Business at recyclables: making profit and providing benefit. Aleshkevich family from Belarus has entered an international market
Andrey Aleshkevich — 34 years old, a businessman, a KUPIFURU group of companies’ member in Belarus, Russia, Kazakhstan and Lithuania, was born and grew up in Nesvizh city, in the family of workers, graduated from the Nesvizh gymnasium, and completed higher education on speciality “economics in the agricultural sector”.
The word “businessman” has two meanings in Russian: an entrepreneur, a man who runs his own business, and a rusher, a busy man. In other words he has been making something in his field. His main target is making profit, but at the same time he creates jobs, produces or sells necessary products, pays taxes, responds effectively to economics events and he is looking for ways to keep his business. The business of Aleshkevich family from the Nesvizh city in Belarus is unique for the country and it became unexpectedly very useful for the environment. A conversation about how is it to be a businessman today, and how to find some original idea for the business will be held with Andrey Aleshkevich, one of the “AnVoiPlus” business managers.
Freedom of choice
— One’s own business is always risky. Working for hire and getting guaranteed paid is so much easier. Why did you choose the hard way?
— I’m in business for a long time, almost since the university: we worked closely with the Kaliningrad pulp and paper mill for about two years, we had our own vehicles, our own teams who logged in Belarus and border areas. I’ve also run gambling business — gambling clubs. Laws of economics, of business operation are the same everywhere; the thing which differs is only specificity. I’m interested in it, that’s my bag. My younger brother Vladimir had worked in private companies for hire and my father had worked in medical drugs’ plant for the entire life. My brother and I drew our father into this business. We’ve registered him as an individual entrepreneur. Sharing is much simpler among close people, and handling of issues and challenges is simpler when just one family runs the business. Sure, we can have some arguments about the job, but we didn’t argue seriously for ten years.
— How do you share duties among yourselves?
— I deal with the financial activities: accounting, sales. My father and my brother deal with delivery, supplies and organization. My brother also brings ideas about what can be reconstructed or made cheaper, or how can we prolong units’ life.
— How did you choose the idea for your business?
— It all started with our good friend who offered us to go into trading with special vehicles for agriculture and building industry 9 years ago. There is a production of agricultural vehicles in Belarus, but we’d focused on imported used vehicles. This was the basis, impulse for the first several years. We visited European countries a lot, and we had a lot of contacts there. The first deal was successful, we had discussed it, analyzed the market and took care of business. It was flourishing, we had many clients until the crisis of 2009.
— There are a lot of national vehicles in Belarus. Why do you think your idea “did the job”?
— Then only major dealers like, for example, Caterpillar and Johndeere worked here, but practically no-one dealt with used vehicles. This meant that there were new vehicles and they were expensive, but there weren’t vehicles in the lower price range. We had only one business rival at the Belarus market, we were in the second place in this field. We bought the vehicle at auctions, transported it from European countries, from China, a little from America, and everything was fine until 2009.
— Really? Was it profitable to transport vehicle across the ocean?
— Not much more expensive than from Holland or Germany.
— What was your reaction to the crisis of 2009?
— We made a family meeting and decided to try another direction. At that moment consumer still had money but he wanted to save them when buying something, so we came up with the idea that we should restore and renew old vehicles for the final product to be cheaper. Thus the second kind of our business started: purchase of derelict and outdated vehicles, their restoration and sale. First we found the repair facility in Poland, brought all vehicles there and then we organized business in Belarus — found a facility on lease, then purchased it, recruited staff.
We decided to expand the company and enter international markets during the family discussion in 2011. In May 2011 LLC “AV-Group” was formed in Russia, my brother Vladimir became its founder and director. In August 2011 the company UAB “AV LT” was created in Lithuania, and I headed it. We recruited managers staff who dealt with orders and placing in our main company in Belarus. The group of companies expanded and due to this earnings and profits increased 3 times. The customer base became international: agricultural and transport companies from Russia, Lithuania, Latvia, Poland and Germany became our clients. In April 2014 we decided to set up a company LLP “KazAutoGroup” in Kazakhstan to expand the market towards Asia. In two years we assimilated markets of Kazakhstan, Uzbekistan and Kyrgyzstan. We joined all the companies that I’ve mentioned under one trademark KUPIFURU. Sales and profit of company had been growing. We participated in many exhibitions and meetings on the topic in Russia, Poland and Lithuania, we traveled to gain experience, communicated with farmers, got acquainted with potential partners.
— What countries are easier for business?
— In terms of bureaucracy most difficult running is in Belarus, Russia and Kazakhstan. Both tax and customs difficulties are present there. It’s easier to work in Europe.
— Whether there wasn’t any repair shops for big vehicles before you came to the market?
— Don’t confuse repair with restoration. Repair is maintenance. We didn’t have business rivals at all in this new field. We take vehicle that, figuratively speaking, stands under the fence as a scrap metal, we replace units and devices with new ones if required or restore them, and we restore the frame. As a result we have actually new vehicle.
It’s all about figures
— Restored vehicle is not the same with new one. Why doesn’t customer buy vehicle that will serve longer for sure?
— A proverb “Penny-wise, but pound-foolish” is 50% true. There are important devices in the vehicle that can’t be repaired however hard one may try. For example, crankshafts, everything related to engines and transmissions. All this stuff is better to be replaced with new items. This is what we are doing. But there are also minor devices and units (fuel system, atomizers). New component costs about one thousand dollars, but we restored and renewed it for 500 dollars. Turbines can be restored in such way that vehicle serves with them as good as new one.
When vehicle is being restored, we buy some old “used-up” tractor, truck or tow truck. The specialist decides what should be replaced and what should be repaired — up to painting. For sure, the final product is not plant-manufactured, but it’s like-new, plus the difference in price for customer is double. By the way, there were a lot of abandoned broken vehicles in Belarus, at the Russian market and in Europe. Usually owners don’t want to give cars for utilization, it’s unprofitable for them, so this scraped metal just sits unused.
— Give an example in figures.
— For example, utilization of one tone of scraped metal costs 100-200 dollars. So owner will get about 300 dollars for a tractor that weights one and half to two tones. I will buy his tractor for 1500-2000 dollars, I will spend about three thousands more for renewing and restoring and I will sell it for 8-9 thousands of dollars. New tractor costs 15-16 thousands of dollars. It’s profitable for the owner of rusted iron, it’s profitable for us and it’s profitable for the buyer.
— How many vehicles have you saved from utilization in such way?
— We started in September 2011 and we restored 15 units before the end of the year. The next year was the most productive — 88 units, during next three years the average index was 40 vehicles. This year it’s less.
— Did you think that recyclables field is a global trend when you planned this business? That it’s relevant to environment, that several dozens of tones of rusted iron wouldn’t get the dump?
— Of course no, we were thinking about business. But if such effect came out – it’s good. Environmental issue is number one concern in all countries right now. Dumps are packed to capacity, I’ve heard that in Russia they started waste disposal program, construction of new modern grounds just last few years, the system of separate collection and utilization of waste just begins. And even if our contribution will be very small and if there will be not very few people like us than our ecological environment will improve.
— How long does it take to restore one vehicle?
— Depending on size — two weeks to month. No-one is interested in delay. Faster is better.
— Have you ever thought about restoring of passenger cars?
— We’ve counted economics and came to the conclusion that we’re not interested in it. This field is occupied by the Lithuanians and the Poles for a long time. It’s hard to overcome them. Restoring is a labor-intensive process and the final result is very poor compared to heavy vehicles. Passenger cars are relatively cheap.
Forward, over the ocean
How many employees do you have?
— Altogether about 15 people work in “AnVoiPlus”: accountants, managers and technicians. And three of us as senior management.
— Restoring of vehicle is actually an art. In these latter days people are talking about the personnel crisis: specialists are not like they were and they don’t do their work like they did. Do you feel it?
— It’s really difficult to find specialists. We had been selecting for approximately half of a year. Our team is friendly and hardworking. Everyone is an excellent specialist. We should have good painters and good mechanic who uses his head, offers something but not just twists nuts, in this business. We try to hold specialists including use of monetary stimulation.
— Belarus is situated between Europe and Russia. One time it’s crisis there, another time it’s currency crash here. How are you working between the rock and a hard place? How did you understand that hard times had begun?
— The crisis started showing itself last year when it became harder to sell vehicles. It’s all about payment and accounting. Usually buyer takes a loan or lease, but loan interest rates are high, banks don’t loan. If people had some money they started to be tight with them, started to create the “safety net”, they tried to do the same they did with the resources they had. In other words, organizations didn’t expand. The crisis got hold of entire former USSR territory. In 2014-2015 we worked successfully in Asian countries, but there was a crash also, last year they started to fail in keeping of their national currency.
— You’ve mentioned that 2016 is not as successful as previous years already. What will you do?
— We are planning to enter the US market and to start the same business of old vehicles’ restoring. There is less and less transportation in Europe, no-one has money, no-one is paying, agriculture is dying. So the US market is interesting for us. We will learn about the business specifics on site. Our business will remain at home, in Belarus, our father will manage the company. We will develop one more direction simultaneously — hotel-tourism, we’re building a hotel right now. Nesvizh is an interesting historical city. Besides, there are themes to think about in the USA. For example, we have an offer to open the ice-cream production factory in the States. There is no such tasty ice-cream in America as we have in Belarus. It is the best at markets of Moscow and St. Petersburg.