26th January 2009 (Právo) – THE CHAIRMAN OF THE BOARD OF ALTA, A.S., VLADIMIR PLAŠIL FOR FIRMA: The western economies are paralysed by crisis; does this signify for our export companies that they should direct their attention towards Great Russia? Many respond positively to that. The Firma magazine supplement asked the head of a company, which has considerable experience with the countries of the former USSR, about the realistic possibilities in this area.
The ALTA Company, since its founding in the year 1991, has specialised in engineering, metallurgy, mining technology, and the energy industry. It operates in the Central and Eastern European countries, especially in the CIS (Commonwealth of Independent States). Most of the individuals who participated in its inception had experience from precisely these countries. Knowledge of the terrain is an essential requirement for undertaking business activities in the CIS countries. Three years ago, the company extended its operations to Vietnam by exporting mining machinery there and is currently importing coal from there.
A significant milestone for the company was gaining access to the engineering company TOS Kuřim (foundry, machine lines, single-purpose machines, machining centres, portal milling machines). In the year 2005, the TOS was basically rescued from ruin, and its modernisation is gradually being carried out. ALTA is ranked in 52nd place of the 100 top companies in the Czech Republic.
They supply both nuclear material and shredders
As a holder of the authorisation for the treatment of radioactive material, ALTA also provides, in partnership with OAO TVEL, the logistics for supplies and the transport of fuel cells for the Dukovany nuclear power plant. They cooperate with the state enterprise DIAMO in Stráž pod Ralskem, with the Institute of Nuclear Research in Řež, with the Sigma Group and with the Slovenská energetika company. They import equipment and spare parts for nuclear and hydro-electric power plants, refineries and gas operations. Specifically, they provide spare parts from the CIS countries for the nuclear power plants Dukovany and Temelín.
In addition, they supply components for diesel engines, crushers and separators for the mining industry; for quarries, limekilns and sand quarries they provide giant BELAZ trucks, including spare parts and servicing. ALTA supplied to the Ukraine a technological line for the production of bituminous mixtures for the price of 3.5 million euros.
It is not necessary to continue listing additional giant contracts, which are, moreover, frequently subject to confidentiality, because they are related to strategic commodities. In summary, one of those individuals who is amongst the most authoritative expert concerning the CIS environment, is the current Chairman of the Board of ALTA, a.s., Vladimir Plašil.
The state export agency, CzechTrade, emphasises that, even in times of crisis, Czech exports are not necessarily bound to decrease, but that it is essential to focus on markets other than those in EU countries, such as, for example, Russia. What considerations should companies take into account and what measures should they undertake, prior to attempting to enter this market? What kind of offerings, in your opinion, would give them a chance?
Currently, unfortunately, it is not a good moment for entry into the Russian market. Small and medium-sized companies in particular have little likelihood of succeeding. Now it is important that the state should support, let us say, ten key projects and if these are successfully achieved, small and medium-sized companies may be utilised initially as subcontractors and gradually, in this manner, find their own business partners.
In your opinion, is Russia currently, in this period of world crisis, even an attractive market?
Russia remains a very attractive market and locality, one that has vast supplies of raw materials. While the price of oil has significantly decreased, in comparison with last summer, nevertheless, in my opinion, it will gradually increase - although it will not match the prices it achieved during the middle of last year. Moreover, when else will there ever be a better opportunity to be assertive than in the current difficult situation? This is no time to panic – rather it is necessary to work intensively on the strengthening of the position of Czech companies in the Russian market. It is not an opportunity for fast-turnover trading or for marketing consumer goods; it is necessary to focus attention on major projects and investment units. A big advantage, especially in the current situation, is not only our know-how, but also our capacity to finance projects. A certain amount of caution is, of course, essential; whenever major projects fail, then the entry conditions for the small and medium sized suppliers cannot be created. This is not only about a direct link to the projects, but also about the reputation of the Czech Republic as a promising partner. The Russian market has specific features, it is not a market based on Western conceptions. Current activities undertaken have to be understood as investments for the future; this does not mean in a matter of months but rather years.
You are saying that the current complex situation provides a unique opportunity to be assertive in the Russian market. How should Czech companies strengthen their position at this time?
The economic crisis has created a situation in which many companies have not been able to draw up and complete the projects which they initiated. Inexperienced firms are at this juncture fearful of entering the Russian market, or they are suspending their local activities. Companies who have experience with activities in this region should take advantage of this opportunity and be proactive right now. With little exaggeration, one could easily affirm that the following well-known saying is applicable: “A friend in need is a friend indeed.” If now, in a time of crisis, we make investments in already initiated projects, and in this manner we facilitate their continuation, this will be a signal for our Russian partners that they can rely on Czech companies and that, even after the difficulties have been smoothed over, they will be prospective partners for them.
Russia is rich and attractive, but...
What exactly should state support for Czech exporters look like?
It falls into two main areas – help with the financing of projects through the programmes initiated by the Czech Export Bank and EGAP on the one hand and, on the other hand political support for our representatives. If the Russian partners feel that the activities of our private companies are supported by the state, it very much assists such companies to get a foot in the door and the project gains credibility.
Do Czech companies, as individual entities, have prospects or is the path to success via the export alliance a more easily travelled route?
The problem in creating an alliance is the great rivalry which, unlike in other countries, exists between our exporters. For example, in Germany, the manufacturers cooperate much more and this helps them to succeed. Now it is really necessary to join together and cooperate.
The commercial activities of the ALTA Company are traditionally directed towards the East, especially to the countries of the former Soviet Union. The economic crisis has also arrived there. Is it manifesting there with the same intensity and in the same manner as in the Western European nations or, from your perspective, is the crisis in this region taking on its own individual characteristics?
I cannot make a judgement about how profound the manifestations of crisis are in the West, but can only compare its symptoms in relation to the Czech Republic and further East, in particular in the Russian Federation. There the crisis is far more self-evident than in our own country; Russia had already been hit by it in its full intensity in the autumn of last year. However, when comparing the current situation with the situation in the year 1998, it can be said that the Russians have reacted far more professionally this time and they have not allowed panic to take control of the situation, as occurred ten years ago. Although they are well aware of the seriousness of the situation, they also know that the crisis will not last forever. The current responses are much more under control than they were in the past and the implementation of a number of projects continue to progress.
What is your personal experience of negotiations with Russian partners?
Negotiating and concluding transactions in Russia is very time-consuming; frequently taking several years. And then sometimes you are suddenly surprised in negotiations with Russian partners by the rhythm and sequence of events. For example, in the case of the Magnitogorsk metallurgical combine the contract, in the order of hundreds of millions of euros, was swiftly concluded - within a few months. Many of the prejudices that are still projected towards Russia, are no longer valid. It is palpable that, during the past 19 years, the Russians have travelled the world and that they are increasingly reliant on acting on the basis of their findings. It really is no longer about how many litres of vodka have been consumed during dinner, rather, especially in the larger cities, the hosts are often greater wine experts than we are. The quality of Russian cuisine also went up a few notches, both in the quality of food and also for example, in the aplomb of the service.
Are you already feeling in your company the specific implications of the crisis? What responses are you planning to make?
Of course we too are starting to feel the consequences of the crisis, but here we have some of the advantages of a longer activity cycle. The impact of the crisis is most likely to show itself with greater intensity at the end of year and during the year 2010. But I believe that the implementation of large, long-term projects will help us to overcome these temporary setbacks.
And what you consider as your greatest achievement?
People, people, people. I do not want is to sound like a cliché, but the success of the company depends on people. In the year 1991, we started out with seven people; as of today, the ALTA group already has 1,500 employees. Amongst our successful contracts I would like to highlight, naturally, the project for modernisation of the Uralvagonzavod enterprise. This contract, with its total a value of one billion euros, became the largest in the modern history of Czech-Russian business relations. ALTA, at its inception, in the year 2005, concluded a contract for 300 million euros with Urals machinery Uralvagonzavod from Nizni Tagil (in the Sverdlovsk region of the Russian Federation). In May 2007 another agreement was signed to increase supplies for the reconstruction of the Russian factory in the Urals, in the amount of a billion euros (about 28 billion crowns). It is a complex solution, which includes the modernisation of both the metallurgical and foundry equipment and metal machining.
ALTA AT A GLANCE
March 1991: Founding of ALTA, spol. s.r.o. November 1991: First supplies of turbo-blowers to the Commonwealth of Independent States (CIS) and of spare parts for the railways of the Russian Federation. Establishment of foreign representation in Moscow (Russian Federation). August 1992: First supplies of engines for the activities of the mining combines in the countries of the Commonwealth of Independent States. December 1994: Transformation of ALTA, spol. s r.o., into a joint stock company ALTA, a.s. July 1995: Establishment of representation in Komsomolsk (Ukraine). Signing of the contract for the exclusive representation of TVEL, the Russian manufacturer of fuel cells, for the Czech Republic. December 1995: Commencement of supplies of iron-ore to the Czech Republic. December 1996: Commencement of supplies for investment projects in the field of technologies for the mining and treatment of ores and stone. January 1998: Establishment of representation in Minsk (Belarus). January 1999: Representation in Kiev (Ukraine). March 1999: Commencement of the investment project for the modernisation of PO BELAZ. June 2001: ALTA, as, is for the first time amongst the top 100 Czech companies. May 2003: Establishment of representation in St Petersburg (Russian Federation). July 2003: Representation in Yekaterinburg (Russian Federation). May 2005: The signing of the framework agreement for the Modernisation Project for FGUP PO URALVAGONZAVOD. July 2005: Participation in the companies TOS KUŘIM – OS, a. s., KULIČKOVÉ ŠROUBY KUŘIM, a. s., a SLÉVÁRNA KUŘIM, a. s. April 2006: Commencement of the project for the modernisation of FGUP PO URALVAGONZAVOD. May 2006: Signing of the contract for the complex mechanisation of the shaft for VINACOMIN (Vietnam). July 2006: Financial participation in TRANSPORT21 VEK in the Russian Federation. September 2006: Commencement of the supply of coal from Vietnam. October 2006: Signing of the contract for the supply of complete technological lines for a brickworks in Kuzmincy (Ukraine). January 2007: Founding of the affiliated company ALTA URAL. April 2007: Increase in the contract with FGUP PO URALVAGONZAVOD to one billion euros for supplying the equipment for the modernisation. The signing of a framework contract with the industrial company TITAN GROUP to provide a plant for bioethanol production.