Ilya Korotkov: “We have the main thing – the people and the Russian forest”

At the Cherepovets plywood and furniture factory, they are confident that the business will not only overcome all difficulties, but will become even stronger as a result. More than half a century of experience is behind us and the team consists of efficient and professional employees.

– Ilya Evgenievich, how did the sanctions affect the activities of your company?

“Sanctions continue to be imposed and markets continue to close. Such a difficult situation is now developing for wood processors. Each new sanctions package introduces new restrictions. At the moment, Cherepovets PMC is not able to sell its products in North America and Europe, which are the most developed high-tech markets, which, of course, affects the company’s export potential. Taking into account the divergence of exports from North America and Europe, ChFMK’s export sales lost 40%. We are now actively engaged in the search and development of new sales markets, mainly in Asian regions. However, it will take a long time for commissions to be created in new markets. Unfortunately, such connections are usually made for a very long time. The Asian markets for our company are new but rapidly growing. This is a positive development, so our main task is to enter effectively and gain a sustainable foothold in new markets. It will not be easy, it will take a lot of effort and time, but everything is completely solvable.

– You said you could not sell your products in North America and Europe. For what reason? Do they refuse or problems with logistics?

– No, this is a complete embargo on Russian products. The government of these countries forbids its customers to buy goods from Russia. This is a problem and the second is logistics. The same governments of the same countries forbid the transport companies to cooperate with goods from Russia and to go to the Russian ports.

– And what are the growth prospects of the domestic market?

– We must honestly admit that the domestic market for our export products has always been small. In recent years, we have been in dialogue with our government, with ministries and services responsible for developing the domestic market, stimulating demand in Russia for the construction of wooden houses. This will make it possible to use the products of our industry in Russia in a larger volume. Until recently, we exported up to 90% of plywood and timber, because the Russian market could not provide us with such volumes, so now it is difficult to say that we can replace exports with the domestic market. Yes, most likely, we, like all other producers, will be able to sell extra volume in the domestic market, provided that the state continues to stimulate domestic demand in the country: preferential mortgages, financial loans, major infrastructure projects. Here I see the main task of the government: to create conditions for the rapid growth of the economy, for the rapid growth of domestic consumer demand – the implementation of major infrastructure projects, the creation of new industries, including high-tech industries, development of agriculture and manufacturing complexes, rapid construction of housing, including individual, construction of social facilities.

– And what will be the prices in the domestic market?

– I would like the prices in the domestic market to be dictated by the market itself and not by the political and economic situation of the country. We will work in such conditions, the main thing is that prices do not fall below a certain margin, which allows the company to implement investment and modernization programs, create new jobs, grow and stay in the ranks.

– Recently, the Government of the Russian Federation decided to postpone the fulfillment of the obligations for the implementation of priority investment projects in the field of forest development. How relevant is this to your company? What priority measures should the government take to support the forest industry in the near future?

– I would like to say that since this whole situation arose, we have been working very closely with the regional and federal authorities. We are already feeling the impact of federal support measures. Today, all our carpentry companies in the area have received the status of backbone for the economy. In this regard, we were supported by the Governor of the Vologda Region, Oleg Aleksandrovich Kuvshinnikov, who sent a corresponding appeal to the Ministry of Industry and Trade. This will make it possible to take advantage of most federal benefits and subsidies to manufacturers. I must say that today the Ministry of Industry and Trade has set up a good group of professionals who support the industry and try to implement all the initiatives and support measures we propose at the governmental level. If you look at the information field, you can see that new support measures are being announced in Russia every day. One of these initiatives was the extension of the official deadlines for the implementation of investment plans in the field of forest development. ChFMK JSC, together with the Vologda Lesopromyshleniki Group of Companies, is implementing a priority investment project for the production of large Plitwood plywood in the Gryazovetsky area. Most of the business has already been built. As long as we do not stop or slow down anything, the project is implemented, but we can not avoid delays in the supply of equipment related to logistics problems, so the project implementation schedule is likely to shift. We have strongly insisted on temporarily suspending such complex bills as the third federal law, which greatly complicates the lives of timber processors and lumberjacks, and now this measure is being considered by the government of the Russian Federation. For the forest industry, there will be a postponement of rent payments based on forest lease agreements, a procedure is being developed for the granting of a payment for the use of forests, which is credited to the regional budget. All of this is being implemented and it is very good that we have developed a productive dialogue with local, regional and federal authorities. We will fight with all our strength. The measures taken are really a good help for the companies for which the issue of maintaining the company and the team is coming to the fore today. These support measures allow us to focus on the main thing, so that later we can return calmly to development issues.

– On staff and social policy. Are you planning changes here in relation to the current situation? You announced the transfer of employees to a reduced working week …

– We have always said that we have social responsibility in the areas where our production assets are located. Nothing has changed in this context. We fulfill all our social obligations and the requirements of the collective agreement. Our social facilities, such as the stadium and the doctor’s office, operate normally and the employees enjoy all the benefits. In addition, our social facilities actively offer their services to employees of other organizations, public sector employees and retirees. The government of the Vologda region is actively involved in supporting employers. In this agenda comes to the fore the preservation of labor resources in all companies in the region. I do not think that any company plans to lay off staff, even with the reduction of production volume. We want to avoid this, so together with the regional government we are developing support programs. Going to a shorter working day is one of the decisions we have to make, but only if, in a short period of time, it is not possible to achieve the desired level of production. It is important to understand that this is one way to save the team. This is the best social step to offer people jobs and wages.

– Ilya Evgenievich, and yet, in what mood do you look to the future?

“Today the company is operating normally, the planned programs and projects are being implemented. Cherepovets FMK JSC, Fibroplit LLC, as well as Sheksninsky Wood Board Plant LLC and VokhtogaLesDrev LLC, created jointly with the Vologda Lesopromyslenniki group of companies, are on the backbone list, which means they enjoy state support. Yes, it is not easy to work in the current conditions. But Cherepovets FMK is a company with more than half a century of history. During this time, tremendous capabilities have accumulated – both productive and technological. The company employs a very effective group of like-minded people. In addition, we have managed to create a vertical production system with a high degree of differentiation and a wide range of products, we work effectively in cooperation with the largest forestry companies in the Vologda region. In our history, we have gone through many crises, and they were very hard. But the well-coordinated work of professionals made it possible not only to successfully exit them, but also to increase production capacity.

We will overcome this crisis, we will explore new markets, we will create new logistics flows and we will expand our responsibilities and maybe we will enter new market positions that we have not thought about before. After all, we, unlike our competitors in Europe, have the main thing: people and raw materials – Russian wood.

Ilya Dranitsin

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