Chairman of the Board of JSC AgromashHolding Oleg TSOI:
WE WILL EXPAND THE RANGE OF MANUFACTURED GOODS IN THE LONG-TERM
The 2015 economic crisis also affected quite seriously the machine-building industry, Kazakhstan's major automotive enterprise AgromashHolding faced difficulties as well. Nevertheless, last year the company managed to hold its ground and achieve good results. Chairman of the Board of JSC AgromashHolding Oleg TSOI told Interfax-Kazakhstan why in 2016 the company walked away from past anxieties "in the state of mild concussion" and when "wounds healed".
- Oleg Viktorovich, how did the plants of AgromashHolding and SaryArkaAvtoProm perform in 2015?
- Last year the production sites of our plants made over 6,000 vehicles. In spite of the crisis our enterprises made the effort to keep achieved results up and perceived difficulties as motivation for achieving further objectives. I think we have succeeded in holding the positions and achieving good results. In fact and “not without vanity” our enterprise has what to be proud of: of human resources in the first instance - of people working at the enterprise. There are more than 1,200 employees. Last year Kostanai machine builders managed to make over 20,000 vehicles using the semi-conduct assembly and completely knocked-down assembly methods, and a 'jubilee car' was manufactured namely in 2015. Last year the current brand model line in Kazakhstan's market was supplemented by affordable price segment GEELY and JAC models. In addition to the new models in production, 2015 was the year when the company received prestige awards in the automotive sector. For example, the production site of SaryArkaAvtoProm secured the Best Consumer Goods nomination at a regional contest show (in the city of Kostanai) with its Toyota Fortuner car as the best consumer product. In addition, last October the company was awarded the 2015 Car Prize for SsangYong Nomad, SsangYong Actyon Sports, Peugeot Partner cars.
- How did the year 2016 start for you?
- Possibly, all the enterprises of the region and, well, of the whole nation stepped in 2016 in the state of mild concussion following last year's anxieties. But wounds heal over time. That's why it shouldn't be worth dramatizing this subject. Any crisis ends; however we need to work on strengthening our position and reducing dependency from the other economies, from forex exchange rates and the political situation. I am sure that we will overcome all difficulties and implications of the crisis, just we need time for adaptation. We are not trying to leap in the dark, our enterprise is developing step by step with targets set ahead. We focus on satisfying the end consumer, and the quality of manufactured products is the main component for the achievement of this target. The enterprise modernizes production sites, uses high-tech equipment and of course, gives priority for boosting the human resources potential in order to reach the high quality. We have started this year with modernizing old production shops in order to install equipment for full-scale manufacture of Peugeot 301, Jac S3 and Iveco Daily cars, the launch of which is planned in the near future. The start of the year literally has brought in new trends in the development of partnership relations. A license agreement has been signed between AgromashHolding and the company CNHI on the assembly of the New Holland combine harvesters. Earlier the New Holland TC 5080 combine harvester under the Made in Kazakhstan brand underwent a full cycle of certification tests and also got comments aimed at eliminating problematic issues. The combine harvester design is brought into conformity with the Customs Union safety regulation requirements, and the signed license agreement enables JSC AgromashHolding to proceed with a full scale assembly of the New Holland combine harvester. Moreover, SaryArkaAvtoProm LLP became the first enterprise to supply Kazakhstan-made commercial hardware to the Russian market upon concluding an IVECO vehicle export contract with the [company] IVECO RUS.
- Did the demand in the automative market change now? Did the situation stabilize?
- It would be wrong to say that there are no difficulties. Everyone has them. Machine building is a sector linked to global recourses and work may not be stainless in all of the areas. Every system may malfunction and sometimes the conditions in which business is being done are to blame. Currently the demand in the automotive market has changed because the automotive market is saturated with imported cars. The exchange rate of the free floating tenge also has had a quite big effect. These consequences just prove that it's necessary to develop the automotive sector like any other industry in Kazakhstan in order to reduce dependency from the forex exchange rates. Another factor, no less essential, affecting the change in demand is the cut in loans from second tier banks, the percentage of rejections considerably rose. Of course, the situation stabilized more or less thanks to soft car loans. The scheme, undoubtedly, stimulated the demand for Kazakhstan-assembled cars. For these reasons the plant had to review temporarily the [production] format and somewhat work hours, but these temporary changes are left behind, currently we are ready to work under the previous production workload. Our main principles did not change; we keep manufacturing quality products, boosting the rate of localization and a range of products, expanding into new markets and attracting new partners. Our determination to keep skilled staff having unique experiences, who were trained abroad by overseas gurus in the machine building sector is also in place. One of the most important areas of the activity is the functioning of the Staff Training and Development Center at our enterprise. Kostanai specialists as part of a skills improvement program could visit the Italian plant of IVECO, plants of SsangYong Motor Co in South Korea, UAZ in the city of Ulianovsk, Russia, PSA Peugeot Citroen in the city of Kaluga, Russia, Hyundai in the Czech Republic and many other production sites of the global carmakers. In addition, production sites of JSC AgromashHolding and SaryArkaAvtoProm LLP, which are part of AllurGroup, are engaging in the educational program "Innovative Production and Industrial Hardware" within the framework of Kazakhstan's national industrial and innovative development program. Under this project recent graduates get an opportunity to pursue the relevant master's degree in the Automotive Engineering specialty. Last year 20 employees from the car assembly sites joined the master degree's students with the aim of studying and they are continuing to study. Recently they underwent in-service training at the Russian car making company AvtoVaz in the city of Tolyatti and returned with the new knowledge ready to apply obtained skills at work.
- What is your production volume in 2016?
- We planned to reach recent years’ output and keep with the level of 8,000 cars. We also actively participate in renewing the country's machinery and tractor fleet and intend to start assembling over 300 combine harvesters this year. I want to believe that we would be able to achieve this target.
- What plans are for 2016?
- The start of the year was really busy for our enterprise. We have quite big plans. We are going to proceed with the assembly of light commercial trucks, heavy duty trucks, buses. The domestic investment company Alatau Invest Capital will participate in fulfilling these objectives, with which we concluded a memorandum at the beginning of the year. This is a landmark event for us because a domestic investor invests in a Kazakhstani business. The scope of our partnership will include HR training and advanced training, the transfer of new advanced automotive industry technologies, creation of a science, research and design base. Mechanisms are also set up in the agriculture machine building development sphere which allow Kazakhstan’s farmers to have an opportunity to assess a wide range of the Belarussian agricultural machinery. Currently the work is under way on setting up a JV with our strategic partner – the company Gomselmash. This means that in the long-term we will expand the range of manufactured products. At the same time the enterprise keeps expanding the component producers’ list who are ready for mutually beneficial cooperation in making domestic vehicles. The plant is preparing a production base and has already proceeded to modernize equipment in order to start implementing end-to-end projects such as Peugeot, Jac, Iveco.
- Thank you for the interview.
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