TITAN OF INDUSTRIAL PRODUCTION: Andrei Brodsky from “Velta” company about a titanium saucepan, a dictatorship, and the “Galaxy” star cruiser
Leadership Journey (LJ): Andrei, tell us about the formation of your company.
Andrei Brodsky (A.B.): I had started up this business in 2003 all over a sudden for myself. At this time, my partners and I were engaged in pipe trade. I understood that it was necessary to move on to production. Accidentally, a package of documents on a titanium deposit got to my hands with a seven-page, ill-considered business plan and an expired license for exploration of the Birzulovsky deposit.
I had started up this business in 2003 all over a sudden for myself
It was not easy to renew the license, because the Orange Revolution had just begun. At first, nobody wanted to do anything, because everyone was expecting a change of power. When everything changed, nobody was capable to do anything. However, eventually, we did the geological exploration and confirmed reserves. Only in 2007, we finally received a license for the commercial exploitation of the deposit.
Then the problems with the land ownership began. We attracted negative attention. Only in 2010, we started the construction of the enterprise; we invested both our own and loan funds. The budget over the years has increased significantly. The initial business plan that I had come across was $7 million, and we barely managed to make it $90 million.
LJ: How competitive in the world is what your company mines and produces?
A.B.: Today, “Velta” can sell 5 times more than it produces. Our products can be attributed to the premium segment. We operate in a high price category, as high-titanium raw materials are scarce in the world. Moreover, its mining is declining every day, while our volumes are increasing.
90% of titanium raw materials are used in chemistry. Pigmentary titanium dioxide turns black titanium powder into the usual white product. The rest 10% is used in metallurgy and electrodes. The metallurgy products are used the military industry, the construction of spacecraft, aircraft, and fleet. For example, the rigid hull of nuclear submarines consists of titanium, and it is irreplaceable!
Our products can be attributed to the premium segment: we operate in a high price category.
LJ: What is a crisis for you? How did you survive the fire in 2014?
A.B.: I have learned to find good in everything bad. Therefore, for me, a crisis is a challenge and an opportunity. You see, the fire provided us with an advantage. At the very beginning, we could not find a design institute that would satisfy our needs in terms of time and price.
As a result, we had created our own design office and designed all our factories ourselves. The project implementation happened to be about 10 times cheaper and 3-4 times faster. The first factory seemed not perfect for us. Its launch took about six months, which is typical for industrial enterprises. The second factory was much better, and we launched it in a week. After the fire, we had a brand new project and managed to launch the factory in 24 hours. 24 hours was enough to start full-fledged operations! The factory works great; foreign partners come to see and learn the experience.
A significant decrease in the market at the time when the fire occurred was the second positive feature. I very much doubt that we would have sold our usual volume. We reduced production by two thirds; the rest volume was sold at a lower price, and we also rebuilt the enterprise at our own expense. You would not wish it on your worst enemy. Now, looking back, I cannot understand how we survived it. But we had launched the new factory and are working in a good rhythm.
LJ: Tell us about the values and mission of your company. What is most important to you?
A.B.: Still at the stage of construction I had suggested my partners do business not the way which was typical for Ukraine in the 1990s but to focus on Western, global standards. This meant that we paid taxes and official wages, including ourselves, as shareholders; we introduced international reporting. In terms of values, this means to work strictly according to the law, with full transparency and social orientation. By the way, in the West, the first thing they ask is ecological and social responsibility of our production. Our production harmful emissions are twice as low as permitted by law; the enrichment process and the deposit are not radioactive, unlike many other titanium deposits.
In the West, the first thing they ask us about is ecological and social responsibility of our production
As for the mission, I would put it this way: “Velta” strives to make metallic titanium available to every ordinary person. Today it is an elite metal. A titanium saucepan is 10 times more expensive than any other metal, but it is much better. We want to make titanium affordable, which means, that everyone should have a high-quality titanium saucepan. That is why two years ago we organized an R&D center in Dnipro. We are well advanced in our research work, but I am not ready to share the results yet.
LJ: Do you use the services of external consultants in business?
A.B.: In my view, the services of external consultants are very useful. When we decided to develop as a public company, the issue of IPO arose. We invited consultants, together with them we determined that it would be the London Stock Exchange. For some reasons, it did not work out. Nevertheless, we have come a long way and received a lot of useful knowledge from consultants. We learned about the functioning of the stock market in the West, about the approaches of investors and their requirements.
At the very beginning, when we had just received the license, there were also funny stories. I was thinking about the idea to use Western standards in our work. We hired consultants from a Ukrainian office of one of the big four companies to arrange finance management. These were the most expensive consultants in the history of the company. They were working for a year. After six months, I had realized that we were learning together. A potential investor from Australia visited us; he was continually richly using economic terms, which referred to mining. One of our leading consultants was at a loss. He was asking me, “What does it mean?” This was our first step towards consulting. We still use the services of external specialists, but American.
In my view, the services of external consultants are very useful
LJ: What is the extent of your delegating authority to your colleagues?
A.B.: Because of rapid growth, we had many management problems. Within two years, the company grew from 10 to 700 employees. The business structure was built, and it more or less worked. Then there was the fire. I was forced to introduce a dictatorship style and in fact, everything was looped on myself. According to colleagues, even the purchase of toilet paper in the office required my sanction (Laughs. — Ed.). Seriously, not a single kopeck leaves the enterprise without my approval.
Not a single kopeck leaves the enterprise without my approval
Now I have begun to delegate authority. First, because the dictator leadership is only efficient in survival time. Secondly, errors accumulate, since one person cannot be equally effective in everything. And, thirdly, we managed to gather a very forceful team; the top management level was formed who went through fire and water. They can and should be given authority. As to myself, I try to focus on strategic issues.
LJ: Tell us about the social activities of your company.
A.B.: Our company is located 20 kilometers from the city of Novomyrgorod, in which most of our employees live. We consider ourselves a Novomyrgorod company. The mayor’s program motto is “Let’s Make Novomyrgorod a European City”, and we contribute to this program substantially. The city park in which we have invested a lot of effort is our pride. A concert venue and a stadium are in our plans. When I had learned that the new married couples from Kropivnitsky, which is located 90 kilometers away, were coming to our park to take pictures, I was very proud.
LJ: What is your attitude to the new power? Would you like to try yourself in politics?
A.B.: I am a human being and I live in hopes for the best. The country needs change since the recent development was the way to a swamp. I was telling everyone that I was deeply convinced if Pyotr Alekseevich remained for a second term, then there would be no next election because there was a chance we could lose the country. I do not know what Volodymyr Zelenskiy will do, whom he will work with and whether he will fulfill his promises, but I see a breath of fresh wind, and I like it.
The country needs change since the recent development was the way to a swamp
At the dawn of the company formation, I did a lot for my would-be political career, but I stopped in “five minutes” before joining the Verkhovna Rada. And I am very grateful that a chain of events prevented me from getting into parliament. Now I don’t think about it and will not go into politics, at least in the next 10 years. At the previous parliamentary elections, I refused two proposals to go to the Verkhovna Rada, my firm decision is to focus exclusively on business.
LJ: Is there a particular person or a collective character you could call the perfect leader?
A.B.: No. My father likes to repeat the phrase, “Do not create for yourself an idol.” And I try to stick to this. I have learned from so many people, but none of them is perfect, and, fortunately, they know about it.
LJ: Do you agree with the words, “Hire leisurely, fire quickly”?
A.B.: Yes, I do. But in my case, unfortunately, it is vice versa. I am hard parting with people and I fire people only as a last resort. The most interesting thing is that I hire people very quickly (I mean mid-level and top managers). I should not boast, but I am almost never wrong. In recent years, only once or twice I have made the wrong choice.
LJ: There are processes-based thinking and results-based thinking. In the second case, a person is ready to break walls for the sake of a goal. What type are you?
A.B.: I really was breaking through the walls during the time of enterprise survival, so I consider myself the second type. That is why I am now delegating authority. There are two directions: the first is to break through the walls and move the business forward, and the second is to build processes and manage them correctly. I believe that these are two complementary factors, but they should not be mixed.
I really was breaking through the walls during the time of enterprise survival[/su_pullquote
LJ: Please, describe your working day.
A.B.: In the mornings, I try to do sports, sometimes I exercise twice a day. If there are no business trips, I spend almost all day in the office. I do not like big meetings, only short ones and on concrete topics: separately with a financial director, separately with a marketing and sales director, with a purchasing director, etc. But these meetings come one after another because the situation is constantly changing, And sometimes I meet the same person 2-3 times a day.
LJ: Managers sometimes get tired of making decisions. Does it happen in your life? What to do about it?
A.B.: We are all human. Anyone who says that there is no (decision making) fatigue, either is a bio robot or a liar. I fight with it. Firstly, I overcome myself, relying on a sense of responsibility and willpower. Secondly, I try to switch. I have hobbies — sports and science fiction. I have time for reading on vacation and on the plane; I prefer printed books. In rare evenings, I can allow myself to relax by watching a fantastic series, 2-3 episodes running. Among the old movies, I like “Star Cruiser Galaxy”, which I have already watched three times, and among the new movies, I like “Expansion”.