Interview with A.Yu.Soukhnev, Director General of ZAO “Stalepromishlennaya kompania” (“Industrial Steel Company”/SPK)

By reference: Alexei Yu. Soukhnev was born in 1969 in Kazakhstan. In 1992 – graduated from the Radio-Technical Department of the Ural Polytechnical Institute, where his actual career started. Since 1991 – held the position of Director General of ZAO “Stalepromishlennaya kompania”, a member of the Board of the Russian Union of Metal Traders.

MetalTorg.Ru: ZAO “Stalepromishlennaya kompania” has been present on the market for over 10 years. The history of the company is the history of a great work beef up its structure and the whole Ural metal trading. Could you tell a few words about the fist steps on the company?

A.Yu.Soukhnev: The Industrial Steel Company was formed in 1991 in the city of Yekaterinburg. Initially, the company was mostly oriented at the roll trading. In 1996 it was first decided to establish an affiliated company in the Ural Perm. The project turned to be successful and opened a way to the construction of 16 more sub-companies and 11 representatives through all over Russia. In addition to metal trading in the regions the company deals with quality services and professional management.

Today SPK is a Russian leader in metal roll trading obtaining an affiliated net constantly developing sales in different Russia’s regions.

MetalTorg.Ru: How do you explain the smooth work of the most branchy affiliated net in Russia? Links with producers? Additional services at your own metal bases? Universal supplies (various roll)? Or something else?

A.Yu.Soukhnev: With that divaricate structure, we have to face such problems as a lack of financing and experience, difficulty of the remote managing, staff problems. The last one attracts very serious attention of our managers, as efficient management is capable of providing the company’s market success, its stability and development.

MetalTorg.Ru: You are actively promoting on the market the strategy of servicing metal centers, aren’t you? Do you think they have prospects under Russian conditions and what is the reason for their current narrow spread (greater supporting expenditures, traditional conservatism of the market participants, clients’ unavailability for such services, etc.)?

A.Yu.Soukhnev: The servicing metal center concept implies a combination of “warehouse + servicing center”. The concept involves serious investments into the purchase of modern metal work-up equipment. I can’t disagree that our clients are partially unprepared to such services as they are not well aware of them, and our task is to make up for this gap.

MetalTorg.Ru: On the other side your company has to allocate great means to additional services, i.e. stocking pre-selling preparations and so on. So, does it make sense to sell production without these preparations?

A.Yu.Soukhnev: Roll price does not depend on the factors you mentioned. Overhead expenses and the price of equipment are only referred to the prime cost of the processed metal roll. It is quite normal. By all means, it would be easy for us to sell production without special preparations, but the market has its own laws we should abide by. Being a progressive and creative company we cannot miss a chance to develop this direction.

MetalTorg.Ru: As was above mentioned, SPK is a universal supplier permanently represented in the metal traders rating prepared by the Russian Association of Metal Traders. What is a secret of the success – a big number of works in the Sverdlov region, cooperation with metal works or something else?

A.Yu.Soukhnev: The region of Ural is famous for its metal companies. The headquarters of “Stalepromishlennaya kompania” is located in Yekaterinburg. We sell about 80 thd tones of metal from stock, with an assortment of around 2,000 kinds of production. The marketing department analyzes the sale/demand correlation on the market, gives recommendations to the supplying department; and the assortment is constantly growing.

MetalTorg.Ru: Could you briefly describe the market of the Ural region? Meaning, the most popular products. etc…

A.Yu.Soukhnev: We permanently analyze the market. Main buyers in the Ural region are motor-car plants and constructing works. Production of MMK, Mechel and NSMMZ is in the greatest demand. We are a universal supplier to perform combined orders of any volume and number. Our clients’ structure in Yekaterinburg looks as follows: Machine-building industry – 38%; Construction industry – 24%; Non-ferrous industry – 8%; Power industry – 6%; Non-manufacturing industry – 6%; Oil & gas industry – 4%; Ferrous industry – 2%; Small-sized business and physical persons – 12%.

MetalTorg.Ru: What is a pleasant surprise about your company is that when getting to know your company closer, a progressive attitude to innovative business technologies becomes obvious, as well as a defensive treatment of your clients and employees. Your company has its own developing strategy, goal and mission. Do you think it should be a stimulus for your colleagues or you just do homage to the fashion?

A.Yu.Soukhnev: Our top executives have always had a very considerate attitude to the employees and clients. As well, the striving for new technologies has distinguished Steel Industrial Company, too.

We have arrived at a necessity to apply the market attitude to SPK’s development strategy during the past year. At first, it could be called “the homage to the fashion”, after our managers had taken a number of special courses and consulted a lot with experts in the field, the target-development became sensible and professional. We regularly invite both Russian and foreign experts to participate in the company’s strategic development.

And it is, surely, in a stimulus for SPK’s employees who are aware that they work in a highly efficient team of professionals sharing common goals and values, and people feel proud for the company they work for. This is where a secret of our success is rooted.

MetalTorg.Ru: The site of Steel Industrial Company is one of the most informative and convenient in the Russian metal devoted Internet. Does it promote your sales? Do you obtain clients from the net? What is their share in the overall clients’ number?

A.Yu.Soukhnev: A notion of brand, or company’s image, presents both in on-line and off-line business. And SPK is remarkable for its high quality services and individual attitude.

Our site is another proof of the said. Being well promoted, comfortable for users, with an attractive and updated design and daily renewing information, our site is a good reflection of the company’s image. Such sections as News-line, scheme routs, contact information (including affiliated companies) and so on help our clients to boost their business with help of cooperation with our company.

MetalTorg.Ru: Do you think Russia’s e-commerce has the future? Does your Internet-shop bring profit?

A.Yu.Soukhnev: As a matter of fact, metal trading WEB-shops are far from being perfect. By the highest standards, there are only few really good WEB-shops in Russia. Lack of services calls for lack of clients. We in Russia do not have modern payment systems and this is a big obstacle in the way of the Russian e-commerce. But a deep analysis of the situation could really help to build an efficient e-shop. We have established an on-line question-answering system rendering detailed information on metal roll on SPK’s stock. Speedy, comfortable, topical and reliable are the key slogan of www.spkonline.ru .

MetalTorg.Ru: Among various services, you deliver rolled production, including railway transportation, and the tariff policy conducted by the Russian government must have a great influence upon your company. Could you comment on the problem in the view of another tariff rise that is coming? Don’t you think our government is too enthusiastic as to permanent tariff rising, if taking into consideration a traditionally unsatisfactory level of servicing and a lack of responsibility for cargo safety at sub-branches of the Ministry of Communications?

A.Yu.Soukhnev: The tariff rise is not at all justified. I think, our President and government let monopolists (like RAO “EUS of Russia” and Communications Ministry) push them around. The monopolists are pretty well doing and reckon that tariffs, not improvement of their work, are the best profit source.

The Communications Ministry pretends it is acting enthusiastically on the servicing market. Special road transport servicing centers have been declared to secure the safety of cargoes, but in reality they do nothing but collecting statistics on cargoes uploaded and unloaded, and demand that their clients reduce to the minimum their stoppages. Cars are brought and moved away with 10-15 hour delays, because of an oppressive situation with the labour organization and a lack of personnel on the stations.

The Communications Ministry is fully responsible for the cargo safety, but often uses its privileged position to force companies to insure cargoes (for example, at the re-addressing).

MetalTorg.Ru: Your company is a member of the Russian Association of Metal Traders. Do you regularly take part the Association meetings, discussions and a decision making process on different questions of the metal trade?

A.Yu.Soukhnev: The Director of SPK is a member of the Association’s Council and curator of the Ural and Siberian metal markets.

Regular participation in seminars and other actions makes up for an exchange of experience between metal traders, commercial partnership, introduction of new technologies of metal trading, promotion on the Russian market a practice of preparing metal for the industrial use.

MetalTorg.Ru: Do we in Russia really need such associations? Are they effective enough?

A.Yu.Soukhnev: There have been created a number of such associations in different scopes of activity. All of them share the same idea to promote members of the associations, perfect their professionalism and strengthen market positions.

I do believe that the associations of the kind are especially necessary in Russia. On one side, they protect consumers’ interests, on the other side, they made up for the development of manufactures. Thus, the associations contribute to the development of the whole market and its separate segments by means of a number actions like skill raising seminars dedicated to marketing, logistics, warehousing, as well special exhibitions, editing and printing, meetings, consultations, conferences and so on and so forth. All the mentioned is aimed to heighten production efficiency of the Russian works.

MetalTorg.Ru: Could you tell a few words about your future plans? What are your priorities – on-line trade, geographical expansion, development of metal servicing centers or anything else?

A.Yu.Soukhnev: We are not in the least disappointed in the idea of the territorial extension and are going to stick to it in the future (1-2 affiliated companies a year). We plan to become wider. As for the deepening, we have in mind further improvement of our sub-branches’ work, quality of the management, development of metal servicing centers and integration with the leading Russian metal producers.

As far as our site is concerned, we are going to: broaden on-line services; fill up sections with up-to-date information; further develop the current services; evolve intra-corporate on-line relations.