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Economy and Production RESTRUCTURING
Maintenance Service: Yesterday, Today and Tomorrow The importance of Repair and Maintenance Services (R&M) is unquestionable, supported by headcount numbers. For instance, the R&M service at the Lipetsk site currently accounts for around 30% of the total manpower. That said, the large R&M service ratio is by no means a direct confirmation of its high efficiency. Just on the contrary, the task of streamlining R&M operations is as high as ever on NLMK’s priority list.
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ecentralized R&M management systems commonly used by Russian steelmakers are evidently outdated. The key solution is to implement a service model for steelmaking equipment, as well as to reduce the scope of maintenance and repair to the minimum. Today we are going to talk to Alexey Popov, Head of Repair The key objective of the Production, Anreorganization is to drey Yaroshenko, centralize the repair service Technical Direcforming specialized R&M tor, Anatoly Khebunits for a number of nev, Head of Intesteelmaking processes grated Information System Implementation Department, and Vladimir Nastich, Senior Vice President – Director General.
Alexey Popov: “Everything is well thought through” – There is a famous wisdom, “God forbid that we should live in times of change!” It so happened that I became the Head of Repair Production during a time of large-scale restructuring and, believe it or not, I am really excited with the changes because they are aimed at improving the efficiency of R&M operations, increasing the repair men’s labor capacity, thus promoting their welfare. Assigning people to specific devices is no longer practical. The key objective of the reorganization is to centralize the repair service forming specialized R&M units for a number of processes – blast furnace,
steel smelting, rolling, and by types of equipment – cranes, energy, automatics, subordinated to the R&M Center. Starting from 2011, we are planning to transition to the service model, leaving Repair Production with the sole function of manufacturing spare parts and equipment. In the near future, this unit is going to focus exclusively on machine building products. Specialized departments – for machine assembly – were created within the Repair Production unit itself. Or more specifically, we merged the old ones, forming 7 out of 12. This sort of consolidation allowed us to optimize their operations. We have closed down our millworks as a non-core business and decommissioned the wood-sawing unit. Square logs are now supplied by the Procurement Management Department. This simple measure resulted in a 10% reduction of tray and packaging material manufacturing costs. Such “in-house production vs. external suppliers” analysis should be applied across the board. It’s not uncommon that the reverse is sometimes true when we are buying elsewhere something that it would be cheaper to produce ourselves, thus limiting Repair Production capacities. Getting back to the point, these activities released 62 workers. The majority was reassigned to fill vacancies in other units and departments of the plant. Some opted to leave. But nobody was forced to
make that decision. Overall, I must say that our employees are very understanding towards this reorganization process. They are aware of the goals and the opportunities it is going to create. We are currently executing a project on decommissioning the production and administrative facilities of the iron casting unit and its infrastructure (buildings, warehouses, etc.) and relocating all the necessary equipment to the steel casting unit of the CU. The iron casting building is almost 60 years old. Maintenance costs are huge while the output is only around 5000 tpa. Repairs are estimated at RUR157 million (~USD5.1 million). And it’s definitely not worth the effort – it’s much easier to relocate the equipment. This is what we are in the process of doing: moving all the machines and mechanisms that have been installed over the last few years and decommissioning obsolete ones. The project will result in a 17-18% cost reduction, and for some product types savings will total up to 25%. There will be no decrease in output and 24/7 operations will boost efficiency. 40 people will be released, and they will traditionally be offered alternative jobs. The same approach is used for other projects. They are all backed up by careful feasibility studies. Everything has to be well thought through. Machining equipment and 112 machine operators were transferred from the main departments to the