Vladimir Soták: It did not have to come out, but it all came out for us

Vladimir Soták: It did not have to come out, but it all came out for us.

Vladimir Soták already believed in Železiarne Podbrezová when he was still a college student receiving company scholarship. He led the factory through the pitfalls of privatization, he revitalized it and also thanks to the acquisition of foreign companies he now is in charge as the CEO and the most important co-owner of prosperous company. The company now has eight percent in hot rolled tubes market and nine percent in precision tubes market of the European Union.

You belong to the most senior General Directors in Slovakia. How do you now recall your arrival to Podbrezová? Supposedly you started out as a laborer.
In fact, after returning from military service, I had asked the factory to put me to work as laborer. I did not want to work to make ridiculously small amount of money as an engineer, whereas the heat treater I could make, and I also earned twice as much. It was a good experience.
But the management of the factory – me being a scholar - ceased to tolerate this and I had to take the position of the Head of the Department of Safety and Hygiene. I had my hands in everything that was connected with the protection of health at work. Even nowadays all methodological guidelines and commands have my signature on from that period. Regulations that you see at work now, was also during the socialism. Many people do not believe me this.

Why the voucher privatization, which became for the company and for you personally a success story is not in general in our society perceived and evaluated as such?
In my opinion, the voucher privatization, was not the best method to privatize national assets, but it was not bad. It was based on a logical expectation that if by doing so someone takes over the factory and will also behave as manager. I believe that those who started the voucher privatization, did not expect that businesses will be plundered.

What made you to decide that you went for it?
Podbrezová entered the voucher privatization, at the request of management. My friends at the Ministry of Finance has in fact warned me: If you do not establish the fund and will not apply for it, the second wave of the voucher privatization will not happen and the politicians will sell Podbrezová. Thus we, together with Petrochema Dubová established the Horehronie fund.

A big load test was apparently the period after the collapse of the Soviet Union, where significant part of the production was directed.
At that time, Podbrezová reported a loss of five hundred million Slovak crowns. I was production manager and at the same time served as a board member. Through the Horehronie fund I had a number of small funds tied to myself.
Being in position of the third strongest shareholder, during the general assembly meeting I managed to block proposals from the shareholders who were ready to trim and carve Podbrezová. To pick cherries, to sell off and leave the rest to its fate. Then we purchased additional shares from the National Property Fund and offered them to our employees fair and square, at the price for which we bought them on credit.
Few employees have expressed an interest, others were afraid of uncertainty. Finally, we, along with those who believed in the factory, bought up all the shares of which about ten percent were owned by small shareholders. I believe that they were satisfied. Nobody gave us not even one share. When then Iveta Radičová still as the Minister told me that we already got assistance from the government by choosing the voucher privatization, I, with a clear conscience was able to reply, that she is mistaken.

What was the turnaround point that the Železiarne were not bankrupted, but in 1995 again they recorded a profit?
In a crisis situation, we hired a consulting company from Switzerland and allowed them to educate us how the revitalization is being done in the world. At that time we were the only ones who have compiled a revitalization project. On its basis the Slovak Savings Bank lent to Železiarne 300 million crowns. Thanks to this, we turned the factory around to prosperity and were able to pay 500 million Slovak crowns to Nova Huta and Vítkovicke Železiarne. We paid off the debts and started to earn.

What business philosophy lead you to buy the Czech and then even the Spanish companies?
The fact that we successfully revitalized Podbrezová, we recognized that we can bring prosperity to any factory. Thus in 1996 we bought and revitalized Tažírny trub Svinov, then Žďas and TS Plzen. Two Spanish factories were not doing so badly, but we also revitalized those. In 2009 in the times of crisis we had to close only Svinov. By acquiring foreign companies, we strengthened the employment in Podbrezová by the finalization of our tubes.
For example, in Spain we have the most modern metallurgical enterprise in Europe with high productivity. And what is most important, Podbrezová supplies their semi-finished products to them. If we did not have these two factories then the tube mill in Podbrezová would not be able to sell seven to eight thousand tons of hot rolled tubes a year.
A stroke of genius. Today Podbrezová in hot rolled tubes serves to more than eight percent of the EU market and in precision tubes to more than nine percent. Show me in Slovakia a business, which in the given commodity reaches such a market share.

Do you have someone who is your management model?
Through my father's friend who once worked in Partizánske, I got into Baťá’s books. That’s why today we have our own school. Secondary vocational education with GCE and private high school. I contend that our secondary metallurgical vocational school is one of the best. You enter the classroom and see that our students wear uniforms, just as they were worn in Bata’s schools. Students get money allowance just as they used to get in Bata’s schools. They have super working environment, equipped workshops, laboratories, and good teachers who earn perhaps a third more than teachers in schools under the state administration.
They receive fourteen salaries per year, as well as employees. Bata had built up his own sales network, also we have it. Bata trained dealers, so do we. We also pay scholarships. We also had our own apartments. We sold them to people not at the market but at the residual value. We paid recondition stays for our employees, even after they were repealed by law. We give rewards to our blood donors, and give people rewards when they have anniversaries.

Do you know of any government's decision that made the greatest harm in the business community?
From my perspective it is not a relevant question. Twelve years ago the 500 Club was formed, of which I am chairman. It has companies joined together who have Slovak owners and co-owners and more than 500 employees in each company. We are part of inter-ministerial commenting procedure. We monitor the activities of the Legislative Council of all governments for twelve years.
We collaborate with law agencies and representatives of Slovakia in Brussels so that we can receive documentation and to provide an informed opinions. For twelve years not a single politician could say that we are not telling the truth. For twelve years we have influenced quantity of laws. When the government makes good decisions, we support them, we are trying to prevent wrong decisions. If I were to criticize something now, they may say that I should have raised my voice before.

How do you assess the business environment in Slovakia?
Foreign investors do not come to bad business environment. What bothers me more is the fact that 95 percent of dividends paid in Slovakia are exported abroad without taxation. The five percent which remains here, is taxed by fourteen percent. It is not fair. It is not fair that the employees in the companies have the highest levy burden on them compared to sole traders also all others.
It is not fair that we have so many nonprofit organizations, that we have such a strong third sector, which constantly begs and asking for money. This country will prosper only with the development of key industries. In the regions we need large companies who can tie up small and medium-sized enterprises.

Foreign investors are coming here due to the stimulus.
Pittsburgh was the “iron heart” of America. Then the Americans destroyed the entire primary production, except for the military part, and occupied the world. Ten years ago they found that they have a lot of people unemployed. Now governors are competing which state gives better conditions for foreign investors to build factories and employ people.
Americans provide incentives. Turks, Russians and neighboring countries as well. The whole world gives stimuli. If the government will not push for it, even at the cost of financial loss for people to get a job, it will not be possible to create values for the society. Incentives are not the Slovak patent. The world created it. What I have the stomach aches from are the gifts for Ukraine and Greece.

Managers need to have the courage when making decisions?
You always have to have the courage. When you are making a serious decision you are going into the risk. Moreover, my credo is to not let anyone walk all over me. It could happened to us that nothing would come out, but everything came out for us. I was fortunate that I could work with a team of people who had the same interest as me. True principle applies here, that a top manager is as strong as are the people he surrounds himself with.

30.12.2015 | Jozef Prosnan | © 2015 News and Media Holding
Translation: GLI