Global economic crises are not a new phenomenon, and metallurgists feel these trends quite acutely. Another cycle of the global crisis in metallurgy began at the end of 2019, and now the degree of intensity has increased due to the pandemic and the response to it – the lockdown of world economies.
How does the global crisis affect the work of “Zaporizhstal” Steel Works, does the plant have future prospects – in an interview with Aleksandr Mironenko, General Director of “Zaporizhstal”.
Aleksandr Grigorievich, please, describe briefly the general trends in conditions of which “Zaporizhstal” operates now.
— The crisis and pandemic at one point drove the whole world into a situation where the usual logistic ties were cut off, markets closed, investment projects were frozen as much as possible. After the first wave of the pandemic, commodity markets began to recover faster, which led to higher prices for iron ore raw materials. At the same time, the price for finished steel products on the market fell by almost a third, and as a result, we received an increase in the cost of our high-margin product – rolled products, as a result, significant losses.
We lost a lot, but continued to pay salaries steadily, provide employment for people, maintain social guarantees as much as possible and pay taxes.
Aleksandr Grigorievich, in your opinion, is Ukraine ready to follow the path of de-industrialization, abandoning its focus on the real sector of the economy?
— When building a strategy for the development of the Ukrainian economy for the future, it is very important to rely on the real sector of the economy, which produces and sells high-margin products, filling budgets, providing employment for people in specialized and related industries. In Ukraine, such industrial platforms are already operating: the chemical industry, steelmaking, the agricultural sector, and machine engineering. We have industrial potential, infrastructure for it, hardworking and talented people.
The IT sector, like the service sector or the tourism sector, must develop and exist, but it is necessary to objectively assess the situation, their development is possible only with the normal functioning of the real production sector.
Do you feel the increasing competition in the market? What are the priority markets in this regard?
— The competition has been felt quite sharply and for a long time. There are several reasons, but the key one is the recession of the world economy. The world community often speaks about fair competition, but specifically “Zaporizhstal”, like many other manufacturers, has experienced the hardships and deprivations of the protective measures introduced by Europe. The quotas introduced by the EU pushed us out of the European market, where we had been working for years and occupied up to 35% of the market. Now the share of Ukrainian steel products on the European market cannot exceed the 20% mark.
Is there a solution to this problem, in your opinion?
— Certainly. The state needs to increase the level of consumption of metal products in the domestic market and protect its domestic producers in foreign markets.
All advanced countries follow this path. What does this mean by the example of the Ukrainian mining and metallurgical complex? Everything is simple – it is necessary to develop metal-intensive industries: build roads, bridges, renew railway infrastructure, social infrastructure, build locomotives and wagons, heavy equipment. Simply put, create new and modernize existing.
Without stimulating metal consumption inside the country, we are seriously losing – we become less competitive and lose our investment attractiveness.
The second step is to protect domestic manufacturers. The state itself does not make money and does not fill budgets; it is the national business that does it. It is at the expense of our taxes that they build hospitals, roads, kindergartens, update public transport, pay salaries to state employees.
How do you rate the challenging 2020? Have we managed to cope with the crisis that has been complicated by the coronavirus pandemic?
In 2020, our team showed flexibility and variability, a creative approach to production, which is critical in such conditions. Experiencing the pressure of quarantine restrictions, we staked on the development of our own customer focus – and time has confirmed the correctness of this decision. We worked a lot on quality and production cost. The high discipline of order fulfillment deserves special attention, which gave us a competitive advantage and showed the clients our interest in reliable mutually beneficial partnership.
We intend to continue to develop, increase efficiency, invest in modernization and retain the workforce, despite all the difficulties.
I would like also to touch upon the topic of 2020 in the aspect of political PR, when the pressure on the Steel Works in the area of ecology has sharply increased. The approaching date of local elections brought with it an increased activity of political parties – accusations fell on us about the lack of modernization of equipment, the shutdown of gas purifications etc.
In fact, “Zaporizhstal” invested UAH 15 billion in environmental modernization – in three new blast furnaces that meet the most modern technological and environmental standards; carried out a complete environmental modernization of the sinter plant, with a reduction of dust emissions by dozens of times.
By the end of this year, we will complete the construction of additional aspiration units at the tail end of sinter machines in order to further reduce dust during sinter production and improve the working conditions of our workers.
There is a fact that everyone knows, but they rarely mention it: besides “Zaporizhstal”, other industrial enterprises operate in Zaporizhzhia. Unfortunately, in recent years, none of them has made significant investments in the environment. Meanwhile, this is one Zaporizhzhia industrial site where “Zaporizhstal”, “Dneprospetsstal”, Titanium & Magnesium Combine, “Zaporozhstekloflus”, and a ferroalloy plant are concentrated. In fact, there are no boundaries between enterprises, but they are trying to reproach us for what our industrial neighbors have done.
I know for sure that our team is responsible for “Zaporizhstal”, and what really could have been done in the area of ecology, we have already implemented and continue to work in this direction.
How do you see 2021 for the Steel Works?
If we keep the pace of customer focus and quality taken in 2020, in 2021 we will have orders and production utilization, and hence the employment of our people.
In response to all the doubts and fears that prevail in society, I can confidently say: “Zaporizhstal” and its team will be provided with work. We have already proved our flexibility and ability to work at the most peak times of crisis, now our task is to maintain these positions.