Chumachenko igor electrotyazhmash

State Enterprise

ELECTROTYAZHMASH Сompetitive bid Candidate for filling the vacancy CEO of State Enterprise «Electrotyazhmash» Igor Chumachenko

MARKET ENVIRONMENT The market of power engineering industry, has a share not more than 5% in the machinery industry of Ukraine and becomes strategic. The work of the engineering sector is related to the energy security of the country and large export contracts.

Representatives of industry in Ukraine •

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Сommon features of the enterprises

State Enterprise • «Electrotyazhmash» (Kharkiv) • PJSC «Turboatom» (Kharkiv) PJSC «Sumy Machine Building NPO» • (Sumy)

domestic market orientation; market orientation to the former Soviet block, Asia and South America; small relative share in overall export of these enterprises in Western countries.

Product sales dynamic: Recently the market situation in the power engineering industry significantly deteriorated.

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January-October 2015 the export of nuclear reactors, boilers and machinery decreased by 40% compared to the same period of 2014;

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Export in 2014 decreased by 20% in comparison with 2013 year.

Benefits of competition: Association of enterprises

A wide range of energy products

Well-reasoned commercial policy

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PROBLEMS

1. DETERIORATION OF RELATIONS WITH RUSSIA Economic relations with Russian enterprises are broken.

September 2015 - "Electrotyazhmash" has successfully passed the audit of quality management system. and became a supplier of "Energoatom" (Russian Federation).

The success of cooperation with this holding looks doubtful.

2. LOSS OF MARKET IN THE OCCUPIED UKRAINIAN TERRITORIES The work is stopped or limited: • PJSC "Luganskteplovoz", completely stopped operation in January 2016 • Lugansk TPP • Zuevskaya TPP • Metallurgical plants and coal-mining sector in the ATO zone

3. DECREASE OF FINANCIAL SITUATION OF THE MAIN CONSUMERS Fall of the prices on the international markets of raw materials

Decrease of the financial condition of customers

Decline in sales volumes Electrotyazhmash

Decrease of sales volumes in 2015 in comparison with 2014 and 2013: • in UAH equivalent - 19 and 31%%, respectively; • in dollar equivalent - 57 and 75 %%, respectively.

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PROBLEMS

4. THE LACK OF TRANSPARENCY IN BUSINESS ACTIVITY OF THE ENTERPRISES 4.1. As a result of investigations executed in 2015 it was determined that Electrotyazhmash has been working with offshore companies related to the former management of the plant, in which "settled" a significant portion of the company's income.

4.2. Unprofessional security: •

Steal of commodities and materials theft

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fictitious sale operations

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manufacture of unrecorded production and other.

5. THE LACK OF MODERN MANAGEMENT TECHNIQUES IN THE ENTERPRISE Absence: Lean production Budgeting Balanced Scorecard Delegation of authority and etc.

A large proportion of the auxiliary and administrative personnel Large stocks at the warehouses Accounts receivable and accounts receivable (including bank loans).

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PROBLEMS 6. OBSOLETE ORGANIZATIONAL AND MANUFACTURING STRUCTURE OF THE ENTERPRISE "Soviet" organizational structure

• Redundancy management levels • Outdated business processes • Large amount of departments

Large areas and quantity of buildings

• Operating costs and repair of buildings • Operation costs of communications and networks • Spillover of population

Availability of non-core businesses

• Excessive diversification • Lack of outsourcing • Spillover of population

Social sphere

•Non-productive expenditures •Spillover of population •Inefficient use of resources for the formation of social package 5

WAYS OF SOLUTION: INCREASE IN SALES 1. METHOD OF SALES VOLUME INCREASE: 1.1. Entering new markets and development of the relationships with key potential customers in these markets • • • •

opening offices and branches in promising countries the formation of dealer network production certification of standards (ISO 14001, OHSAS 18000, etc.) rebranding and others.

1.2. Development of after-sales service products • • •

formation of a network of service centers creating warehouses with spare parts formation of a network of field repair teams and others.

1.3. Improving product quality • • •

compliance with ISO 9001 standards implementation of international practices to improve the quality (six sigma, lean production, etc.). renovation of machine tools fleet

1.4. Development of the plant product line • •

expanding the range of existing products development and introduction of new types 6

WAYS OF SOLUTION: INCREASE IN SALES

2. COST REDUCTION OF ENTERPRISE The goal of cost optimization - creation of organizational and production structure of the enterprise, business processes, which will be effective at different levels of production.

Quickselling

Realized in the medium term

Realized in the long term

•the rejection of non-core businesses •integration of production, production separation on the food chain •intra-factory optimization and internal transport •optimization of storage facilities

•optimization of production facility use •optimization of equipment stock •equipment upgrade •removing excess levels of management and implementation of delegated authority

•realization of long-term investment development program •realization of staff development programs 7

WAYS OF SOLUTION: INCREASE IN SALES 3. TRANSPARENCY OF BUSINESS ENTERPRISE ACTIVITY transparency of purchases of commodities and materials and services business transparency

•using web platforms •tendering •publication of the results of tenders, etc..

•broad participation of leading experts in agreeing the terms of contracts •informing the top management team of the deals made •on the results of business publication in the media

broad involvement of •participation in decision-making and agreeing contracts specialists of the •informing plant staff on economic results of operations plant the activities of the Internal Control and Audit

presence of professional security companies

•conduct an ongoing audit of production and business process •an analysis of the fulfillment of contractual obligations •analysis of write-off material costs and the prime cost of formation •joint discussion of the results and events to eliminate violations and overheads, etc..

•control of delivery of commodities and materials and access to company staff •control of movement of commodities and materials for the enterprise •Introduction of Video Surveillance the introduction of modern control systems (vehicles GPSmonitoring, electronic access etc.).

•work with law enforcement authorities

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WAYS OF SOLUTION: INCREASE IN SALES Corporate culture: openness of departments and divisions of the organization, participation in the formation of the overall development strategy of all employees, the collective awareness of the production and economic plans and results, the role of each employee in achieving positive results

Corporate culture Analysis of the production structure and business process

Development of the new structure and strategy

Starting the realization of a new development strategy

Revision of HR and ТОP-managers

Creation of a working group for reforming

Staff training, startup of new business processes

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1-3

3-6

Decision by the guide of the Security Police and its human resources

Analysis of purchasing and sales processes, the creation of the internal audit

Organization of transparent purchase and safety of commodities and materials

Revision of marketing analyzes and the product. factory line

Development and launch of the program to increase sales

Introduction of best practices by quality management

6-12

months

Introduction of technical controls

Certification Intl. standards

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COMPETITIVE EDGE OF CANDIDATE Ability to manage change •Reorganized metallurgical plant 8 thousand strong •The reorganization of concentrating assets: construction of a new enrichment plant (the largest in Europe) and sold old •Started construction company and building work are centralized at the holding •Created the Department to work with troubled borrowers, organized work on the restructuring of loans

Result orientation •Create your own profitable enterprise •Improved financial results DMZ •The reconstruction of electric steel production DMZ •Reorganized the largest enterprise security •Build the largest coalpreparation plant •Improved financial performance in coal preparation

•Created building company 350 strong •The analysis and decisions on restructuring of distressed debtors of the bank more than $ 500 million.

Communication

Leadership skills

Business skills

•Search of customers and conclusion of contracts for the heating supply

•Management enterprise eight thousand. strong.

•Manufacturing Process Control: •coal enrichment •metallurgy •gondola cars production •building •the banking sector and others.

•Finance: •financing attraction •loan restructuring •management of enterprise finance, budgeting •strategic and operational planning, and others.

•Human Resource Management: •Management team of up to 8 ths. people.

•enterprise structure reorganization •the formation of top management team •recruitment and training of personnel, and others.

•Negotiating with buyers about products and raw material suppliers •Participation in the reconstruction of the plant: Danieli, Siemens, Institute Giprostal, build installation companies and many others. al.

•Joint work on the construction of coalpreparation factory: CETCO, UTEM, ANDRITZ, Luganskgiproshakht and many others. al.

•Development of investment projects: Seric, Direxa, Energoprojekt and others.

•Negotiations about investment and bank financing

•reforming the organization of the plant •Management reconstruction of steelmaking complex •Construction management and output on a designed capacity of the largest preparation factory in Europe •Organization of building companies and construction management in the holding •investment projects management •Organization of the Department work with troubled assets

•Negotiations with borrowers

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THANK YOU FOR ATTENTION !

Igor Chumachenko Candidate for filling the vacancy CEO State Enterprise «Electrotyazhmash»