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with Alexander Kozlovsky, General Manager, ZETO

12.03.2013 / Energyboardroom

The Russian government has made the modernization of the Russian power grid a priority for the country. What opportunity do you see for Russian power equipment manufacturers to contribute to this modernization phase?
For a long time, no improvements have taken place in the Russian power grid. Today, it is time to put our intentions to modernize the system into action. It has now been widely agreed and communicated that modernization will be taking place, which will undoubtedly require significant investment. As a private company, we are very pleased to take part in this process.
As manufacturers, this will imply that we will need to increase our production levels and continue to work on our development plans, something that will not only benefit the energy sector, but also other related sectors.

How would you describe ZETO’s positioning today?
We manufacture electrical equipment for the power sector, not only for the former RAO UES –which today is divided into regional generation companies and the power grid– but also for other sectors such as nuclear and the Russian railways. When our company was created, our work was mostly directed towards supplying the entire energy sector, notwithstanding where construction of the grid or substations could take place.
We certainly have priority areas, such as the Federal Grid Company (FSK). After the merger with MRSK, this entity under the name “Russian Grids” will cover more than half of our contracts. We mainly work in the area of high voltage equipment from 35 up to 750 kV. We also have experience working with higher voltage –of 1,150 kV– during the construction of the Ekibastus Center line.

ZETO has its roots in 1959. To what extent can you leverage this Soviet heritage when profiling yourself as a ‘modern company?’ Does one contradict the other?
We build on and keep our Soviet heritage as it shows the experience we have in the energy market. This experience is testament of the capability we have in joining construction services with science, a knowledge base that is not always easy to find today. We combine our experience and look at improving our approach, upgrading our production and modernizing our company. We cannot forget our past. Many companies of the Soviet era were given many opportunities to develop, which continue to exist today.
Not taking into account any political aspects, we are very proud of the projects we have been working on during Soviet times. We have taken part in the electrification of our country as well as other nations in Asia, Africa and Latin America, in countries like Cuba. At that time, the company was developing even faster than today. The products that have been supplied to those countries and facilities are still in place, which proves that they are of high quality.

You indeed carry the ISO label, which must be a necessity to be able to work with large customers such as FSK. Where do you still see room for improvement?
As any other director of a manufacturing company, quality is at the top of my agenda. ZETO continues to work on improving the quality of its products as well as production processes. We need to ensure that tomorrow’s product is always one of higher quality, a task that is set out by the market requirements. We continue to work on reducing our errors, even though ZETO has never experienced incidents due to faulty equipment.
We do not only support the management quality system of ISO, but also other systems that are required by other companies. FSK, for instance, wants its own certification while companies like Transneft inspect the products and quality systems of the company. Also in the nuclear arena, substations require certification from Rosatomnadzor, the sector’s monitoring body. They all provide proposals for further improvements, which after analysis we implement in our company.

You already mentioned a long track record of ZETO on the international scene. What does this geographical footprint look like today? With so much work to be done in Russia, is an international footprint also worth investing in?
We continue to supply our equipment at an international level. Historically, international sales made up around 40 to 60 percent of our total business. Today, however, this share has declined to 15 to 20 percent. While the Russian market now enjoys our priority, we do feel it is important to be present on the international markets. Many of these markets are ‘traditional markets’ to us and even used to be part of our country. We continue to supply to Ukraine, the Baltics, Belarus, Poland, Bulgaria and even Asia and Africa. We also take part in tenders in Latin America. These markets remain growth areas for us and are also important to remain competitive in Russia. Companies cannot only work in one market if they want to develop and grow.
We can learn significantly from the experience and quality, management, automation and production systems of our international colleagues, but it is also worth underlining that they can learn from us. Few companies can say that their equipment can also be used in the extreme weather conditions we face in Russia.

Is there potential to partner too, through joint-ventures or technical cooperation agreements?
At present, ZETO cooperates with manufacturers of complex equipment and buy high technologies from Asia and Western Europe. We also outsource many components from foreign companies in Europe and the USA and closely cooperate with test centers abroad, for instance in the Netherlands and Italy.
As for our direct competitors in Asia, the USA and Europe, we are also open for mutually beneficial cooperation. We have discussed many projects lately and have entered into various discussions. We do not exclude such cooperation in our future, which can be a great experience to stay on top of global trends.

We wish you the best of luck! On a more personal and final note, what has been the fit between your profile and the role of the general director of ZETO?
From a professional point of view, I have been linked to ZETO for a long time – since 1993. That year I started working in ZETO’s central sales office in Moscow. I came at the head of that office in 1999. In 2006 I joined ZETO as a commercial manager and one year later I was appointed as the general manager.
Both for myself and for the company, it is important to always look forward and continue to develop. Today, it will remain very important to both defend our current market position whilst conquering new markets, not only from a geographical but also from a production point of view. Today, we have many projects taking place in parallel, have a construction bureau and work on SF6 switchgears. In the near future, we want to introduce this new technology and raise its share in our business from the current 10 percent to an estimated 50 to 60 percent



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