“Our achievements are the result of responsible work”

On April 19, 2019, the KASTAMONU Group of Companies celebrated its 50th anniversary. Ali Kılıç, General Director of KASTAMONU Russia, answered our questions related to this landmark event.

Today, КASTAMONU enters the Top 5 major wood processing production sites in Europe. What, in your opinion, contributed to the achievement of the success?

Our company has a clear development strategy, and thanks to its implementation, currently we occupy one of the leading positions among the industry participants. We carefully follow the market, its features and needs. We try to produce a quality and affordable product that will be in demand in its category. And if the demand for this product remains stable and high within several years, then we have done everything in a right way.

KASTAMONU has production facilities in Turkey, Russia, Romania, Bulgaria, and Bosnia and Herzegovina. Why did the company decide to invest in the construction of plants abroad?

The decision was based on two main reasons. First, the global economy as a whole is characterized by fluctuations, and in an unstable situation, the opening of production in different countries minimizes risks. Second, the country where the production is located should have the required raw material base, while in Turkey the volume of raw materials is limited.

In 2014, Kastamonu launched a plant in Russia. What attracted the company to the Russian market?

We began to study the issue of investments in a wood processing plant in Russia in 2008, when the company's representatives paid attention to the mount of the Republic of Tatarstan at the Sochi Forum. And in March 2010 the project for the construction of a wood processing plant in the Alabuga SEZ was approved by the Supervisory Board of the Alabuga special economic zone of industrial and production type, and in May of the same year a solemn ceremony of laying the first stone in the foundation of the plant was held.

In general, before making a decision on the production site, the potential investor must assess and analyze a variety of factors. Among them – the availability of raw material base (as mentioned above), sales markets, infrastructure development (engineering and logistics), features of the tax legislation, traditions of administration and management in the region. It is important for modern business not only to feel the support of the authorities, but also to see its real results.

ПWhy the Alabuga SEZ in Tatarstan was chosen for the construction of the plant?

In our view, public-private partnership can be implemented most effectively within the framework of special economic zones.

SEZs create favorable infrastructure and economic conditions for the formation and development of businesses.

First, a flexible tax system is provided for residents (in particular, income tax, land tax, etc.).

Second, the objects of engineering and transport infrastructure of special economic zones are created at the expense of public investments.

Third, administrative and organizational support is provided to residents in addressing a range of issues – from personnel to interaction with authorities.

Fourth: simplified customs regulation implemented in a single window mode for the shipment of products.

All these peculiarities of SEZs largely determined our selection of the best site for investments. In addition, in the situation with Tatarstan, cultural and historical component, proximity of the peoples of Tatarstan and Turkey were also important for us.

In 2012, when the project for the construction of the plant started, the name KASTAMONU was little known in Russia. How do you assess the situation today?

Today, we hold a share of about 30% in the market of MDF boards, and we are the largest Russian exporter of laminated floorings. All this suggests that we are known and our products due to their quality are in demand among the end users (in case of laminate), and among industry participants and furniture companies (in case of MDF boards).

The growth of Kastamonu's recognition and its leading position in the production and export of laminate is the result of systematic work on the development of the dealer network and expansion of markets. We will continue this work.

Since January 2013, you have managed the construction of the plant in Yelabuga, and then became its General Director. What were your first impressions of Russia and Tatarstan?

I lived, studied and worked in different countries: Finland, England, Romania, and Ukraine. And Russia has become very dear to me. I like to live in Yelabuga, I immediately felt myself at home. In many ways, the similarity of the Tatar mentality with the Turkish one has played its role, we are close in many ways. When I first came here, I realized that I understand 70% of the Tatar language. The expats, whom we invited at the beginning of our operations, also understood it very well. This is an advantage that gave us the opportunity not only to easily settle in a new place, but also successfully and quickly implement the project. And, of course, I appreciate the comprehensive support that our company receives here at the federal and republican levels, and from the SEZ management.

In terms of total investment KASTAMONU takes the 2nd place among the residents of the Alabuga SEZ. What are the company's further investment plans?

We are developing well thanks to the right place chosen for investments. In addition, the republican and federal management supports us in everything. At the end of the last year, we were able to maintain the positions and production volumes that we had achieved earlier. Now we produce 1 million m3 of MDF and 35 million m2 of laminate per year. This is the maximum capacity of our company, we work around the clock. Featuring such indicators our plant is the largest producer of MDF/HDF boards not only in Russia, but also in Europe, with the production located under one roof.

KASTAMONU invests tens of millions of rubles in the economic and social spheres of Tatarstan. Please name the most important projects from your point of view.

We do not divide projects into more important and less important. They are all important for us, as the development of the social direction of work is an important tool in creating corporate culture, maintaining the status of socially responsible business and promoting universal values.

How did the opening of the KASTAMONU plant affect the economy of the Republic of Tatarstan?

The impact of our presence on the region is as follows: in addition to investments of EUR 450 million, it is more than 950 new jobs directly in the production and 3,000 in related and service industries. This is the development of furniture production, where KASTAMONU became the anchor enterprise of the formed cluster. This is an outlet market for the logging industry. Finally, this is import substitution of foreign manufacturers in the Russian market.

What the company received from the development of new geography?

The sales geography expansion has a number of advantages: first of all, the prospects for further development and growth of the company, increase in the share of brand presence and, as a result, increase in the sales, increase in the brand awareness among the new audience, building a reputation for a wider audience of business partners and potential consumers, as well as unlocking the potential for successful expansion in the future.

The expansion of sales geography plays an important role both for medium-term and long-term plans of the company's development in the world markets. The development of new geographical areas is also required to reduce future risks. The entrance to the new markets not only contributes to the development of the company, but also helps to withstand competition, and is a kind of reserve option in case of the loss of share in the existing market, reducing possible risks to a minimum level.

The entrance to the new markets is always preceded by a thorough analysis, including the activities of competitors, specifics of the market, behavioral characteristics of consumers and many other factors. In the future, such analytics can be very useful for the company's activities and allows avoiding many mistakes and foreseeing a number of risks. When developing new markets there is an opportunity to prove the goods and gloss them over if compared to competitors, analyzing the previous experience.

The wider the area of presence, the more opportunities for the company’s development taking into account global trends of the industry. In general, the entrance to the new territories opens further prospects for the company’s development and is a good platform for further growth.

Company History in Brief

The care of the environment is one of the most important principles of KASTAMONU. What are the company’s plans for the development of environmental infrastructure?

First of all, it is the maintenance of a high level of environmental safety at all stages of the production cycle, widespread introduction of energy saving technologies, implementation of measures for the development of waste- free production and recycling. Today, we are holding a large range of events in this direction, and they will be continued in the future.

How do you see the future of the KASTAMONU plant in the Alabuga SEZ and future of the Group in general?

Today, we are Europe's largest site for the production of MDF boards. We see the future in further development of our production, implementation and introduction of the most advanced technologies in the field of wood processing, environment, professional development of personnel. Investments in the Alabuga SEZ will be continued. There are also plans to invest in other regions of Russia for the next ten years in accordance with the company's strategic development plan. The determination of investment time depends on various circumstances and factors.

Summing up… What are the biggest achievements of KASTAMONU for the last 50 years, in your opinion?

I have been working at KASTAMONU for 16 years. My personal opinion is that during this time there were quite a lot of significant events. One of them is investment in the opening of production in Romania. Prior to this, no country in the European continent produced such product as door linings (they were transported mainly from America). Another significant event in the history of KASTAMONU is investment in Russia. I think that every leader of the wood processing industry should have a plant here.

For five years since the launch of the plant in the Alabuga SEZ KASTAMONU in Russia has strengthened its status as a reliable partner and responsible employer, developing high-tech production and ensuring the production of high-quality and market-demanded products. All our achievements are the result of responsible work of our personnel. During this time, we have become a united, cohesive team and a family that sees a goal and confidently goes to it. I would like to wish all the employees of the company to continue to believe in themselves, to make grandiose plans and certainly to achieve the greatest success in the field of their activities.