Alexander Balandin: Everything is determined by enthusiastic, competent professionals
20 July 2020
Regiony Rossii magazine, July 2020.
Pumori Corporation General Director Alexander Balandin speaks about the digitalization of Russian machine-building companies, the technological achievements of the Japanese, and the importance of the human capital asset.
How did the coronavirus affect the activity of the Corporation? What’s the difference with the work before the pandemic?
— Everybody got into the same situation. There were government directives for people to isolate themselves. For most of our staff, we set up a remote access. It took a month to tune up work in the new format. I believe that the restrictive measures influenced the stability of the epidemiological situation, although the reduction in the disease turned out to be insignificant. The risks remain. We were going to move the people to full time, but several corona cases turned up in the Corporation, and it was decided to have people stay at home. I am unprepared to take on the responsibility, requiring from our people to work on the premises. It is summer, and observation of the rules is rather performative.
How have you managed to set up a safety system for those employees who had to go to work even during the lockdown? What measures were taken to protect them?
— Some people — the production staff — have few contacts: a worker hardly leaves the area around his machine tool. If coworkers don’t approach them, all they will need is a face mask and gloves: then they will neither infect nor get infected. They worked during the lockdown, and they work now, too. We organized shifts to minimize contacts among workers. The hazard is that if it becomes an outbreak zone, the company can be closed. We make every effort to avoid it.
What economic consequences for industrial production do you see in the present situation?
—The economy has been conventionally divided into the pandemic-affected sector and the one that was supposedly left untouched by these problems. It is a short-sighted attitude to the general economic recession, which we are witnessing. Everybody without exception was affected. The logistic business doesn’t function, the cooperation ties are disrupted. Imagine, some people with coronavirus were discovered in the factory, and we had to limit operation. At the same time, the companies the factory cooperates with started to stumble. And it’s been happening everywhere. During three months, Pumori Corporation lost 30% of its operating income. Could have been much worse. It’s frightful to think what we may face in the second half of the year. We are trying to make forecasts, but they are discouraging so far.
Humankind is seeing the Fourth Industrial Revolution, which implies a total transition to management and control of production with the help of new digital tools. How will digitalization influence the efficiency and productivity gain?
— For the last two decades, modern companies have been improving processors and achieving maximum precision using the microprocessor technology, which allows us to smooth mechanical misalignments. Nowadays, a machine tool is practically a self-contained unit, capable of round-the-clock operation. It is stuffed with special software and supplied with a robot, which replaces the human operator handling parts. Additionally, the machine is furnished with equipment for automatic chip removal, oil replenishment, and tool change. Okuma Corporation has opened its third fully-automated factory — Dream Site. And it only took them four years! Human personnel only work one shift preparing the production, the other two shifts are fully unattended. All production processes are nowadays perfectly monitored with new technologies. Using their smartphones from anywhere in the world, managers can see what is happening at the place of production. When I was a student, that seemed sci-fi.
How do you assess the digital maturity of Russian machine building compared with that of the financial sector, IT and telecom, which are considered to be the leaders of digitalization?
— Our companies promote digital tool management, where a traditional storage facility is replaced with programmable cells to put coded tools into. Then the workers use their cards to get the necessary tools; alternatively, they are issued at the machines with the aid of robots. In Russia, this technology is still in an embryonic stage. Most of our machine factories suffer from poor economics. Many of them barely make ends meet due to high prices of products, poor competitiveness, and the pricing policy. Obviously, they don't have a profit surplus to invest. Implementation of a new technology takes money, but machine builders don’t have it. They have to take revolutionary steps at practically no cost. It is utopia. Where there is good financing, even if it comes from the state, progressive projects are implemented, not at all inferior to Japanese ones. The potential is vast, and we know how to make things, but the companies are unable to modernize production on their own. So, the only thing we can do is wait when real investment comes into the machine building industry.
What else does the digital success of an industrial company depend on?
— At the starting point of any development is a purposeful specialist, I would even say a zealot. The pivotal role is played by impassioned and competent professionals. If on top of that they make up a team and have a common goal, they will cope with challenges of any complexity. Money is second. And what do some of us do? Give funds to non-specialists and then — oops! — they’re gone. They are spent, but without effect. Moreover, no one is born a specialist, they have to be nurtured. That demands appropriate educational institutions, suitable secondary and higher education, an upskilling system, and the opportunities for retraining, internship, etc. All should have an opportunity to see somebody else’s experience with their own eyes. Somebody has already covered a long way, so others should pick up the new knowledge. If we bring up the necessary people, who will be motivated and supplied with the resources needed, then we’ll succeed.
What will be the human’s place in a digitalized production? Can it give a boost to unemployment in future?
— Of course, the threat posed by modern technologies is job killing. When I was a young engineer, sometimes workers intentionally broke robots. Any self-contained equipment was a real threat for the workers performing the same operations manually and earning a lot of money for them. Thirty years ago there already were conflicts during the introduction of innovations. This is certainly a dialectical conflict, and it is on the rise. For example, the banking sector, which is energetically following the track of digitalization, is going through a wave of job cuts. They dismiss people because their jobs can now be very well done by a machine. As things go, nobody is going to pay a lot both for equipment and for a do-nothing worker. There is no social program committing anyone to find employment for those who were made redundant due to modernization. What occupation to follow? In future, this issue will become more burning. To withstand competition against machines, humans should focus on creative activity, since it will always remain highly valued as an asset of human intelligence. But you know as well as I do that the creative class accounts for 5% of the population, at most. What the rest are to do is so far unclear.
Ksenia Shiriaeva