It should be reminded that “M-Konstruktor” specializes in the production of a wide range of concrete equipment. Let’s say, everything that relates to concrete moulding, is produced by the company with an interesting slogan “We shape the metal accessibly for you!”
Artem Bagnyuk, Commercial director of the company, told us about the active development of family business, technological upgrades and export strategy.
I would like to start with the export geography: how many countries can you name today with the objects already built or being built using your products?
Let's start with the country which was basically the first one for “M-Konstruktor” to export its products. We won’t talk about Belarus and Kazakhstan now, because we have been cooperating with them for a long time, but these countries are still considered as satellites in Russia and should be allocated to a separate group.
Our serious export experience began from the Netherlands, where we supplied our first product in 2016. Step by step, we started working on it, became interested in export-related topics, realized that we could deliver products further, to other countries, and that way we entered new markets.
We are experienced in supplying equipment to Poland, and we are going to expand in this country. We negotiate a lot with the Poles on equipment supply. And today we perform a contract for Romania.
Very interesting project of budget house building is being discussed with a Belgium company, but I cannot yet disclose the details. I hope we will finally get to the stage of a large-scale project implementation in 2019.
Actually, there are more countries. I know that our product is in Canada, France, and even New Zealand and England, but this product is not under our brand, not under our trademark.
As I mentioned above, special attention should be given to Kazakhstan, because this country is potentially interesting for us. This is our regular customer from year to year, and we participate in various projects there. We can proudly say that in 2017 we took an active part in the construction of a port in Aktau city, a sufficiently massive construction. About fifty trucks of our products were unloaded there. We had a queue of these trucks all summer long, the unloading took place 2-3 times a week. This year we continue our supplies to Kazakhstan.
Belarus today can’t show such indicators and a great demand as well, but we still contribute a little to this neighboring region and supply our products.
You have rather wide range of products. Which one is the most popular abroad? What products do you export?
The range is really quite big. So the most popular products are managed in a separate way. For example, the most famous are tetrapods used around the world. The farthest point of its supply is 10 000 km. Although it is a domestic supply, it is more valuable than any export due to its delivery from Velikye Luki to the Kuril Islands.
As for exports, today we are discussing three strategically important projects: the construction of ports using our product in Gdansk (Poland), Madagascar and Algeria.
A separate product line is related to the equipment for concrete plants. This is exactly what we are currently doing for Romania and supplying to Poland.
The segment we are trying to develop and consider as a future direction is tilting tables. It is used in house construction when casting wall, facade and floor panels. They can be used both in the construction of multi-storey buildings, and in small-scale, one-, two-storey houses.
Does the company export only products or services as well? Do you have engineering support for projects?
Let's just say that we are trying to get rid of unnecessary, needless work from the budget of our customers, to make their work easier. Frankly speaking: “Guys, you don’t need installation and commissioning at all.” Our equipment is so flexible and easy to work that engineering is excessive.
But if our participation is required, we are ready to send our workers to perform any kind of work. Now we are discussing several projects directly connected with commissioning in Poland.
With whom do you usually work abroad? Dealers, distributors? Or do you work directly with customers?
"M-Konstruktor" always directly cooperates with the plant being a customer. The company tried to deal through distributors, dealers, through some companies that offer their services, but it does not work, because it is not easy money to get. We do business only with the customer itself, because everyone is trying to surcharge its 5-7%, which significantly affects the cost of the product. And when one, two or three intermediate companies appear, you simply become uncompetitive in terms of price.
And in order to understand the scheme of our work: there is a construction site, a leading part, which is the customer of a concrete product. Builders address to a concrete plant with the request to produce a concrete product. The concrete plant addresses to us for the development and production of forms for casting the product. Our engineers design it, create a model for moulds, then we agree this model with the concrete plant, and after that we produce and supply moulds. Further our moulds are used for casting concrete products, and then a new circle again.
How much do you depend on suppliers? Is metal for molds mostly Russian?
We use different metals, not only Russian. Part of it is from Ukraine. When we talk about carbide or hard metals (sometimes we have such orders), then either Belgium or Swedish companies supply metal to us. But the main metal, of course, is made in Russia.
We do everything including metal working ourselves, except for things like rubber sealer, hydraulics, which are purchased at specialized plants.
The security or safety problem at all production stages is very important in the construction industry whether it is the construction of industrial facilities or residential buildings. Are there any regulations or mandatory certification for your products?
Certification is a rather complicated process, especially if we talk about EU countries. There is no certification for our products, which greatly facilitates our entry into the market of other countries.
We produce according to ISO or develop drawings in compliance with Russian standards and agree drawings of the mould itself with European customers. Customers approve those moulds, and we produce our product based on it. The customer sends a drawing of a concrete product and he already knows whether this product meets the applied construction requirements of a particular country. This information is considered by our engineers and designers thus greatly simplifying our task.
You have rather busy business program this year: EXPO-RUSSIA in Serbia, business missions in Finland, Poland, India, INTERMAT 2018 in Paris, BUILDING INDUSTRY SOLUTIONS in Warsaw, KazBuild-2018 in Almaty. This schedule of events requires serious preparation and investment, especially exhibitions. How do you prepare? How long does it take? How many employees are involved? What is the budget?
Let's start step by step. Yes, we have a great number of events this year, it is racy. It began from neighboring European countries and like-minded, such as Serbia. Then we went to France, Poland, and currently we visited India with a business mission.
Each exhibition, especially international, requires careful preparation and work out. Today, we have four people doing it: two employees from marketing department and two employees from sales department who perform any sort of preparations.
We thought out rather convenient way to participate at the exhibition. Last year, when “M-Konstruktor” took part in “Russian Industrialist” exhibition in frame of the International Innovation Forum in St. Petersburg, we brought one of our product samples. It was a tetrapod mould due to its small sizes in comparison with other products. But, it turned out to be very expensive to bring samples of our products.
It was decided to develop 3D-models of samples. We tried to print them using 3D printer, and complement with products made in these moulds. Everyone liked it. Currently we are adding new samples.
We have developed a universal design and layout of stands, which we adjust a little to the size of an exhibition, and use it everywhere; replicate it, making small modifications. It turns out that we are able to prepare for any exhibition, business mission or other event in just 2-4 weeks.
Of course, a separate area is the preparation and study of potential customers. It takes at least four weeks to work with it. This time is devoted to the selection of potential customers, correspondence with them, advertising campaigns that are adjusted using various web search engines in each country. This is the way we work. We send advertising to our potential customers, call them, send letters, and say that we really want to meet them. After that we meet directly at the exhibition. This is the most popular and effective scheme of work.
And how much does it cost for the company?
Speaking about the budget this year ... It is great that we have the Export Support Center of Pskov Region. It provides a great support; we use its services quite actively. Participation in exhibitions can be organized in the format of a collective exposition - this is again an example of Serbia and Kazakhstan, where we have been and participated in the exhibition in Almaty five weeks ago. More effective type of participation in the international exhibition, to my opinion, is an individual stand. In this case, the Export Support Center also provides co-financing assistance.
One exhibition, depending on the country, costs from 500 thousand and up to 2 million rubles.
There is a Russian Export Center, which also organizes business missions. Last week, for example, I took part in a business mission to India, and the costs were charged only for a flight and accommodation, the rest was at the REC expense.
This year we completed certification as well and became the participants of “Made in Russia” program. On May 24, 2018 we were certified. Now we have our own trademark, so we can put it everywhere. This target program is aimed at raising the image of the Russian Federation and its exporters, promotion of brands that have passed certification.
Did you work with Russian trade missions abroad?
We worked with the Russian trade mission in Finland, tried to work with trade missions in Poland and France. Currently, we continue to work directly with trade missions in France and Poland. The most active is the trade mission in Poland.Poland is very interesting to us as a consumer country: there are lots of construction projects. And let's not miss the important component, the logistics. We’ll need only one thousand kilometers to get from Velikye Luki to Warsaw.
You mentioned India, where you obviously would not have gone if there was no interest. And earlier you said that delivery to the Kuril Islands is more expensive than all other supplies? What is the situation with logistics to India?
I would not say it was expensive rather than valuable, because it is 10,000 kilometers within our country.
Is it the status then?
Yes, it is. And if in 2017 we sent our products to Khabarovsk Krai by car, it costed 750,000 rubles for a distance of 9,000 km. And in 2018, when we sent our products in a container to the Kuril Islands, it costed 270,000 rubles for 10,000 km. What is the reason? Because today we live in the world of container shipping, so we are not afraid of delivers to India. We came there because of regular requests from India to supply our products. Now we are convinced that the world of container traffic is alive and working. Containers can be sent to India from Ust-Luga port, and it will have reasonable costs in comparison to car delivery in Europe.
Preparations for exhibitions this year included promotion in the network. What internet marketing tools do you generally use?
We have a separate expenditure article or item for it and perform separate activities with social networks, such as Facebook (on English). Advertising campaigns are configured for each country that uses Google, collecting keywords, key phrases and launching contextual advertising. According to the results of participation in INTERMAT 2018 exhibition in Paris, the specialized magazine Beton[s] (France) published an article with an interview of M-Konstruktor top management called “What if you were offered Russian mould?”
There are a lot of tools helping us to perform marketing activities, more or less, so we are in the working process, and this is the main thing.
According to personal feelings, what is more effective today: online promotion or live communication with potential customers?
I can’t say that this or that is more important.
For example, participation in the exhibition in France provided lots of live communication with customers, about 45 target contacts got interested in us. But today, in the period from May to October, we have not signed a single contract with such companies from the exhibition. And after that, a company based in Switzerland with the main working office in Romania visited us, saw the plant, estimated our opportunities and without any hesitation signed a contract. When I asked: “How did you find us?” They said: “We looked at the list of companies that took part in the exhibition, and your company got our interest.” They just saw us in the electronic catalogue, and now we are executing contract with. This is the effect that we probably did not expect.
How often do you have guests besides the customers from Romania? Europeans always look at the production, before making contact. Do you have other foreign delegations?
Yes, we do. At present, we discuss the project with a Belgium company, whose representatives have already visited our plant twice. Once they came to get acquainted and see our production technologies and facilities. During their second visit, we no longer went to the shops, but discussed the details of our cooperation. We hope that at the end of this year, or at the beginning of the next one, we will sign a long-term contract.
As I said in an interview with Beton[s] magazine (France): “And those who have doubts or who are interested to find out what is happening behind our walls in Velikiy Luki, M-Konstruktor, of course, you are always welcome to visit our plant ".
“M-Konstruktor” is always open for potential customers.
I would like to ask a question concerning your personnel. How difficult was to find employees? How did you form FEA direction (Foreign economic activities) at the plant? Is there professional training for employees?
This is a very interesting question. We have interesting approach that has been developed in our company. Initially, the first export inquiries and orders formed by themselves, without any work of managers. We did not have specialists in sales abroad. We've got acquainted with the Export Support Center of Pskov Region absolutely by chance, met with Yury Shurygin, and he explained why and for what reason we need a separate manager who will be engaged in foreign economic activity and certain countries. I understood everything too seriously and decided to try. Moreover, our employee who dealt with the Russian market, as well as Kazakhstan and Belarus, said: “generally, I know English and improve it myself”. And I replied: “well, now you will try to deal with the foreign English-speaking market”.
In addition, the Pskov Export Support Center and REC periodically conduct various training events. Just last week, our employees in Pskov were trained in paperwork or document control and communication with potential European customers.
You are looking for to increase the share of exports up to 45%. Where did you get this figure? What is the basis for its calculation? And what is the share of exports for today?
This relates primarily to the domestic market. The activities that we perform as exporters have a positive effect on the domestic market, because the company is entering a completely different level in the eyes of its potential customer.
We are interested in developing both in the domestic and foreign markets. Today, taking into account Belarus and Kazakhstan, the share of exports in annual turnover is from 15 to 25% of all revenues depending on the year.
Why 45%? Because today there are certain measures to support exporters in the Russian Federation, and we should use it. We are interested in increasing the share of exports, and 45% is the best balance for us.
And now a traditional question. How do you see your company in 5 years?
Before looking ahead, I would like to return a little bit to the recent past, in 2013-2014, because the company has been actively developing since 2014. I started working in this company since November 2013. At that time it consisted of 12 employees and production capacity was limited to 800 square meters and several machines. Over 4 years the number has grown to 100 people, production capacity has increased to 6000 square meters, not accounting the storage space. Of course, we’ve got a lot of new high-performance equipment. The company's annual turnover increases by 30-40%.
Looking into future, I would like to maintain such growth rates. We have plans to expand our production capacity in the next two or three years. Productivity should be doubled. This is an ambitious plan, of course, but we know how to implement it.
And just today we discussed the possible opening of a representative office in one of the European countries, because this market is interesting for us.
I hope that within 3-5 years all these plans will be fully implemented. Production capacity will increase; we’ll have lots of orders and work, actively supplying our products through our offices in other countries.
Does a double productivity plan involve recruiting new employees?
Of course, it does. Today, Velikye Luki is experiencing a sufficient personnel shortage. We are on the path of acquiring expensive, but high-performance machines, where one operator can do the work for 3-4 employees per shift working with simple machines. We have to move in this direction, because the personnel potential in Velikye Luki is almost exhausted, and not only by us, but due to large factories located here. We are rather small enterprise. And there are huge plants with several thousand people working on it. And it is great that everyone is busy with a certain type of work, and additional specialists are required everywhere.
I would like to add about the future. I've read in another interview that you had a family business, and the company was founded by your father, and then you and your brother joined the company. This is a wonderful story. Would you like the third generation of your family to continue working at M-Konstruktor?
In fact, everyone should do what he is interested in. And the third generation is growing up now, and I hope that our children will be interested in proceeding to work at M-Konstruktor. The most important thing is their desire to work.
As a small digression from a serious discussion, I want to tell you the following: last year my daughter Uliana, a second grade pupil, asked:
- Dad, will I go to work in "M-Konstruktor" when I grow up?
- If you want, you will
- Do I need to know English?
- Of course, Uliana.
She sighed and said:
- Oh, and it does not go well at all. I need to study more.
Now she has extra lessons to cope with an intensive school program.
I hope that our children will be interested in what we are doing.
- We hope so too and wish you good luck.