OREANDA-NEWS. May 13, 2008. In our previous issues we’ve been making a detailed coverage of two glass-reinforced plastic pipe production plants construction projects in our region. It’s obvious that lately the interest towards pipe production has substantially grown in the Saratov region, however pipe production can hardly be called a novelty for Saratov residents. One of the leading manufacturers of these products – Engels Pipe Plant (EPP) – has been successfully operating in this region over the last 30 years.

EPP history dates form the time when, in 1974, a metal pipe production shop was launched at the Engels experimental mechanical works. In 1992 pipe production in Saratov transformed into a CJSC. In 2006 EPP was recognized as the best industrial enteprise of the Engels district. Over the same year EPP surmounted a billion ruble revenue borderline and became a member of “Billionaires club” at the Ministry of Industry of the Saratov region. 

We’ve met with Sergey Yeretin, Managing Director of EPP, to discuss the progress that the enterprise has made ever since and its future prospects.

- Sergey Petrovich, the enterprise that you manage is one of the most stable production entities of the region and one of the oldest in the newest economic history of Russia. How does the enterprise manage to keep its ground on the dynamic Russian market?

- Engels Pipe Plant is indeed one of the oldest, most stable and actively developing enterprises in the Saratov region. Our main goal has always been to become one of the Russian leaders in pipe production of a wide range and high quality – that is, in production of competitive products. And, to reach this aim in the long run, we base our technical policy on the principle of constant development and production technology improvement, development of new types of products. We’re interested in meeting the most sophisticated demands of consumers.

Besides, it should be noted that the wish to make this plant perfect in all aspects – production, relations with customers and suppliers, social policy – unites not only our management but also all the employees.

So, we are constantly on the move. We’ve managed to get through the hard times of market volatility. The plant has ever since been moving along the highway of economic development and stability. We increase the salary of our employees on a regular basis, finance repairs and plan the investments in further production development. The plant’s products have long been in stable demand with the consumers of metal products.

Today EPP has well-equipped shops and a strong staff of engineers and technical workers. We also pay special attention to organizing quality control of the manufactured products and training the professional skills of the staff and teaching them management principles. We actively cooperate with suppliers and customers. Maybe that’s the reason why our plant is well-known on the Russian metallurgical market.

- Three years ago Engels Pipe Plant was integrated in the ESTAR Group. Could you tell us something about this company? Did the plant’s operations change after this integration?

- EPP entered the tubes and pipes division of the Metallurgical holding ESTAR Group (Electriс Steel of Russia) in December of 2005. Today the company unites several similar production enteprises, among them 2 Novosibirsk plants – NMP named after Kuzmin and the Steel Profile Metallurgical Plant, Nytva Metallurgical Plant, Zlatoust Metallurgical Plant, Volgograd Small Diameter Pipe Plant, Volga-FEST, Rostov Steel Plant and Gurievsk Metallurgical Plant.

Integration in this young and fast developing group was successful for us; in 2006 the plant, numbering 447 employees, surmounted the billion borderline in terms of production volume and in 2007 the volume reached 1.326  bln rubles.

Today the ESTAR Group includes a trade house that sells the products of all the member enterprises (including EPP) and provides them with metal roll which is a very practical and profitable solution for both parties. Our order portfolio is tailored for optimally efficient work and enterprise’s capabilities. Involving specialists of our plant, ESTAR created a commercial and service centre ESTAR-Engels that deals with wholesale and retail trade of all the products manufactured by the Group’s enterprises.

Largely due to the participation of the owner company, EPP is making a stagewise transition to a more economical and efficient heating method – gas radiation heating of production facilties. That helps to improve the temperature mode when working in cold seasons.

Besides, two new buses were purchased to transport the staff to the enterprise. Upgrade of roll-forming mill is underway. A high frequency welding unit was replaced allowing a 20% production increase. There are quite a few other activities aimed at more efficient work.

- As far as we know, a program of strategic development till 2010 was designed at EPP. Sergey Pavlovich, could you give us more details? What operations directions were given special attention in the program and what results have already been achieved?

- Having set the objective of becoming one of the largest Russian manufacturers of competitive high-quality products, the EPP staff has worked out the main directions of prospective development aimed at increasing production volume, improving the quality and reducing production costs. In the first place, this means increasing the production capacity and expanding the product range through the upgrade of the existing equipment and, secondly, increasing the production volume and developing production of hi-tech tube and pipe products through the purchase and installation of new equipment at available vacant production facilities.

In the framework of this program we’ve approved and gradually implement corresponding activities, including those for each pipe welding mill, taking into account a more than three-fold increase of production (as compared to 2005) and the critical comments received in the process of review of the equipment operation. Namely, in late 2007 — early 2008 we plan to upgrade the roll-forming mill with the purpose of upgrading the product range and increasing production efficiency.

The enteprise’s experts are preparing a feasibility study for the organization of electric-welded shaped tubes. The purpose of the project is to get additional revenue and satisfy the needs of consumers of construction pipes. Its implementation will allow a higher cost efficiency of the products, an increase of the production and a three-fold expansion of the suggested product range.

In general, we plan to invest 385 mln rubles in our production development till 2010.

- Engels Pipe Plant, as it is well known, produces metal pipes. How is the products distribution organized and in which sectors are they applied? Does the demand change and in what way?

- Our products are well-known in the CIS, namely in Kazakhstan that is closer to us geographically, and in many Russian regions such as Volgograd, Voronezh, Rostov, Krasnodar and Stavropol and many other regions. Unfortunately, municipal institutions of the Saratov region don’t buy our pipes. It’s a paradox but it’s hard to find a logical explanation for it.

Our plant produces 42 types of different pipes designed for water and gas transportation under pressure and also pipes applied in construction. The demand is seasonal – it rises in summer and falls in winter. That’s why our development plans make an emphasis on development of new types of shaped pipes that are used in construction and are less subject to seasonal demand fluctuations.

- Sergey Petrovich, today two more pipe production enterprises are under construction in the Saratov region – the Saratov Pipe Plant and an enterprise of the New Pipe Technologies Company. Do you regard them as your competitors?

- Unfortunately, I haven’t had time to meet the directors of these two enterprises in person but I’ll try to do it by all means as soon as I can. Of course, both enterprises can become our competitors in the long run, so in our plans we pay special attention to increasing production of shaped pipes designed for construction. However, we have no plans to stop production of round pipes. So far the application of plastic pipes is limited, as I see it.

- The authorities love the talk of social responsibility in business. The population also demands this responsibility. But the demands of the authorities and of the population are different. Authorities need sponsor support from business and the people need respectful attitude. How do you understand this responsibility for Engels Pipe Plant?

 - The matter is that each enterprise from the very start has certain responsibility towards its employees. We create workplaces and working conditions, provide material and medical support. Besides, many enteprises support the activities held in the city or in the region.

Our enterprise pays much attention to social policy. We have a health center for our staff with free dental and physiotherapy care in the clinic with modern medical equipment. All the employees are transported to the enterprise with special transport, there’s a bar and a canteen on the premises. All the employees are provided with special clothes and personal protection equipment.

Besides, we’re currently preparing to sign a trilateral agreement between the regional government, the enterprise and the trade unions. The preparation will be over by the end of the month and we’ll sign a cooperation agreement. It’s this agreement that provides for all the social responsibility aspects of our business concerning the employees, the  residents of our region and the whole Saratov region. It directly concerns the development of the enterprise and our future support for the local authorities and insititutions that they all need. 

- Do you agree that any business should actually have this responsibility? To whom?

- Business, by all means, should be based on social responsibility. We should support the government and the city, at least because we’re capable of doing that. Of course, we pay taxes in the local and federal budget but everybody understands that these funds aren’t sufficient to solve all the problems in the country or in the Saratov region. That’s why the enterpises operating here should help the government. Although we can’t provide a very large support, like oil companies do, nevertheless we try to help as much as we can.

- How do you view the future of EPP in, say, 5 or 20 years? How far do the modern enterprises try to predict their future?

- I believe that we need to concentrate on developing pipe production to reach better production efficiency. So I hope that in 5 years the plant will be flourishing with production of over 200,000 t of pipes per year. I wouldn’t like to look further than 5 years’ term, however one can be quite optimistic with the current stabilizing economy in the country.