Director of OJSC «Vityaz»: «We are reorienting to the production of medical equipment»
Almost a year ago, Sergey Gunkо was appointed General Director of OJSC "Vityaz" . A native of "Horizont" , he took over a company full of problems, began to sort out the state of affairs, and focused on building a clear business structure, trying to restore the Vitebsk manufacturer's ability to make money. The young leader spoke about how this is going in an interview with "Vitebskiye Vesti".
– Sergey Martinovich, at what stage, in your assessment, is one of Belarus's leading technological companies today?
– To answer, I will allow myself to look back a little. "Vityaz" was founded in 1976, primarily for the production of special-purpose products. After the collapse of the Soviet Union, household electronics with an emphasis on televisions became a priority. In addition, "Vityaz" began to develop a number of non-core areas, in particular, the production of medical devices, building materials, etc. This was absolutely justified. Moreover, domestic cathode-ray tube televisions successfully competed with global brands.
And in recent years, we have witnessed a series of breakthrough processes driven by technological innovation and global integration. High-tech corporations with the capacity to invest in the development of innovative solutions are literally disrupting the market. Chinese manufacturers have also contributed to its reformatting. Many well-known brands are forced to abandon television production, as the TV set has become a low-margin product.
In such conditions, "Vityaz" is forced to revise its production structure in favor of more profitable products and areas of activity. In other words, the semantic content of the "Vityaz" brand is transforming; it should no longer be associated solely with televisions. Now we assert that "Vityaz" is not just about TV sets.
However, their production remains within the company's structure but loses its primary status. We are ready to produce receivers to meet the needs, in particular, of the Eurasian Economic Union. A new LED TV production line was launched at the enterprise this summer, and this year's production program has already been fulfilled. We hope to sell the products by the end of 2013.
– In connection with this adjustment, do you intend to rebrand?
– This is a very expensive undertaking, which only highly liquid companies can afford. We are not yet ready to spend resources on this; we have other priorities now, such as supporting employees, improving working conditions, and much more.
– What is the focus now, and what will happen to non-core assets?
– Today, all areas are active, we are analyzing the situation from an economic perspective to make optimal management decisions for each of them. To meet the increased demand, we are increasing the production of digital set-top boxes for terrestrial digital television and for cable networks. We are conducting research, developing new models, which we are preparing to launch into production in 2014.
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Vityaz» intends to increase its presence in the medical equipment market, with the task of doubling production next year, including in cooperation with foreign partners. We have an agreement with a Russian company that provides for the production of medical devices under their brand on our premises. In addition, in 2014, we are launching a new development to the market – a bactericidal irradiator, which has high export potential. Today, we have begun the development of a new type of sterilizer, which is planned to be put into production in 2015.Based on the greenhouse farm, the enterprise UP
«Vitebsk-Agro» was established, extensive work was carried out with the team to optimize costs, and as a result, by the end of the year, it should become profitable, with the prospect of expanding the greenhouse area.Our branded retail is represented by the new enterprise TUP
«Galaktika-trade», which simplifies the mechanism for administering trade activities and increases the efficiency of the distribution network. In the future, we expect to attract an investor and jointly create convenience stores.The construction sector
"Vityaz"— unfortunately, this means low-performance technologies and high-cost equipment. We are spinning it off into a separate enterprise and looking for development opportunities.We place great hopes on tooling production. This year, we managed to attract many orders, but we need to ramp up this work so that the unit becomes self-sufficient. This is one of the main goals of restructuring – to give divisions more independence and the opportunity to earn money.
– Has the enterprise managed to remain in the field of military-technical cooperation?
– Yes, the production of dual-use goods has been preserved. Moreover, this year, together with OJSC
"KB "Display", we opened a unit, which gives us an additional opportunity not to lose our personnel potential and to gain experience for further development.– What, in your opinion, is the optimal production structure that you are aiming for with this reset?
– By share, medical equipment should account for at least 20% of the total production volume, consumer electronics, including TVs, – about 35-40%, and another 40% – all other production and services.
– In the summer
"Vityaz" managed to sell the former base of"Kulttorg". What else is being done to improve the efficiency of using factory real estate?– Indeed,
"Vityaz" is large production facilities and social infrastructure, part of which is not used. The enterprise has developed and is implementing a strategy to improve the efficiency of its property complex, which has been supported by the government. It provides for three areas. The first is the sale of sites that we do not plan to develop through auction. The second is attracting tenants to vacant areas. The third area concerns the central site and involves attracting investors to create production facilities, including using our assets.– Are there already examples of such partnerships?
– We have held successful negotiations with one of the German brands, and next year it is ready to establish contract manufacturing with us.
– What is the main problem for
"Vityaz" today?–
There are several. Firstly, today "Vityaz" can only be revived by the efforts of the entire team; it is beyond my power or the power of my deputies. Every employee must catch, if I may say so, the virus of economics and savings, and also clearly understand that the success of the team is equal to the sum of the personal successes of its employees.Secondly, the high cost of money. At the current cost of credit resources, doing business becomes simply impossible. "Vityaz" has no working capital, only a large debt history. However, most enterprises have the same problems with working capital.
"Vityaz" has no working capital, only a large debt history. However, most enterprises have the same problems with working capital.And thirdly, we have to work daily on optimizing costs. To learn to use resources carefully and rationally.
– Is a search for a strategic investor underway? Are Russian partners showing interest in the plant?
– We are engaged in attracting investors exclusively to individual production lines and non-core businesses, which is why we have intensified the diversification process. For example, today we can already speak of interest from an investor from one European country in our trading business.
As for Russian companies, they are not attracted to illiquid enterprises. Speaking of potential partnership with the corporation
"Russian Electronics", the companies within it are experiencing serious problems with production capacity utilization themselves.– What is your attitude towards the idea of creating a radio-electronic holding, which is periodically updated by local authorities?
– Positive. In addition to the advantages of operating within a holding company compared to a public joint-stock company, which are provided for by law, participation in such an integrated structure allows for cost optimization. The creation of an industrial holding is an opportunity for cooperation in finance, marketing, and trade, in several other areas, and it also involves the consolidation of service departments. For example, a common development center can be created with the involvement of the potential of the country's leading research centers and educational institutions. As for production cooperation, within a holding structure, it is easier to agree on the specialization of its participants.
"Vityaz" has a modern galvanic section that meets the needs for such work of manufacturers in the Vitebsk region, someone else has other sections, so there is no need to disperse resources. Moreover, financial institutions treat large companies with more respect…– And are you ready to participate in such a holding, if not
"Vityaz" to be the management company?– I am ready to be managed, provided it does not harm the interests of the enterprise.
– What issues do you pay the most attention to: research, personnel, finance, production?
– Primarily, problem-solving. We live under the harshest economic and budgeting conditions, so a lot of time is spent on financial matters. The next area is personnel work. And rounding out the top three is solving production problems, particularly capacity utilization and order acquisition.
– What is the personnel situation at the enterprise? Will the optimization of employee numbers continue?
– Yes, we are forced to increase employment efficiency, but we do it in a socially responsible manner, meaning we don't cast people into the abyss of unemployment but help them adapt to the new situation. If new jobs become available, we prioritize employing our current workers. We have agreements with other Vitebsk enterprises for cooperation on personnel matters and work closely with the employment center. At the same time, while there is excess staff at
"Vityaz", there is also a shortage of certain skilled workers.Despite all the difficulties, this year our team was joined by 50 young specialists. We understand that the main task now is to provide young people with interesting work and retain them at the enterprise. Incidentally, on my initiative, English language courses were organized, and we are developing cultural and recreational activities.
– Since we're talking about the future, how much attention do you pay to research, new product development, and innovative solutions?
– This area is among our priorities. I manage to attract funding for research work from external sources, without using the budget
"Vityaz". For example, this month over 500 million rubles have been allocated for these purposes, and in December we expect another 2 billion.We are not sparing money for development: only innovation can help us stay afloat and ensure a comfortable future.
Sergey Kochetov, "Vitebskiye Vesti"