"Promet" LTD. CEO Interview

by Promet

"There is always a day to improve something..." (Sarsenbayev K.T.)

direktor— Kanat Turebayevich, would you, please, tell us a bit about yourself? 

— Well, I'm in my 50s, so I'm quite in my productive prime now and I have quite a broad work experience. I was involved into scientific labour, graduated from Chemistry Faculty and worked in Chemistry Department of Kazakh Academy of Science for 7 years. Passed my Ph. D. defense there also. After that, I'd worked on a chemical plant in Pavlodar for 7 years. Then I had been switching various positions in "Astana Motors" company for another 10 years. Then I took an eight year long "detour" to a certain company that distributed "Peugeot" automobiles around Kazakhstan and returned to "Astana Motors" again. There, I was in charge of a "Hyundai" vehicles assembly plant that carried out pilot projects of light trucks assembly that were followed by implementation of more complex vehicle construction technology, with welding and complete assembly of the automobiles - so-called Semi-Knockdown technology. We were happy to have our president, Nursultan Nazarbayev, personally visiting our plant to overlook the construction process and evaluate the quality of our products. It was a time full of interesting and significant events for me, so I was very engaged back then. And so, 2 years ago, I've ended up at "Promet" metalwork plant. It was a new challenge for me, because now I'm in charge of more than hundred people. 

— You've chosen a path of technology throughout your life. Despite having a degree in chemistry, you're working with metal, as you did in the past, when your work was connected with mechanics and machinery. Why did you choose this very scope of activity? 

— Well, the first thing I'd like to point out is that a degree in chemistry has to do with natural sciences and education. There are those we call humanitarians, and those who're proficient with the natural sciences - physicists, chemists and mathematicians. I mean, those people have an unique set of mind. But I don't want to say that a natural sciences degree is bad in any way; it is sometimes advantageous. Natural sciences are attractive due to their strict logic, the kind of logic you cannot simply discard. For example, a problem in math woudln't be resolved "just because", exactly as you wouldn't get a desired chemical reaction in chemistry for no reason. It works the same way for the things we do on our plant - infrastructure solutions, that is - which include both mechanic and constructional elements. I'd say that this very scope of activity is somehow a continuation of my natural science education. Here, if you allow any error to squeeze through, it will definitely spring up in the worst place you could imagine. If a construction is apt for certain amount of durability and an error is made in its design, it can lead to rather harsh consequences, so the logic behind this is very simple - natural science education encourages you to act in those scopes of action that are characterized by utter precision and strictness; that's exactly what we're doing now on our plant.  All the metal works and construсts designed at our plant are ultimately precise.

— Tell us, please, about your plant's history. How it was during the period of establishment? 

— Well, the plant was established back in 2007. Unfortunately, I was not there during the period of establishment, but I know its history and it fascinates me. Because, you see, the bulk of major post-Soviet factories have undergone the scenario of privatization and were divided into different production facilities; people would make maximum use of the existing infrastructure (locations, access routes and engineering communications). This plant, on the other hand, was erected in place of some ravine in 2007, and a range of very expensive metal working equipment was purchased.  For example, a laser metal cutting device by Swiss brand "Bystronic" that cost 800000 euros, along with other machines: a cutting-out revolver press and several bending machines by "Finn Power", a crop shear by "ADIRA", an Italian coating booth by "TAISS" with the technology of preliminary deoiling and parkerizing of metal and so on; all these very costly appliances were used by a group of enthusiasts, to put it frankly, out in the open field, which was truly surprising for the time. Their main goal was to duplicate a certain plant they saw somewhere abroad and to establish a plant for production of containers for telecommunicational use, and we've further developed this idea by now. 

— What are the basic product groups of your plant?

Well, infrastructure will stand out as one of the sharpest problems in Kazakhstan, with its vast territories, for good 20-30 years on; any pipeline, any automoile road or railway should be accompanied with a communication network. If there is such a network, it is usually protected by a group of outdoor vandal-proof shelters that we produce. In case of a fiber-optic line or any other lifeline (e.g., an extensive gas or oil pipeline), there is always a certain solution used: a range of unattended communication hubs are set up at appropriate intervals. And we produce such hubs, too. Along with it, we've expanded our product line and we're producing block-modular buildings for various use; for electrical substations, in particular. Also we're running a big joint project with "Siemens" and "Kazakhstan Temir Zholi" companies: we're producing block-modular buildings for renovation of railway substations run by "Kazakhstan Temir Zholi". Another area we're involved with is the Western part of Kazakhstan with its oil- and gas-abundant regions, where electrical substations are set up. There is a range of very strict terms and requirements imposed upon those stations: they're to be sturdy and proof against environmental issues and durable. We can produce such solutions as well. Now, there's one more successful project we're running - the furnishment of communication networks of "Kazakhtelecom" and cellular operators. For example, a state company by the name of "KazTeleRadio" is about to put their digital radio network in operation, and those sectors of the network which are located outside the town have the communication installations that were produced at our plant. 

— Thank you. Tell us, please, about the basic stages of your plant's development? Were there any specific periods during last 8 years that you could point out? 

— Actually, eight years is not so huge a term, you know, and it's quite hard to accentuate anything in particular. Usually people begin with simple orders, and then interesting ideas come along and big companies like "Siemens", "ABB" and "TengizChevroil" show up. For example, people from "TengizChevroil" have developed their own system of technical requirements for  the items they use, and those are very tough, I'd say. Usually they'd make their orders somewhere abroad rather than in Kazakhstan. Approximately 2 years ago their quality inspectors started to visit our enterprise on the grounds of counsel - they'd check our products, provide recommendations and introduced us to their specifications system. And we were competent enough here, at our plant, to completely fulfill them. We've renewed our welding gear, trained our personnel, obtained a license and passed numerous exams. We started to work according to the TCO format: every stage of works is put on record, acts of hidden works are drawn in presence of an independent expert and so on. If any discrepancies or defects are discovered during the quality inspections, a fault detection report is filed and reconstruction is processed. Hence, as we passed different stages of competence while completing orders for "Siemens", "ABB" and "TengizChevroil", we've achieved a whole new level of product quality. Of course, as we commissioned our products to the clients, we felt very proud, because all of them were made in Kazakhstan; 96% of all production - including raw materials, metal working and all kinds of processing - was done in Kazakhstan, so we can frankly say that all our products are truly "Made in Kazakhstan". And we do have, of course, an ST-KZ Certificate. We're constantly improving and modifying our workflow. For example, from November, 2014 we started the process of implementation of the "Rational Production" system. We were also awarded a grant from the European Bank for Reconstruction and Development and invited a competent consultant to implement the "Kaizen" system into our work processes. The system allows for increase of labor effectiveness, decreases the urge for square meters, expands our product suite etc. As a result, all the orders are being fulfilled faster and with higher quality. This stage is quite important, I think. 

— What problems were you facing during the establishment period? 

— Well, in our scope you deal with problems quite often. The first and the most obvious problem is the problem of manpowerl. Although we had been experiencing staff turnover and labor alienation for some time, and we had a hard time changing the attitude of workers towards their labor, during the last year we finally managed to build a reliable and competent team. The time from 2009 to 2010 was quite a rough period for businesses, especially for industrial enterprises. We faced financial depression, when there were delays of salary payout that lasted up to 3 months. Nonetheless, we tackled the problem, and the first thing we did we started to pay allowance on time and bought some new working uniform for our laborers (2 pieces for each employee). We've also cleaned our production facilities of unnecessary junk and performed a cosmetic renovation. We've finished constructing our administrative wing, wherein we've placed a shower room and a cafeteria; we began to subsidize nutrition for our workers: for example, one meal (that includes a main course, a soup, a salad and, sometimes, even a dessert) costs mere 100 tenge for any employee. And it all boils down to activities aimed for improving labor conditions. And so, all the problems we had with our personnel - staff turnover, unproper treatment of working places and lack of motivation - became obsolete. At present, all our personnel is happy to work at our plant, and they come here full of joy and enthusiasm. They can feel our care, they see that the management pays enough attention to them: all problems regarding instruments availability and quality along with those of machinery maintenance and heating during winter are solved immediately. To conclude, we just started fixing social problems, and the problems with staff were quickly solved and forgotten of. 

There are also some problems with competition. We are, for example, doing everything in compliance with National State Standards and Construction Norms and Regulations; all our CNC-controlled metal working devices are performing flawlessly. But there is the worst kind of competition: some "uncle Pete" from the boonies gets a welding gear, does four pipes, metals it, paints it and gives it out as a quality product. Our products, on the other hand, totally respond to all technical terms and requirements: every detail is sharply clipped and firmly welded; every element is painted individually, and it all sums up to a long-life warranty. Generally, the term of warranty provided for such products is 2-3 years, but we provide up to 10 years of  warranty for our products. Here's an example: our people once examined the containers subject to utilization by one of the ocal cellular operators, and a fair part of them were the types made by aforementioned "uncle Pete". This kind of containers go waste in 3 years: they become corroded and they deform while containing half a million bucks worth equipment inside. And they do not consider one factor: when expensive equipment is housed in such cheap containers, their network might, of course, grow extensive during next 2-3 years, but when this time will have passed, those containers will be subject to replacement; and whoever agrees with such a setting is definitely a negligent proprietor, for a miser pays twice. Unfortunately, it often happens that our potential clients resort to "uncle Pete", thus supporting those unqualified laborers. This problem of improper competition is, alas, still existent. 

However, "TengizChevroil" would never go and order something from "uncle Pete", because they know how important quality is. If we were to compare a costly item and a cheap one, we'd see that you'd pay 2 times less if you bought a cheap one; but when it comes to infrastructure solutions, you have to consider that those things are bought to serve for decades, and as you make the decision to buy, you have to look at the price of ownership rather than at the value of purchase; if you will be forced to substitute those cheap containers for new one, you will pay twice. Now, try to imagine the costs of a cellular or digital radio network stoppage, even if it's short... 

Well, if it is the information about hardships you've asked for, there's one more - how to persuade a prospect that our solutions and products are more rational and beneficial than other options? We bring them to understanding of the fact that our solution is affordable and viable because it can serve them up to a decade. And then the prospect replies: "Well, I do not have a budget this big. We'd prefer something cheaper, because we cannot afford your offer.". The understanding comes after some time. The problem is, basically, that a fair amount of time must pass before they will understand that infrastructure solutions must really correspond to the requirements of the equipment they want to place into them. 

— On your opinion, what are things that make your company stand out amongst the competition? 

— Well, since we have contracts with companies like "ABB", "Siemens" and "TengizChevroil", we certainly do have a range of advantages. One of them is our ability to adapt our construct for almost any client in rather short terms. Let us pick a factory much bigger than ours that used to manufacture certain product for "Siemens" company in Kazakhstan; guys from "Siemens" come to that factory with another order and, after looking over the offer presented by the factory, they find out that the offer is not satisfactory in terms of dimensions. They ask the factory to adjust the dimensions and location of their productional machinery, but they get a following answer: "Sorry, but we have these and these standard products. Please, make use of it, for we cannot offer you anything different because we don't have it in our product line". Then those "Siemens" guys come to us and wonder: "Can we make these and these dimensions, this and this construction?" and so on, and we reply: "Hunky dory!"; our design department quickly reworks the constructive and gives out a required solution, and this is done very quickly, almost on-line, actually. This can be done several times at the stage of project preparation. So we possess a more flexible approach in comparison with other big factories. This is our most significant advantage. 

And we have plenty of other strong points. For example, close control equipment: our laser metal cutter by "Bystronic" can cut metal that is up to 20mm in thickness to the accuracy of 0.01mm. When anything is processed on this device it usually never requires any additional processing. Our revolver cutting-out press also works with a high, almost laser-like, precision, and is very producitve. The uniqueness of our equipment stock is another thing that marks us among other companies. We can take on huge projects: for example, during last year we've made 100-150 metal containers for "KazTeleRadio" company. Our gear allows us to work in 2-3 shifts, so human error is not possible. We can load up raw metal in the device and it gives out fine panels, and any kind of build can be easily scaled. 

We have a good and reliable team, and we have accumulated significant experience in the area of infrastructure solutions, so some people address us for quality control inspections. 

— Please, name those items which you can produce easily with a high level of quality. What kind of orders can you fulfill? 

— The most basic group of items that are guaranteed to be of high quality is infrastucture solutions. Companies like "Kcell", "Beeline", "Tele2" - local cell operators - they're sufficiently aware of our products' quality, so in case they're in need of something relevant to our activity they always refer to us; companies like "KazTeleRadio", "Kazakhtelecom", "KazTransCom" and "TransTelecom" also had positive experince using our products. Any type of product is made quickly and thoroughly. 

We also produce containers for diesel generators. For example, now we're running a project for one of the "TengizChevroil" sites - they've ordered containers for seven huge diesel generators that are 8 meters high; a huge order, but we're doing it just fine - quickly and properly. 

In addition to that, we produce block-modular buildings and antenna mast structures, 16 to 24 meters high. 

There is another interesting product present in our suite - it's called mini-shelter. Some cellular operators now tend to withdraw from the container solution in urban areas and house their equipment inside mini-shelters. They look like a vandal-proof safe that is 2 meters tall and is furnished with climate equipment; inside there is a batch of communication hardware.  

— Are you often addressed with a request to designate a non-standard solution? 

— In sober fact, each and every our solution is non-standard to a degree, especially when it comes to energetics. In case of electrical substations, for example, almost all our solutions are peculiar, because we have to draw them from the scratch every single time. All of the substations require a new kind of approach. They're usually quite big, and you have to stick to some limiting dimensions so they could be delivered to the destination point; i.e., an element of such a substation cannot be wider than 2.5m, or higher than 4m, or longer than 15-17m. There are substations that are much bigger than the limiting dimensions, so we have to make them block-modular, consisting of parts. It is sometimes difficult to design a construction that would correspond to all the technical specifications and requirements imposed upon a solid building while being demountable. It often so happens that our products are non-standard and unique in their core: either a roof becomes supporting, or you have to erect beams inside the construction; sometimes you cannot do even that and you have to reinforce the construction by other means, so our objectives are always interesting and challenging.  

— Your administrative and production locales are kept in ultimate order. Is it also a point that contributes to your success? 

— Now, we're implementing the "Kaizen" system, which is "a system of constant improvement". If they were so ideally neat, there wouldn't be anything to go for... Well, I don't know if it's to our fortune or to our pity, but everything is not so ideal, so there's always a day to improve something, and we're doing it. One of the "Kaizen" system parts is "the system of five S-es" - five elements that let you always have at hand only the things that are necessary for your work and the things you actually use. If you don't use something, you should put that away. You have to be surrounded only by the things that you work with and nothing else. It helps to organize your workspace in such a way that any worker can notice unnecessary items and those that are necessary, but absent. This is, basically, one of the most important principles behind the increase of labor effectiveness. 

— If you had a possibility to address your clients, what would you say to them about your enterprise or your offer? 

— A client evaluates everything from the financial point of view. I call it "the calculator business". He takes his budget, allocates a certain sum that is affordable for him, and figures. "The value of goods is not the main thing to consider. The price of ownership is." - that's what I tell to all my clients. No matter the thing you purchase, you should know that the most important thing is the value of ownership, that is, for how long this item will be useful to you and how much money will you spend on its maintenance.  It is easily seen with the automobiles, because many people have them and they can comprehend it, although they need time. When I address my clients I always offer them to evaluate our products from the value-of-ownership point of view. Unfortunately, this thing is greatly comprehended by Western businessmen, but not local ones. Their folk never tends to buy the cheapest product possible; their companies never have the strive for the cheapest bargain ever. And it is not because they're, as we say, well-fed capitalitsts and they're in clover. It is because they keep tally of every dime, and so they never buy cheap. Here, people do not cherish every penny, alas, so they buy for a song.

— Thank you. And the final question: what are your plans on future development? How would you like to see your enterprise in near future? 

— Well, one of our activity elements is the necessity to make plans for short-term and long-term perspective, and we do have an idea of how do we want it. We have quite a good base for development: a fine amount of grounds (5 hectares of territory, although we use only 2 of them, so we have 3 more in reserves), financial stability and ambitious plans for the upcoming year. That's why we can plan and we can grow. We can somehow extrapolate our current economical scene for five coming years, and we think that in next five years we will become the leaders of infrastructure solutions in Kazakhstan. We will keep developing our strong points and it is possible that we'll open a complementing production facility that will improve our competitive ability and will allow us to offer complete solutions. This is one of our perspectives.