In December people usually review the results of the year. Today we are talking with Chairman of the Board of Ruukki Russia, Jussi TUISKU about the market of roofing products in Russia.
— Mr Tuisku, let’s try to summarise the preliminary results of 2016. How do you assess the condition of the roofing products’ market in Russia? What are the tendencies of its development?
— The roofing materials we are producing and selling in Russia are mainly premium-class products.
For example, despite the crisis, the sales of such premium-class products as Bentley automobiles have grown by 40% in Russia. Our sales have not increased so much but of all our products in Russia roofing materials feel very confident.
I’d say that the roofing business develops well, and that the retail trade also satisfies us.
— Taking into account that the crisis has been more heavily felt in Russia than in Western European countries and the USA, are there any differences from the worldwide condition?
— Russia differs from Europe because all of the segments there are developing similarly. And we feel the crisis in Russia. On the whole, the market is inclined towards asphalt shingle, though metal tile roofing remains the quality standard.
Besides, in Scandinavia, the standards are fixed by law, with the thickness of the metal being 0.5 mm minimum, and zinc use is at a minimum of 275 g/m2. There are no such standards in Russia, unfortunately, and in individual housing construction everybody may do what they want.
Our partners who work with different products say that the lowest price segment presented by Chinese producers has fallen. This is the variant with 0.32—0.4 mm’s thickness and with less than 140g/m2 of zinc.
The mid-segment presented mainly by Russian producers has also fallen, but not so much. Only the premium segment is growing.
— How interesting. Do people reject low quality products in favour of quality ones?
— I’d rather say that those customers who did not have enough money for purchasing have now lost this opportunity completely, and they reject serious investments. Only wealthy people continue building. They say the rich become richer in the crisis, and the poor become poorer, alas.
— For the last two years a new reality has formed and we exist in it. How successfully has the Ruukki company adapted to this new Russian reality? Did you have to reconstruct business in some way?
— Everybody has adjusted to the reality. Since last summer we have been working out the plans for 2017. We have to foresee the situation beforehand because we must think about our employees, partners, customers and establishers. We are a business, not a charity foundation.
In summer 2013 we already saw that something was going on in the economy and in 2014 we felt it explicitly. Two years ago we took a decision to adjust to the new conditions. Talking about positive things, the measures taken and what has been done this year have given us relatively good results now, in the second half of the year.
Our team can work, and it is especially noticeable now.
— Could you please give some examples? Have you changed the product range, reduced the employees or lowered the quality?
— The Ruukki brand does not allow us to lower the quality. Neither Mercedes nor Bentley change their quality if their sales have fallen. But we carefully study our expenses and take measures which are not always evident.
We have three plants in Obninsk and Balabanovo, and this year we have changed the sales structure and projects’ management. These and other measures do not have an immediate effect but do help.
Of course, we have to take decisions about the staff. On the whole, speaking about our company, we have already adapted to the current conditions.
— What is your price policy concerning international prices. You cannot sell your products at international prices in Russia, can you?
— When producing roofing we use 90% of imported steel delivered by our parent company. It is steel from a Swedish holding company, produced in Finland. To provide quality we have to align with current conditions yet avoid losses.
— In 2018 Russia will hold the Football World Championship. Have you got orders for metal structures and roofing for stadiums? Is there a danger that the market may fall when all the special construction is over? Or is this a small segment for you?
— We are not focused on football. This year the number of projects we have had has been the same as it was last year.
The other thing is that the market fell two years ago and since then we have lived in this new reality and have fewer employees. That is why our plans for the next year are very realistic.
There are projects to implement, but it is clear that the market conditions impact on us as well as other companies. But the situation as it is cannot last long.
— Your company produces premium-class roofing from Finnish steel. But as far as I know you also have goods made of Russian primary materials?
— We cooperate with a number of Russian plants and are satisfied with the quality of their materials.
— If we compare the quality of the imported and Russian primary materials, which do you use more? And how are the products made of Russian primary materials sold? Are they sold only on the Russian market?
— All our products apart from roofing are made of the Russian primary materials. The sales area includes Russia, Belarus, Kazakhstan, Uzbekistan and Georgia. There are no problems with these products.
Ruukki roofing is produced in Russia from the imported steel and is both sold in Russia and exported. Ruukki Russia is the exporter to CIS countries.
— What policy will the company adhere to in 2017?
— We are realistic about the next year. We opened a retail store in Balabanovo in 2015, and will open a second one in March, 2017.
Of course, we are very interested in export, and have readjusted the metal structure sales in a way to answer the demands from abroad.
— The Russian authorities expect a slight growth of the economy, but some experts think the stagnation will continue. Are you expecting further growth of the premium-class segment or something else?
— We are expecting growth. As far as structures and panels are concerned, next year will be the same as 2016.
We should take into account both the market condition and what is going on with its players. Some of them, unfortunately, are in a state of “oxygen starvation”, and it cannot but influence us.
It is important for each partner, customer or investor to understand what risks exist and how to manage them.
— Has the problem of low quality goods become sharper on the market during the crisis? I used to talk with representatives of some companies who said that many players began to cut corners, producing low quality goods or selling counterfeit products… Could you comment on it?
— We do not deal with it. There is a purchaser’s responsibility and everybody knows that there is no cheap and quality material on the market. And if a customer is offered such goods, he should think whether it is worth buying.
Though I must admit that such things happen.
— Recently, we were talking with the President of the Russian Architects’ Union, Nickolai Shumakov. He spoke about the development of programs supporting young architects. Are you ready to take part in such programs?
— Yes, and we have already taken part in such programs in Finland. There was a competition of young architects in designing a house and a logistics centre for Santa Claus. The building was designed in a humourous style, but its implementation needed to be serious. The winners went to Europe.
— And the last question is traditionally a personal one. Did you manage to take part in the Iron Butt motor race as you had planned?
— Unfortunately, I had to miss it, as I was sick at that time. So, I hope I shall manage it next year.
I like travelling and this year I visited Bavaria. I have been to Germany several times, but this time I was surprised how nice it is to rest there…
Evgeny GORCHAKOV