Tiraspol, 1 February. /Novosti Pridnestrovya/. The Elektomash situation was one of the key issues under discussion at today's extraordinary cabinet meeting. The plant saw conflicting trends last year. On the one hand, its production volume increased more than twofold in volume terms. On the other hand, in value (US dollar) terms it decreased by 15%. The plant considerably expanded its product range and actively explored new markets, but at the same time the competitive ability of its products were constantly falling.
There were several reasons for such paradoxes. One of them was a decline in global oil prices. As was noted at the cabinet meeting, a decline in profits of power companies resulted in a sharp reduction in demand in the Russian market to which Elektromash sells 90% of its production. To maintain its positions, the plant reduced its prices by 10−20%.
At the same time, from the late 2014 all contract prices were quoted in Russian roubles instead of US dollars used before. Otherwise it would have been impossible to sell Pridnestrovian goods.
«The overall reduction in prices for finished products was followed by the situation when prices quoted in Russian roubles 'stood still' at the rate of 32 roubles per US dollar (as it was back in 2014). But the Russian rouble has fallen in price by 2.4 times since then as have the plant's products in the Russian market. Besides, when we sign a specification contract, we expect to receive one sum of money, but, as the devaluation continues, in the period from signing a specification to receiving money we lose an average of 15−20% on each contract. In 2014 we lost a bit over $200,000 due to exchange rate difference and over $500,000 in 2015» noted Elektromash director general Vladimir Trandasir.
Another negative factor was the loss of the Ukrainian market, which accounted for 20% of sales several years ago. The plant's chief customers were enterprises in Donetsk and Lugansk regions with which contacts were lost due to the civil war. To compensate for these losses, Elektromash began to explore unaccustomed markets and manufacture products for nuclear-power enterprises in Ukraine and Belarus.
At the same time, the management sought alternative opportunities to alleviate crisis implications, let alone a way out of it.
«We have almost entirely reorganised the plant's supply scheme and begun to purchase as much raw material as possible in Russia. Now we buy 90% of raw material there against previous 50%. We have considerably cut the use of fuel and power resources, their share in production costs having decreased to 6 — 7%. Besides, 2015 was the year of active development of new equipment. Almost every third machine produced was either brand new or significantly upgraded. But for these steps, our production volume would have decreased twofold for this reason only," said Vladimir Trandasir.
Throughout the entire year of 2015 Elektromash was doing its best to maintain its positions in the Russian market and fulfil its contract liabilities. This led to a serious deficit of working capital and the plant switched to an austere mode of saving working time alongside fuel. The staff was reduced by 100 employees, with some specialists working only 1 — 3 days a week.
And yet, the plant has at least stayed afloat, let alone emerged from the depths of the crisis.
«As of today, the plant owes nothing to the country's budget and extra-budgetary funds. There is no current and past salary indebtedness to the employees, either. The plant is working with almost no halts, considerably expanding its product portfolio and signing contracts with biggest Russian companies such as Transneft and so on," noted the minister of economic development, Alevtina Slinchenko.
But is still unclear how long Elektromash will be able to work at such a pace. The government has expressed support for the course of action chosen by the plant's management.
«Despite everything, the enterprise has penetrated into the Russian market. It is very important because, if we quit it, besides paying forfeits, we may forget about the Russian markets once and for all. The government will find a way to support your plant. At governmental level we are seeking the opportunity to support your enterprise (besides the existing energy benefits)», said Prime Minister Pavel Prokudin.
