Business Information Agency ABIREG.RU
There was a widely-used cliché in Soviet journalism: ‘The destiny of the plant is the destiny of its people’, and it is true if a person has been working for the same plant for over 40 years. While he was busy packaging milk and churning butter, the country transitioned through the change of several epochs. Those epochs can be compared based on the milk consumption rate. The comparison will not be in our favour, though. A correspondent of Abireg met the longest -employed manager of a processing plant in Voronezh oblast and realised that it takes the backbone to be a good manager in any industry.
— Vladimir, you have been working for the plant since its foundation, haven’t you?
— Yes, the construction of the plant began in 1972, it was commissioned five years later, on 26 September, 1977. I was employed on September 1, 1977, soon after the graduation from the technological institute. 41 years later, I’m working at the same plant. The plant was originally designed to produce skimmed milk powder using Czechoslovak equipment. As I specialised in butter and skimmed milk powder production, I started working as a technologist. By 1991, I had worked my way up to Chief Engineer. In fact, now I still have predominantly engineering functions, although my position is Deputy Executive Director. Executive Director of the plant is engaged in operations and negotiations. So, in fact, I manage the plant. The plant itself was built under the government programme for practical use of protein. There were two main sections then: butter plant and skimmed milk powder plant. The latter has remained almost unchanged. Also, there was a small section of whole milk packing. You probably remember those pyramid shaped cartons. Our milk was distributed mainly to Anna district and nearby areas. In general, at that time almost every district had its own small dairy plant, which provided the population with milk. In Soviet times, Anna district was a leader in milk production.
— Can you describe the milk drying process?
— The section consists of two main units. The first one is a vacuum evaporation unit, where skimmed milk is evaporated and loses 45% of moisture. Further, this condensed concentrate goes to the drying tower, it looks like a metal flask or a three-floor hopper. The concentrate flows to the top by pipes, here it goes through a wide dispenser and turns into a kind of aerosol spray. At the same time, a stream of hot air with a temperature of about 190 C° is fed into the drying unit, the liquid turns into a dispersed substance and settles down. Actually, the substance falling down is milk powder with 0.5% fat. According to the state standard, fat content can’t exceed 1.5% and moisture content can’t exceed 5%. Milk powder preserves its beneficial properties for two years.
— There used to be such a product as high-fat milk powder, didn’t there?
— Yes, we used to dry whole milk, but now it is not profitable to do it. But butter and skimmed milk powder always were our priority products. In winter, whole milk was supplied only by Anna district and cream — from Bobrov district. We produced up to 20 tonnes of butter per day and about 12.5-13 tonnes of milk powder per day. These products were distributed among the social consumption funds (there was a rationing system) and delivered throughout the Soviet Union.
— Yet butter is not healthy, we still eat it. But what is skimmed milk powder used for?
— It is used in confectionery and bakery, also in meat industry: for sausages and wieners. When you see ‘Milk sausages’ on the label, it means that there is real milk in them. We supply the powder. Milk powder is also used in baby food production. Finally, it is used in feed stuff industry, where milk powder is included in the diet.
— What is the difference between milk processing in the 70-s and today?
— Firstly, there used to be much more human labour then, 250-260 people were involved in the process. Nowadays, 154 people work at the plant, and we are going to hire about 60 more people in two steps. Secondly, collective farms then did not have their own cooling equipment. We had three terminals, where milk was brought from neighbouring collective farms, it was cooled there, and then we sent it to the plant.
— Was the plant somehow developing during Soviet period? When did its first modernisation take place?
— 1989 was a turning point for the plant and for the whole district. That year, by decision of the CPSU Central Committee, three experimental agro-industrial complexes were created in the country: one based in Ramenskoye district in Moscow oblast, another in Kashirskoye district in Krasnodar area and one here, in Anna district. It was innovative for that period that the facility included both design and construction organisations, so they worked and cooperated efficiently. It predetermined the further development of the plant. At that time, we managed to replace part of our old equipment with more advanced models, mostly foreign: Italian and German. We opened a new section for condensed milk and one more plant for skimmed milk powder (generally speaking, one more drying system). We had a lot of milk in the district, and we also had begun receiving milk from Talovaya, Panino and Novy Khoper districts, so one drying system was not enough any longer. And we also launched an ice-cream line in record-breaking time: in March, a contract for the equipment supply was signed, and in September, we already tasted the products. We became famous thanks to the ‘Anninskaya zabava’, a double-layer ice-cream on a stick. At that time, this type was extremely rare as ice-cream was sold only in paper or wafer cups. Thanks to the plant renovation, we became one of the first manufacturers in the country to export our skimmed milk powder.. We received payment in foreign currency and purchased new equipment for it. Right next to us, over the fence, a meat-packing plant had been constructed, but it was never launched, as the agro-industrial complex collapsed in the 90s.
— What happened to this meat-packing plant?
— Its territory was divided and sold.
— And how was your plant operation affected by the 90s?
— Well, we went through privatisation at the beginning of the decade, and for a long time, we, the personnel and raw milk producers, who had taken part in privatisation of the plant, were our own masters. But we were always short for working capital, and at one moment the plant turned out on the verge of shutdown. The management was looking for an investor, but nobody needed us. In 1990s, the country had started importing milk powder from the USA, and it was difficult to compete against them, it slowed down the development of the plant. Moreover, the people became poorer and dairy products consumption was greatly reduced. Barter was another problem: no one had any money, they exchanged goods. So, the plant was using only half of its capacity. In 2002 we managed to find an investor, it was Wimm Bill Dann OJSC, a famous company, and we became its branch called Anninskoye Moloko. Everything was reformed within two months. A new UHT milk line and a packaging machine were installed in the facility and it became our core product. Butter production was moved to another plant area. We had Tetra Pak packaging lines for UHT milk with the capacity of 7,000 packages per hour. In 2008, two new packaging lines, with the capacity 12,000 packages per hour each, were installed. At the end of 2010, Wimm Bill Dann merged with Pepsico corporation. The plant passed into Americans’ hands.
— What is the difference between UHT milk and usual heat-treated milk? Are there any substances added due to which it can be stored for so long, about 9 months, if I am not mistaken?
— Of course, nothing is added to the milk. It is all about heat treatment. During ordinary heat treatment, milk temperature reaches 70-80 C° and it is held for 30-40 minutes, but during ultra heat-treatment, milk heats up to 137 C° for 4 seconds at a pressure of 5-6 atmospheres, and then it is cooled and packaged. There is no access of air and bacteria after the process, so it can be stored for so long.
— What is the daily processing capacity of the plant?
— Now we measure it this way. All our equipment has maximum daily milk intake of 300 tonnes, of course, if everything is working at full capacity. This includes 160 tonnes of UHT milk a day, it is our core product, but our range also includes butter and milk powder. Ice-cream plant is not operating at full capacity, as we produce based on orders. Actual capacity now is about 25-30%. We depend on sales rates in this matter.
— Why do you think the Americans left and Stefan Duerr came in?
— The plant itself was operating efficiently as a processing site, the production had never raised any questions from the shareholders. But our logistics let us down: in the Soviet times, the plant had used local raw milk, but by 2017, we had almost run out of local milk. Anna district provided less than 10% of the milk. We had to bring milk from other districts and even regions. Our American bosses decided it was not profitable or interesting for them. Molvest considered acquiring us, but they changed their mind. And the Americans were ready to dismantle all the equipment. They even managed to remove one of the packaging lines. As a result, we were again on the verge of shutdown. EkoNiva saved us, one might say. According to the plan of the American management, the plant was to be stopped on 1 January, 2018. But at the beginning of January, EkoNiva bought our enterprise.
— What was changed when EkoNiva replaced the Americans?
— Logistics. Now we receive milk from EkoNiva dairy farms: it is closer and the quality is better. By the way, we have a modern laboratory to detect batches of milk arriving with excess of antibiotics. It used to be of special importance, as we had had many different milk suppliers and the quality had varied. If some violations were detected, then such a batch would be rejected — a deed would be issued and the product would be returned to the farm. Now we don’t have such a problem at all, as we work with only one raw milk supplier which already has a modern laboratory and a veterinarian control system implemented.
— Your new owner has two main brands: an old one, the Academy of Dairy Science, and a new one, named after the company — EkoNiva. What brand are your products under?
— We package part of butter and UHT milk under one brand, and part – under the other. But our ice-cream is sold only under the Academy of Dairy Science brand.
— Your main shareholder Stefan Duerr has announced a large modernisation that will begin this year. What will it include and how much will it cost?
— The modernisation is to be divided into 2 stages. At the first stage, the production of cottage cheese will be launched, and at the second stage — the infrastructure will be modernised. It’s because there are some problems, to be honest. Production site is the basis of the business. I mean the main production site is always where the product is. At our plant, we have invested in the new equipment in the first place. We did some refurbishment of the premises, but not much.
Now it’s time to pay attention to such objects as a compressor room and a boiler room. The latter hasn’t been renovated since 2003, when gas equipment was installed, and the electrical substation room has remained unchanged almost since the plant foundation. We will build a new compressor room and boiler room. The total amount of the two stages will be about 1.7 billion RUB and is going to be invested in 2019-2020.
— I understand all the difficulties of turning from one shareholder to another, from one brand to another. But the capacities do not operate at full by far. What is the reason? Do people tend to drink less milk?
— Well, we should not drink too much milk at our age, it is better to move to fermented dairy products. I should repeat, although we are a separate legal entity within the company, we are just a production site in fact, we produce as much as the sales department orders us to make. How did they use to build plants in the USSR? They used to take the daily consumption rate multiplied by the number of people in the area of operation and received daily production capacity — no market competition. And the daily consumption rate was 0.5 litres per person per day. And now you tell me how much milk you drink daily?