The consumer is always right.

A new player in the market of rolled metal products appeared in summer 2003 named "Galvanized Steel Consumers' Association" (GSCA). Besides the producers, sellers and buyers of the rolled products this new organization is involved in information support of the market, protection of the rights of galvanized and pre-painted steel processors. That is the role which is assigned by GSCA's leaders to GSCA. The respondences of "Metal supply & sales" were the President of GSCA Mr. Baran D. and Mr. Lomonosov Y. - the general director of JSC "Research - and - production Center "Krovlya" (Samara) which is one of the GSCA's founders.

Mr. Baran, what's the basic aim of the Association, and what made the companies from different regions of Russia unit in the Association?

D.B.: The basic mission of the GSCA comes from it's name. We united having one aim-- to solve the common problems in the field of consuming galvanized steel. In comparison with the whole spectrum of metal production, the area of our interests is rather small. We are interested in galvanized steel (with coating and without it).

What kind of problems do you have in that part of the market?

D.B.: This question should be better addressed to Mr. Lomonosov. I'd just like to thank your magazine for the publications with the materials about galvanized steel's problems.

Y.L.: Yes we've got many problems. Let's point to the fact that the steel can be hardly bought especially in the building season. The production stops; the clients leave; the company suffers the losses. If there is steel, the conditions of supply are impossible. The examples are near. If the producer loads the wagon with the polymer coated steel in coils, with not more that 2 colors in each, how many wagons should a processor buy to hold the assortment of 10 colors? It's turned into five wagons. Paradoxical situation- for one rouble of investment in the equipment you should add 3-4 roubles for the transportation of the raw materials. Not many processors can afford to freeze such a big amount of funds. Is it worth noting that every day you get calls from colleagues who ask about coils with one or another color. Even big companies have difficulties with the color assortment and there is no use talking about the small ones.
By the way, the galvanized steel producers even after getting the prepayment can
afford themselves to foil the dates of supply, and unfortunately it's already a rule.
The absence of raw materials with the necessary technical characteristics leads to a situation where the plants have to buy steel with other color or thickness and width and other zinc coating. As a result the end buyer of the product must be oriented to the seller's offer but not to his own request. For instance you want to buy the metal tile of the red color, you come to the processor and he suggests to you only green and blue colors because he doesn't have the red one and managers start to prove you that green or blue color looks better on the roof, etc.

By all appearances these are the organizational problems, what about the quality?

Y.L.: We can speak about the quality of the galvanized and pre-painted steel a lot. By the way, our processed companies usually use semikilned or rim steel but never deep-drawn steel as it's used in Europe. The reason is the lack of enough quantity of deep-drawn steel in the Russian market. That's why we have to change the equipment over. Have you ever heard about the coating guarantee? Forget about it! I know many situations when the coated surface peeled on the produced material, on the roof for instance. But I never heard of a case where the coated steel producer ever paid compensation.
Another real situation. A batch of imported metal came to the plant which coats the galvanized steel. When the coils were opened, corrosion was discovered. What do you think what was the reply of the representative of steel supplier when we suggested him to solve the problem? He answered very politely with smile: "You as a buyer are not interesting for us" - and several times repeated that it was very good metal and being in such a good packing couldn't be corroded at all.
The same situations also appear with the domestic producers. Many of them work according to their own technical conditions. As a result sometimes a claim for the primer's surface lamellation on the backside of the metal can't be presented because there is nothing said about the primer in the technical conditions - it means that the producer is not responsible for its quality. So if the producer doesn't describe the technical characteristics of the primer, that allows him to produce the material with the local lamellations. That's a producer's logic nowadays. By the way, to get to know these technical conditions is not possible because it's the subject of a commercial secret.
Even the Russian producers of the galvanized steel don't consider the Russian market to be priority-oriented, and there is no need to speak about the foreign companies.
Unfortunately, when we discuss the galvanized and pre-painted steel market- the formula "The consumer is always right" doesn't work. In that situation the coming of a new organization which can help to protect the interests of steel consumers is very appreciated.

A logical question has appeared- if there hadn't been any problems , the Association wouldn't have existed, would it?

D.B.: That's a philosophic question. Theoretically you are right. But unfortunately we have the problems and will always have. Actually evolution is built on solving problems, remembering one's education, and on researching activity. Tasks are always set in every one of these areas and they are the reflection of the problems. The more a man is grown up, the more a man is experienced, the more serious are the tasks and so, of course, are the problems. All the same can be said about business.

How can the association promote solutions to the problems mentioned above?

D.B.: Do you remember the parable? One rod is easy to break, to break two is more difficult, to break a bunch is almost impossible. Nowadays it's difficult to protect the interests of even the big producers. The association opens new possibilities which were closed before. It's hard to argue when the the partner is stronger, when the buying volume is higher, when the staff is more experienced in production quality. Then he is treated with more respect. Besides our Association lets us unite the rich experience of GSCA's members, which not only helps in solving the problem situations, but also gives an open-minded view on the market's facilities and it's development perspectives.

What was the event that push you to organize GSCA?

Y.L.: No special event has happened. The Association's idea is a very old idea. Basically there was something of a club of like-minded persons. When the directors met they discussed problems and the ways out from them, and shared their business experience. These meetings often happened at the negotiating table, during exhibitions, etc. Soon it was clear that solving the problems effectively is possible if we could do that constantly rather than from time to time. As a result it was decided to make relationships
official. It should be noted that this process was somewhat delayed. All twelve founders were competent members and of course their points of view were different, that's why the confirmation of a foundation took a longer time.

What are the aims of the Association?

D.B.: As I told you earlier the companies were united by the common problems connected with steel's consumption. At first we started with organizing the effective supply and controlling the quality of the raw materials. In a while we understood that the association could be beneficial for the producing area and for the sales of finished goods. The borders of the tasks had been extended. We also added marketing researches about marketing sales, advertising activity, and help in the certification of finished goods. The Association's members always exchange the experience in the matters of producing and sales of the production.

A rather long list, especially if the decision of these tasks are connected with financial expenses. If it's not a secret, would you tell us what the Association's resources are?

D.B.: Of course it's not a secret. There is a budget for the Association which is funded by the founder's fees. These moneys are used in financing GSCA's projects. By the way, the priority of the projects is always discussed with GSCA's members. Nowadays GSCA's experts are more oriented to marketing research. It's connected with the deficit of true information in the market.

I am sure many readers are interested in your Association. Are you planning to extend the number of GSCA's members, and what are the criteria of acceptance for the candidates?

D.B.: Frankly speaking the procedure for new members joining is under discussion now, but it's already clear that there are some basic criteria for choosing the members. At first GSCA helps in problems solving when they appear in the outside environment of a plant. But if they are local problems which appear within a management crisis, the associating doesn't help. If the plant is advanced, has a skilled staff, and takes an active business place it can become a member. Another requirement follows the first one- the candidate should obey business ethics. We don't appreciate the "graspers" at all. The business reputation of the company must not be in doubt. A third reason for the refusing could be the clash of the interests of a candidate with GSCA's members. If you focus your attention on the GSCA founders list, you will see that they are not direct competitors. There are two companies in St. Petersburg but the market there is so big that they can exist together, and moreover they help each other in solving different problems. So there were three basic criteria. I'd like also to add that the decision about accepting a new member into the Association is made in accordance with the voting. That decision consider to be taken if any member doesn't object to it.

Summing all the above, I suggest using a popular term like "mission". So what the mission of GSCA?

D.B.: Our mission is to have metal with the accessible prices, of a good quality, good service and with the wide assortment and just in time.

©2006 GSCA All rights reserved