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I am optimistic about the development of our country and the chemical industry. Interview with Andrey Shkola, CEO UTS Group, for the magazine Chem-Courier.

In May 2019, the UTS Group celebrates its 25th anniversary. A quarter of a century is a serious period even for a person, let alone a business. Andrey Shkola, General Director of the UTS Group, believes that during this time the UTS Group has become one of the largest distributors of chemical raw materials in the CIS countries and a reliable partner for domestic and foreign manufacturers.

Andrey Anatolyevich, we sincerely congratulate you on the upcoming anniversary of the UTS Group. Tell us about your company, its mission, values and objectives? In relation to customers? Suppliers? To your employees?

We see our mission in a combination of traditions and a modern innovative approach to the market, in working for the benefit of our customers, partners, employees and countries in which we operate. The ultimate goal is to improve the well-being of our employees and their families, partners, and the country as a whole, by continuously improving the efficiency of our work. We strive to have a wide range of products in each segment, providing our customers with the opportunity to reduce costs through the principle of "one window". We have 10 modern warehouses at our disposal, which allow us to minimize the volume of our own stocks at our customers, to carry out delivery on the same day. We offer good payment terms to our reliable clients. We have six laboratories to support our customers and introduce new products and solutions.

For suppliers, partnership with UTS Group is an opportunity to work with a highly qualified team of sales managers and technologists of the largest distributor in Russia, Ukraine and the CIS countries. These are guarantees of timely payments to suppliers from United Trading System Scandinavia AB (Sweden), which since 2005 has had a AAA credit rating according to Bisnode. This is access to our wide client base and complete information about the market, demand, trends.

What is the business model of the UTS Group? What place do the divisions in Sweden and China occupy in it? Are you planning to open offices in other foreign countries?
Our presence in various geographic regions, our technical services and a wide range of products enable us to offer our clients high quality services. In Russia, Ukraine and the CIS, UTS Group provides a full chain of services from logistics and customs clearance to storage in a warehouse and delivery, as well as technical support. By maintaining close technical and commercial cooperation with our suppliers, we are developing our business, increasing the share of our suppliers' products in the chemical market in Russia, Ukraine and the CIS. Our subsidiaries in Sweden, China and, from this year, India are responsible for working with our suppliers, while offices in Russia, Ukraine, Kazakhstan and Belarus are focused on working with our customers in these countries.

We promote the UTS Group brand as a “solution provider” and value our relationships with suppliers and customers as a cornerstone of our development strategy. We strive to guide, influence, and innovate the market.

Since its founding in 1994, UTS Group has continuously evolved to become the largest and most influential distributor in the market for specialty chemical raw materials in Russia and the CIS. What events did you remember the most?

First of all, of course, difficult times are remembered. These are the crises of 1998 and 2008. We passed the 1998 crisis easily. At that time, we had small turnovers, and we practically did not use borrowed funds. The 2008 crisis turned out to be very difficult for us. We had no experience in such a situation, and it was very difficult for us to cope with the problems that befell us at the same time: a sharp drop in the ruble exchange rate against the background of foreign currency debt to banks and suppliers, the bankruptcy of our customers, a sharp change in bank loan rates, a drop in turnover, etc. etc. But we have dealt with it. First of all, thanks to our employees and good relationships with suppliers. Not a single employee and not a single supplier left us. This once again confirmed that in business, as in life, reputation and honest and open relationships are important. Thanks to this, we managed to cope with the situation by May 2009 and were able to stabilize our business.

There were also joyful moments. This is the opening of our first own office in St. Petersburg in 2004. Then the opening of our own modern warehouses in St. Petersburg, Moscow, Kiev. And of course, the celebration of our 20th anniversary, when our whole team from all countries (which is 350 people) went to Turkey for four days. We prepared this event for a very long time and thoroughly, and it turned out! Everyone still remembers him. Since then we have grown, it became problematic to gather all employees in one place. But we will definitely celebrate the 25th anniversary in every team!

What key results have been achieved during this time? What achievements do you consider to be the main ones? What are you proud of?

Today UTS Group is a well-known and one of the largest distributors of chemical raw materials in the CIS countries. Has a good reputation, which is very important to us and which we value. In June 2018, UTS Group took part in the annual Congress of European Chemical Distributors FECC in Nice. This representative event brought together the leading distributors of chemical products in Europe, as well as many suppliers, including: BASF, Synthomer, A. Schulman. The ICIS rating of the world's leading chemistry distributors was timed to coincide with the Congress. UTS Group ranked 37th in Europe and 75th worldwide. For me, this result is, first of all, recognition of the merits of our entire team. But this is not a reason to sit back and be content with what we have achieved. We still have a lot to do to strengthen our position in the market. And believe me - we have more than enough ideas.

Obviously, the UTS Group has never let down foreign suppliers. Did the vendors let you down?

There was everything. That's life. But we always strive to create long term relationships with our suppliers. When problems arise, we find compromises and solutions. And we do it. We have more than 250 regular suppliers and we have terminated contracts with only 5 of them in 25 years. This is a good indicator. Suppliers are happy with our results and are not going to leave us.

Now the company adheres to parity in sales of European and Asian raw materials. Nevertheless, do you have the feeling that the products of Asian manufacturers are crowding out the European ones? Including the one made in factories in Asia, and not only at a price?

Yes, it is. In the 1990s, our main suppliers were European firms. Their import accounted for 90% of our turnover. Now Asian and European suppliers share our turnover 50/50. Over the past 15 years, the quality, product range and service of Asian manufacturers have grown dramatically. I remember when 15 years ago our clients in Russia refused to even test products from China, not believing in their quality and stability. Now the situation has changed dramatically. Most of the products made in Asia are in real competition with the products of Western manufacturers. This is an objective reality. But we do not refuse European products either: we have a short supply chain from Europe and good relations.

UTS Group develops the production of chemical raw materials and products under its own trade marks. What kind of product is it and where is it produced in which countries? What does it give you?

Today, we locate production with our partners or manufacture our own products such as plasticizers for concrete, defoamers, mixed solvents, complex amines, various surfactants and many others under our own trademark. For us, this is, first of all, the positioning of our own brand, as well as the ability to provide the client with a product with an optimal price / quality ratio. In addition, this is how we protect our know-how. The products are mainly manufactured in Russia and China.

In 2011, the scientific and technical center of the UTS Group was organized, which now includes six laboratories. The costs of new developments and products are significant, and they do not pay off quickly and not always. How did you come to the need to invest in technology? Do they justify themselves in the current economic situation?

We not only supply chemical products and raw materials, but also help our customers improve and optimize their formulations and technologies. This is largely achieved with the help of our own laboratories and highly qualified technicians. At the end of 2018, UTS Group completely renovated the laboratory complex in St. Petersburg. Now we are focusing the attention of technologists on the main areas of our activity. These are primarily: paint and varnish industry, special chemicals, detergents and household chemicals, as well as construction chemicals and products for the production of composite systems, food chemicals and plastics.

The work of a modern chemical distributor is inextricably linked with the creation of additional value for products, solutions, services. For more than two 10 years, UTS Group and all of its employees have been working to provide quality service and help customers get modern technological solutions for their tasks. We are always open to new business ideas and opportunities. Every year we bring dozens of new high-quality chemical products to the markets of Russia, Ukraine and the CIS countries, helping to produce modern and competitive goods. We strive to use every opportunity to share knowledge with our partners.

To maintain health and live longer, people go to gyms, swimming pools ... They spend money on it. Is this the cost? Yes! But they pay off and are justified. So for us today investments are costs. But we are confident that they will pay off in the long run. And we are going to live long and efficiently.

What are the key features of local markets right now? Growth / decline rates, focus on consumer segments?

The main feature of modern business is more and more rapid changes in everything. New products, sales technologies, modern communication and advertising solutions appear. The M&A market is constantly on the move. In the world, more and more attention is paid to ecology and environmentally friendly solutions. New production facilities are under construction. In Russia, its own production of chemical products is rapidly developing. Quite recently, we imported a lot of PE, PP, PS, melamine, Group III oils ... Now all this is produced in Russia. Competitive production of not only tonnage, but also special chemistry appears. Everything is changing very quickly and everything is faster and faster. Therefore, it is now very important not to lag behind. Follow current trends and not only follow them, but also try to stay ahead. It is very difficult! If we talk about short-term tasks for the coming years, then the main problem for everyone in all industries is the same - profitability. Unfortunately, the trends here are alarming, and this is the main brake on development.

Andrey Anatolyevich, you have personally headed the UTS Group for 25 years. How do you find the strength to do this every day? What is your motivation? To make more money? Achieve peer recognition? Expand your business? Or something different?

I was born and formed as a person during the Soviet era, and my personal needs are quite modest. But business is impossible without money. It is impossible to develop and implement new ideas and plans. And business should always develop. If you stop, you will die - it's like riding a bicycle. Therefore, we are obliged to earn. At the very beginning, we said that our goal is to improve the well-being of our employees and their families, partners and the country as a whole. And this is not an empty phrase or beautiful words. The main thing that motivates me is work, results, satisfied employees, partners, suppliers. I am used to working a lot and I cannot live without work. Thanks to my family (wife, children, grandchildren) that they themselves cope with all our household chores and give me the opportunity to work.

If there was an opportunity, what would you like to change during the development of the UTS Group?

Nothing. Of course, there were many mistakes, problems, nerves, losses ... But all this is natural and cannot be otherwise. It taught us to look for solutions, survive, made us stronger. I believe that business is the ability to find solutions in all issues, to solve problems. There is no business without problems. And you will not be successful without going through difficulties and problems.

The current situation is not good. Exchange rate fluctuations. Sanctions. Rising prices for raw materials. Construction segment stagnation. Decreased profitability of processors. How do you assess the prospects for the development of the Russian chemical market? Pessimistic, optimistic and most likely scenario.

The chemical industry does not exist autonomously, but in the same environment and conditions as all other businesses. And it also depends on the purchasing power of the population, the ruble exchange rate, loans, taxes, domestic and foreign policy of the state, etc. I'm an optimist. It is impossible to talk about the chemical industry in isolation from what is generally happening in the country and in the world. I believe that we and our country have everything to develop and live happily: - people, natural resources, history, culture, education, endurance ... Of course, I would like some processes to develop faster. But there is what is. And a lot depends on ourselves and on each of us.

We (the country) have largely adapted to external conditions. We have become less dependent on the United States and Europe, which have their own, sometimes different from us, vision of what we should do and how to develop. As an example, our company: - we already receive more than 50% of products from Asia and we work more closely with Russian suppliers. If we talk about the chemical industry, then, as I said above, it has been developing very rapidly lately. And this is an irrefutable fact. The production of not only tonnage, but also special products appeared.

I would only like the country to create conditions not only for the giants of the industry, but also for small and medium-sized enterprises, as it is, for example, in China and even India. It is a pity that many talented and hardworking people in the current conditions cannot realize themselves and realize their ideas. I am optimistic about the development of our country and the chemical industry. I never wanted to leave Russia and I want my children, grandchildren, great-grandchildren to live here. I want them to live happier than our generation and our fathers and grandfathers.