This is the third interview, which the author has taken from Rostislav Shurma, CEO of the PJSC “Zaporizhstal”. There are some differences about what the Head of the metallurgical industrial complex tells now and about what he told two years ago. The most vividly seen is, that earlier the CEO of Zaporozhye backbone enterprise, unwillingly talked about poli-tics, declaring that he is not a politician, but the production man. Today Rostislav Shurma criticises the authorities openly. Possibly, it is connected with the fact that around one year he is in charge of regional organization of opposition party.
– In 2015 year, according to association “Metallurgprom”, the country has lowered steel production on 16 %. How, the “Zaporozhstal” tried to minimise the production losses?
– “Zaporozhstal” – perhaps, the only one industrial complex in Ukraine, which could retain and even increase a little volumes of production of hot metal, steel and rolled product following the results of 2015. Thanks to what? The metallurgy market is rather specific phenomena. The one who is competitive under cost price and quality wins here. Three year and a half we worked continuously over increasing of operating efficiency, on reduction in expenses and improvement of quality. Thanks to it, we remained competitive practically in all markets. However, to say honestly, today the enterprise, during the last three months works in “zero” and even with small “minus”, because situation inside metal markets is catastrophic. But nevertheless, we could retain volumes of production and all relevant social standards.
– And do you have problems with the investor because of it? That the enterprise today works in “minus”.
– And what problems may I have with the investor and the shareholder, if the Steel Works is the only one in Ukraine, which could retain volumes of production following the results of the last year?
– Before that, you worked in “zero”, which, by your words, the enterprise reached in the shortest time. All owners want to have profit from their enterprises.
– At present, there is no single profitable metallurgical enterprise in Ukraine. I think, even it is difficult to find the profitable metallurgical company all over the world. Look at capitalisation of ArselorMittal – it has fallen ten times for two years. How do you think, is Mitall happy? I think not. Look at capitalisation of the largest mining companies – it has fallen 15-20 times. It is a global trend. We live in a certain stage of the world megacycle, when we are entering into a situation of absence of growth of demand for metal, and on other hand, there are many production capacities already build.
Now the question is different. Who will survive? The nearest period of one – three years is a test for survival. There are 800 million tons of excess capacities in metallurgy. Level of their loading is below 70 %. Such situation happened last time somewhere 30-40 years ago. 15 % of capacities should leave the market to allow the situation somehow to be stabilised and to have possibility to work in “zero” or with small “plus”. In other words, 100 large metallurgical enterprises will be closed in the nearest years. And now, there is a struggle not to be one of these hundred. And the shareholders who are strategic investors of metallurgy, understand it very clearly
– Does “Zaporozhstal” have suffered from embargo of Russia?
– Any restrictions in foreign trade are bad for economy. The Russian market never was the topmost and big for us. Nevertheless, we appreciate each our client in each country. There were and there are one hundred clients in Russia with which we work. However, the Russian market never occupied more than 12-13 % in structure of our sales. Sometimes its share dropped down to 2-3 %. Today we sell to Russia from 7 up to 10 %. Embargo actually is not present, there are additional duties amounting to 5 %. The other situation is strange – the Ukrainian metallurgists should pay these 5 % during deliveries to Russia, but the Russian metallurgists deliver everything to Ukraine duty-free. Where our government looks? It speaks much, but cannot do the simple thing. Do something to make Russia to cancelled the duty, or enter mirror measures. Nowadays, large quantity of the Russian import is sold in Ukraine under dumping prices.
-Earlier, you said that the enterprise headed by you is oriented mainly to the Ukrainian consumer. Is it so at present?
– Certainly. For any company the home market, the internal client is always the most priority di-rection. Until now, home market for us is the priority No.1. And it will always remain like this. All metallurgical companies in the world are oriented first of all to the home client. On average, from 70 to 90 % of the steel products is sold in home market. In this context, Ukraine is the unique country, which exports 70 % of the produced metal. It is strange that in these conditions the metallurgy still exists in general. We do not have home market because there is no invest-ment climate and nobody builds something. And this is already a trouble for the whole country. And I wish, that we live till that time to see when 80 % of the produced metal will be consumed in Ukraine, and this will indicate that roads, homes, bridges, terminals, airports are under construc-tion.
– During the last interviews, you did not touch policy subject and now criticise the authori-ties. Why it happened?
– And what about you, are you happy how we live?
– Do you see how the future may unfold?
– I also do not see. I communicate with many people, not only in Zaporozhye, mainly in Kiev, with intellectual elite. So I can tell you that the majority of them think as to how to leave Ukraine. I was simply put into shock. It is not my way. The second alternative is to hang head and bear all this. I am afraid that for people who receive payment documents with 1500 hryvnyas for heating, it will not be finished in a good way.
And there is the third way, that is to try to change something. I do not interfere in a major politics. The first step that is to ensure liveability of the plant in these difficult conditions and we for the time being manage with this problem. The second step that is to try to change something at city level. Several years are necessary to be passed in order to break down this system and obtain the first positive results.
When Maidan has taken place, I had hopes that professionals will come to power and we will start to move to the European standards of life. But we totally move completely into different direction.
– In an interview with “New Day”, political analyst Mikhail Pavliv said that in the Zaporozhye region rating of the Opposition bloc will increase. Can you confirm or deny it, based on the research rating that you must have as head of the party in the region
– I’m not interested in ratings; I’m interested in actual actions.
– Don’t you see the inner-party figures? Don’t your colleagues bring it to you?
– I have seen, recently some sociological researches were published. Well, I would not say that there are some major changes in the ratings.
– The opposition in the City Council believes that all major, “tasty” commissions took the Opposition bloc such as budget, land, housing and public utilities. And opposition received only funny commissions – regulation, humanitarian, etc. Why Opposition bloc wants to control the budget, land and housing and public utilities?
– From my point of view, it happen quite reasonable distribution of commissions in the regional and city council. It concerns quantity as well as quality. Most participants of the political process consider these positions as some pies and cakes. And we see this as a job. At the head of the humanitarian commission should stand strong humanist, not a production worker. I can’t make boast that I have a lot of strong humanists. Therefore, we do not even qualify for this commission, although from my point of view, these are key commissions.
Our team is strong with managers, professionals, production people and economists. Therefore, we qualified for corresponding commissions. In each commission positions of deputies were offered to alternative parties. So what that representative of the Opposition bloc is in charge of budget commission? If he has deputy from one party, and secretary from the other. And with that, show me more literate financier in the Zaporozhye region than Ruslan Bozhko (head of the budget commission in the City Council, – author). Nobody can be compared with him. It is really good that this person even agreed to head this commission
– Many times you have stated that Zaporizhstal doesn’t have and never had employment layoffs. But on the internet, on forums people say that nevertheless people still massively lay off and wages reduce
– If you put together all that politicians talk about and what people talk in social networks, for example 5000 were fired, then 3000 were fired, it means that “Zaporizhstal” Steel Works has reduced five times over the past three years. But thousands of people still work here. Just before they were all in staff, and now many of them are working in outsourcing companies. So let’s leave out all rumors that people talk about.
The global steel industry has entered into a difficult period. The last 15 years China, where hundreds of towns were built, has been actively consumed metal. When they were consuming in this way they were creating demand and prices were growing up. And at one moment, China was built and moved from consumption economy to the economy of services. Metal demand stopped to grow. And what is now? As I said, uncompetitive enterprises will die. And our task is to hold “Zaporizhstal” open and try maximum to retain staff.
In order to do this, first of all, it is necessary to reduce costs maximally, to improve production efficiency, and among other things to work with the organizational structure. There are some areas at the enterprise for which there are no prospects that their capacities will be loaded. At the same time, we have increased the volume of export shipments and there are not enough people. What we have to do? To regulate organizational structure and to reconsider staff schedule for this kind of areas. Generally, reduction in the number of employees is possible, but in such case primarily administrative functions will be decreased.
That means, we are not talking about any large-scale job cuts. But the reorganization will be. Otherwise, we just will not survive.
– At the present time it is popular to be a fighter with the “Zaporizhstal” among politicians and public activists. It means, that we can hear from local tribunes and from different people calls to “impact” on the enterprise and call it to account. Why a lot of people have chosen “Zaporizhstal” as a local “dragon” to be fight with? And the second question. After the Opposition bloc took the majority in the City Council, and “Zaporizhstal” representative became mayor, did not these crowds of people come to you in order to become friends?
– You know, this is a very big problem in our society, and especially it is a problem of those people who involved in politics – complete irresponsibility. I believe that image and authority are necessary to build on the creation and association and not on searching for enemies or politicking. Most of these politicians and public activists are driven by small business interests. And it is clear that they try to solve these problems with the help of inspirational speeches. But our position is fundamental – we came to make Zaporozhye better. I went into politics in order to change life in the city and not to satisfy someone’s small business interests.
If a person has come to snatch something then it doesn’t matter what political coloration he has. If he is from the Opposition bloc – we get rid of him.
– Do you connect your future and future of your children with Zaporozhye?
– Would you like to say that your children will study in Zaporozhye rather than abroad?
– My children are now attending the local kindergarten and also they go to preparatory courses. In Zaporozhye there are a lot of good schools. I remember that from school times, when I went to academic competitions and some students of the Zaporozhye schools had really high level of training. Yes, they will go to school here, and I plan to live here.
All we walk before God. Nobody knows what will happen tomorrow. Who could have predicted the war in Ukraine? I do not know what will be. But I want and plan to live in Zaporozhye. And I want my children to live here. But not in such Zaporozhye, as it is now, but in a different one, in much better city. And I’m going to work on it.