can participate in any, even in major projects. And having seen this, the market responded quickly. We are recognized now as a major producer and invited to participate in large projects such as the construction of a terminal in Ust-Luga, Tikhvin Railway Car Building Plant, South-West Central Heating and Power Plant, the cement plant in Novorossiysk, Olympic facilities of JSC Gazprom in Sochi. Moreover there is an interesting detail: not only large Russian companies, for which we are implementing these projects, responded in this way, but our foreign partners - suppliers of the components did. Seeing our increased capacity, they became more confident to support us. All of the above projects are the results of joint work with such companies as ABB (Ust-Luga port, the Olympic facilities in Sochi, Tikhvin Railway Car Building Plant), Schneider Electric (South-West CHPP) and Siemens (Novoroscement).

For another thing, the increase in production capacity resulted in reorganization of the company’s management system, full implementation of the quality management system principles, as well as a constant movement to improve, raise the efficiency of production processes, to improve product quality.

By the way, upon completion of all this work it has become much easier for our company to undergo various certification and licensing procedures in various government agencies and large companies certification and licensing procedures in various government agencies and large companies that want to be sure of reliability and quality of the equipment supplied by them. These are such companies as Energoatom, JSC Gazprom, JSC FGC UES, JSC IDGC Holding, JSC Transneft and others.

Third, growth of production capacity has allowed us to implement much more efficient design and manufacturing technologies, such as CadEL computer aided design system and EHRT bus bar systems. With the increased volume it allows us to lower the final cost for the consumer, making our equipment more competitive.

– Does it mean that development, production and promotion of own products come to the fore for your company?

- I am sure that if the company does not produce and thus does not promote its own product, it is doomed to extinction. Development, production and promotion of own products are the goal of any company thinking about the future. These tasks have been always in the front burner for Electronmash. Introduction of major production capacity does give our company advantages in the sector of final product assembly. Therefore, we are planning to improve development and promotions in this particular segment.

– What is the current strategy for the development of your production, how do the achievements look like at the moment?

– Strengthening and improvement of the already large, developed company cannot take place abruptly, in leaps and bounds. The main stability is associated with a firm onward movement, although this movement happens bit by bit every day, let all employees and managers think about these enhancements and improvements all the time. This is the basic principle of the Japanese Kaizen system showing good results at many industries. This is also our strategy for the development of production. Facilitated workshops are organized for the employees; we are trained and inspected by the professionals with extensive experience in implementing such systems, additional tools for motivation are being introduced.

In addition, our specialists when designing the equipment tend to use pre-tested standard engineering solutions. The base for standard solutions is embedded in the CadEL automated design system developed by our company, which is promoted by us among designers and our customers. This simplifies greatly the equipment designing process, reduces production time and excludes a lot of mistakes.

And the results will not slow to arrive. All this will reduce production costs and improve the competitiveness of our products. Sales and overall production must grow. For the past two years, our production level has increased by 50 percent. In 2011, a growth of more than 30 percent is planned, and the statistics of the first and the second quarters confirms that the plan will be implemented. I consider the opportunity to participate in projects of the highest possible volume and complexity that may appear on the market is the other major achievement of our company. In Russia there are about ten manufacturing companies with such opportunities.

– How will the expansion of own production influence the other units of your company?

– Of course, increase in production capacity offers great opportunities for commercial services. It is necessary to strengthen the technical departments and maintenance services, both in terms of number and quality. There are more interesting and complex technical challenges requiring specific expertise and experience. Therefore, we employ new professionals, change management methods. The company is an entity, and strengthening of one of the units is not possible without strengthening of the others.

– Many years ago, your company was established as an official distributor of the world's leading companies. Today, the company's product line is presented both by own products and developments and equipment of your partner companies. What is the relationship of these areas now? Have the lessons of the long-term cooperation with world leading companies helped in creation and development of your own production?

– And now cooperation with the leading manufacturers is the main focus of our development. For better and fuller satisfaction of our clients’ needs, last year we began to work with Siemens equipment having become their official partner. In addition, we continue the long-term cooperation with ABB, Schneider Electric, Elsteel and GBE. If in the early years we offered only turnkey solutions, products and packages of these producers, now we offer, in addition to the above, our products developed on the basis of the components and technical solutions of these companies.

Often, when you participate in a major project it turns out that for a number of technical, time or other reasons the project includes partly our equipment, and partly the end products of these concerns. And it can give the best “price – quality” ratio. With the development of our production the focus is increasingly shifting to our products. In terms of technical and operational characteristics, it is almost equal to the products of leading Western manufacturers, and as for the price, terms and flexibility in the process of work on the project, we have well-defined advantages.

This trend exists despite the current customs duties, according to which the imported equipment identical to the equipment produced by our company is imported with a zero customs duty, as having no analogues in Russia. It's about time for our legislators and the government to reconsider these outdated rules. Life and production operations in Russia are moving forward. We do not need the same protective duties, as in the automotive industry. Give us equal conditions with the Estonian, Czech, Lithuanian, Polish and other manufacturers.

And the experience of working with companies - global manufacturers - is a huge boost and an example for the development of our company, our production operations! We often visit our partners’ plants; send there our employees and clients to adopt their experience. These are control technologies and equipment, and the ways in which the partners’ production was developed - all these things are very interesting and important for us.

– Today, your business is involved in a number of large “energy” construction projects, including projects of national importance. What goals does this fact put in front of your company, including your production department, engineers, designers and planners?

– The matter is that our company operates in the “expensive” segment of the market. We offer qualitative, reliable equipment based on the imported components and advanced technologies of the electrical engineering industry. This equipment is purchased by the customer who has studied and compared it with peers and who understands what he pays for. As a rule, they are clients who are concerned about reliability of power supply and thus, about the purchased equipment. In many cases, these companies that previously worked with European manufacturers, but being satisfied with the quality of our equipment, and having seen all the benefits of working with a Russian manufacturer of the European level, have become our clients. But these partners expect that Electronmash provide them with the declared European quality of the equipment and the services.

So in terms of improving the quality of the equipment and services, these important projects do not require any intensification and improvement in our work. But to comply with the required deadlines and to sustain high production levels, it is necessary to increase the production capacity, using all the tools that I mentioned earlier.

I am glad that our energy industry and other industries can finally use the more advanced, reliable equipment with a long service life, and do not buy whatever just “to rob Peter to pay Paul”.

– What new developments, new products will be introduced to the market in the near future?

We are constantly working to improve our products, such as LV switch gear ASSOL, ELTEMA switchgear, ExOn DC control panels. Thus, this year of 2011 we plan to complete the development and to carry out all the necessary tests of Switchgear “ELTEMA” rating 6-10 kV with Sion (Siemens) and Evolis (Schneider Electric) circuit breakers. In addition, this year we plan to complete testing of ELTEMA + Switchgears rating 35 kV and to get it certified. We are working towards development of the issues of soft starters and frequency regulation of electric drives rating 4-12 kV.
Our primary advanced development of this year is a software product “CadEL”. This is a computer-aided design system for electrical distribution equipment, which has already been used successfully by our employees for some time, and starting with this year the new instrument can be tested by the designers, customers, and specialists of the electrical units from various enterprises. The program will automatically produce documentation for ordering, calculate the project budgetary cost, and eliminate any possibility of errors. The first replicated version of the program makes it possible to design low-voltage devices; the future updates of the program include its functionality extension providing for work with the packaged switchgear. In the future, the system will have a database on Electronmash product range.

– And what are the recent changes in the demands and requirements of your major customers, to what extent do these changes affect the policy and strategy of the company?

– Customers’ requirements to the quality, reliability and enhancement of the products are constantly rising. At the same time, we face the demands to reduce the cost of the equipment supplied. The customer wants to see more and more automated equipment. And the geography of these high demands is constantly extending. Sometimes a province sends requests for such equipment that is not imported into the country even by the world leaders. It has become possible due to the greater awareness of the customers via the Internet, improvement of the understanding of the importance of reliability of power equipment and its energy efficiency by managers and owners of companies. In this regard, our company gives priority to the issues of reducing production costs through introduction of the new equipment and technologies, process and design management improvement, as well as quality and service management improvement. We are studying the European companies’ experience, the world leaders’ vision of electrical engineering development. We find out from the customers what they need. We are approaching the goal of performing more and more complex engineering tasks.

Strategically, we are approaching the target goal of becoming the number one in production of low-voltage and medium voltage equipment in the North-West region.

Energy industry and production sector of Russia, № 9 (173) 2011