Wednesday, 03 December 2008 08:32
Solombalales Holding
PRESIDENT: Ivan Borodin
OPERATIONS: timber harvesting, saw-timber, woodworking, pulp and paper production
ESTABLISHED: 2007
EMPLOYEES: 5000 people
www.solombala.com
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Russia is one of the most important suppliers of timber, including saw-timber, pulp, and paper to European markets. Northern part of Russia, especially Arkhangelsk region is very rich in woods, mainly in very precious softwood from coniferous species. Therefore, historically Russia has always been and currently is an influential player on a world’s timber market.
Recently European Parliament has voted the project by which timber market operators are obliged to trace and provide basic information about the source of timber, their country and forest of origin. Special attention is to be paid to the place of origin as well as way of obtaining timber. In case of using or processing illegally harvested timber the company would be severely fined. The purpose of the law is to prevent illegal timber trade and thus avoid deforestation. It will basically cause that European importers will require certificates of legal timber origin from exporters. Can this law result in changing of the actual market situation or prevent Russian woodworking companies from shipping timber to the European markets? To find the answer we will look at the working principles of a large pulp and timber supplier from North of Russia - Solombalales Holding.
How It Began
Solombalales is a Russian group of wood processing companies. As a vertically-integrated Holding Solombalales was founded in 2007, after Solombala Pulp-and-Paper Mill acquired Solombala Sawmill and Woodworking Plant at the end of 2006. Both mills are situated in Arkhangelsk region very close to each other and historically have always been linked together. Both mills were constructed at 30-40-s of XX century during large-scale industrialization of north of Russia. Arkhangelsk region was chosen not by accident but out of strategic purposes. The region is very rich in woods and Arkhangelsk has a large international commercial port. After USSR breakout all woodworking companies were privatized. By the end of 90-s consolidation was started in woodworking industry. Solombalales Pulp-and-Paper Mill acquired Solombala Sawmill and Woodworking Plant with all its timber and transport companies - which became the key point in creating Solombalales Holding, and the development of company’s structure is still going on. With the course of time common procurement, sales, finance, security, legal, and accountant corporate departments were created.
Company’s Structure
All managerial functions are performed by Solombalales Managing Company. This company serves as the centre for strategic decision-making within the Holding. All commercial and financial functions are concentrated under Managing Company’s control. According to Ivan Borodin, General Director of the Company the main advantage of the Managing Company is its ability to accumulate considerable resources and use them for effective tackling of problems. He is sure that managing company can do the things much bigger and much quicker than separate enterprises. So, in Mr. Borodin’s opinion, the main purpose of Solombalales Managing Company is to concentrate actions of all companies of the Holding to solve common tasks. Currently due to unfavorable economic situation, caused by the world financial crisis the Holding continues to centralize management of the company. In addition to financial and commercial functions, all non-production functions in the field of IT, PR, document processing, all administrative functions are passed to the Managing Company. The Holding strives to the model when mills perform only production tasks. Solombalales Holding is a group of companies having facilities both in Arkhangelsk and in Vologodskaya region, which provides the full cycle of wood processing. The structure of the Holding comprises three main directions: timber-harvesting (7 companies in Arkhangelsk region), sawmill and wood processing as well as pulp and paper production. The company has its own transport facilities: there is a transport enterprise as well as a shipping company in the Holding. Therefore, Solombalales Holding is almost self-sufficient as regards woods supply - and this is one of the most important strategic resources of the company. Solombalales can harvest around 1,2 mln m3 of wood annually. Solombalales includes two export-oriented companies - Solombala Sawmill and Woodworking Plant (SSWP) as well as Solombala Pulp-and-Paper Mill (SPPM). Solombala Sawmill and Woodworking Plant is a major timber-processing plant in the European part of Russia. It produces saw-timber extremely demanded on the world construction markets and the enterprise is focused on production of lumber for export. The company’s sawing output amounts to more than 700,000 m3 , saw-timber production - 350,000 m3 per year. Perfect quality of Solombala Sawmill and Woodworking Plant products has been awarded many times. For example, the plant received award „For quality” by international „Club of commercial leaders”. Solombala Pulp-and-Paper Mill is a large company in Russia producing high-quality coniferous kraft pulp under NSK trademark, being among three world’s leaders responsible for 10% of the entire world market of this kind of product. The annual pulp output is around 240,000 tons. Solombalales mill has 13% of the world’s coniferous kraft pulp market and around 50% of the Russian market. Apart from that the company produces high-quality kraft paper and wood-chemical products. Solombalales commercial pulp is characterized by enhanced mechanical characteristics, which are achieved due to reliable production technology as well as special quality of northern softwood. Effective work of Solombala Pulp-and-Paper mill has been awarded by „Sign of quality of XXI century” of Platinum category. The mill became a winner of the VIII All-Russian contest „1000 best enterprises and companies of Russia in 2007” in the category „The best enterprise of timber and woodworking industry”. Production of the mill regularly becomes the winner of the contest „100 best goods of Russia”. Currently Solombalales Holding employs 5000 people at all of its companies, where around 1700 people work at pulp-and-paper mill, 1600 people are at sawmill and woodworking plant. Around 1500 people are engaged in timber harvesting.
Reliable Partner, Clear Policy
Expectations of Solombalales foreign consumers are very high as to ecological safety and quality of products. Therefore Solombalales is working very actively to certify timber harvesting production and the whole chain of timber supply. Such companies of the Holding as Svetlozerskles, Toima-Les, Solombala Sawmill and Woodworking Plant are certified by an authoritative organization FSC (Forest Stewardship Council). Other Solombalales enterprises are on the stage of preparation for certification. In addition Solambalales Managing Company has recently certified the supply and distribution system of timber. As Managing Company is the only supplier of wood to the Holding mills, it guarantees that only certified wood is used. It means, that all timber is harvested legally, without breaking any traditional or civil rights. It has not grown in the forests of high preservation value, moreover, genetically modified timber is not used. All this allows Solombalales Holding to be a very reliable partner in trade with foreign customers. In 2008 Solombala Pulp-and-Paper Mill shipped 89,5% of pulp to the countries of Eastern and Western Europe (8,4%), to North Africa (28,9%), South-East Asia (22%), Middle East (4,5%) and North America (3,5%). In 2008 there were the first shipments to Ukraine and Belarus, agreements for supplies to Azerbaijan and Poland have been achieved. As to saw-timber the largest consumers are Egypt (28%), Great Britain (24%), Holland (18%), Germany (16%), and France (9%). Access to the Arkhangelsk port and own shipping facilities make shipments to foreign customers very smooth and easy. mPreserving of the current position on the international and Russian markets as well as finding new consumers are two strategic goals of the Holding for the nearest time.
Strong Environmental Concern
To meet severe Russian ecological law and take care about the environment in the region Solombalales provides forest replantation, i.e. regeneration of logged woods. Around 1,5 mln of pines and spruces have been planted during the current year. The Company’s investment into plantlets reach 50,000 EUR. Another important part of the Company’s environmental activities includes modernization of energy economy of all enterprises of the Holding. Solombalales switches step by step from using dirty fuels, such as coal, fuel oil to more environmentally-friendly ones. Solombalales Holding was the first in the region to switch heat-only boiler station of SSWP as well as one of boilers of SPPM to dunnage, such as sawdust and bark. This helped to use dunnage more effectively, thus providing considerable saving and reducing pollution. Conservationists pay special attention to Solombala Pulp-and-Paper Mill, and the Holding is currently taking a set of measures directed at reducing of anthropogenic burden to the region environment. Environmentally-oriented approach is brought into action due to considerable investments. For the last five years around 13 mln euros have been invested to achieve ecological purposes.Generally the Holding has very serious investment plans for the nearest years, including modernization of sawing and woodworking production, supplying plants with the most state-of-the-art equipment. As a result Solombala Sawmill and Woodworking Plant will be able to increase the output of sawing to 800,000 m3 per year, of saw-timber - up to 370,000 m3. These parameters can be achieved by the year 2012, but it will largely depend on the market situation. Considering all the above, Solombalales Holding with its clear harvesting policy, environmental concern and irreproachable quality is not threatened by new European wood origin or other regulation and can look into future very optimistically.
