Russia’s Solombala pulpmill CEO: Pulp sales boost while prices are still low

Jun 1, 2009. /Lesprom Network/. Solombala pulp and paper mill (Arkhangelsk region, Russia) general director Anatoly Drachev gave an interview to Pravda Severa newspaper commenting on current pulp and paper industry challenges and presenting plans of the enterprise. “When economists talk about the second wave of the crisis, they mean the insolvency crisis which may occur between banks and loan receivers, between suppliers and consumers. The most effective remedy in this case is to increase production and sales volume and cut loaned assets and expenses. That is why it was essential for us to launch second pulp production line. This will enable to boost sales revenue almost twofold and cut expenses per production unit at the same time”, - Drachev said. Situation on the pulp market is improving in terms of sales volume, says Solombala’s pulp mill CEO, however, prices are still low: world market prices fell practically twofold. Partially this trend negative for exporters was offset by decreasing rouble rate to euro and dollar. Anti-crisis measures at the plant were directed at saving staff, cutting expenses and preparing the plant for sustainable operations in the second half-year. The plant management introduced daily analysis of expenses. “An ideal enterprise structure should comprise only those departments that are responsible for production, services and technical development. This will enable to improve production efficiency and workers’ wages”, Mr Drachev comments. The plant director also commented on legal proceedings initiated by plant workers who were paid only two thirds of the tariff rate during the plant shutdown. “The court took a decision and we satisfied it. I am not opposing it but I find it too emotional. The vast scale of the global economic crisis could not be predicted even by the chief officers of the International Monetary Fund. Pulp and paper sales market totally depends on global economy trends. For several months pulp was not in demand on the market and therefore was not sold. What would we do in this situation, produce and store it at the warehouse? How would we compensate 200 million roubles ($6.5 million) production expenses then? It is only evident for me that the shutdown was accounted for external circumstances which nobody could predict. Having paid two thirds of the tariff rate during the forced downtime, we acted in compliance with the Labor Code, and what is important is that we prevented massive staff reduction”.