How do you transform a giant Soviet industrial complex with a 72-year history to a modern multi-product corporation? Just ask Alexey Batalov, marketing director of Slavich Group, who helped to organize this exclusive visit by Flexible Packaging’s editorial staff. 
The key to this kind of impressive makeover, he tells you, is utilizing the precious “human” factor.
“We wanted to effectively employ the massive pool of skilled managers, scientists, engineers, and workers, who were grappling with hyper-inflation and falling standards of living in the years after the dissolution of the Soviet Union, into the developing market economy of the new Russia, and be able to make competitive products at the same time,” Batalov says.
Today, parent holding company Slavich, headquartered in Pereslavl-Zalessky (pop. 45,000), maintains a group of companies located in the 500-acre area of the former high technologies industrial park that delivered 70% of the output to the military-industrial complex during the Soviet era. The company consists of headquarters, a research center, six production plants, a number of small enterprises, service shops, and health maintenance facilities. In 1999, Slavich gained the ISO-9001 certificate.
With a staff of 2,500, Slavich is the major employer in town. It has also inherited the social responsibilities of the communist past, running a modern hospital, a recreation park, and a concert hall with 500 seats.
Starting with motion picture film
The 1920s were a period of complexity and excitement in Soviet cultural life: the promise of a new order just a few years after the Bolshevik Revolution attracted many artists who later became movie-makers and helped to create the cinema industry. This art form was highly encouraged by the Soviet government fighting financial problems in general, and specifically, the high cost of imported film for motion pictures. The first government negotiations to build a film manufacturing plant in the Soviet Union were conducted with leading Western film suppliers Eastman Kodak (USA), Du Pont de Nemour (France), and Agfa-Gevaert (Germany). These negotiations eventually failed. However, Lumier and SIMP (both of France), fighting their own financial and production problems, stepped in.
The production site in Pereslavl-Zalessky, just 88 miles northeast of Moscow, was chosen by vacationing French engineers amazed by serenity and beauty of this small ancient town with the unemployed and poor population. However, it took almost five years from signing the contract to start up the first film manufacturing line in July of 1931.
There were so many misfortunes and frustrations during those first five years that the factory was shut down a few times and converted to production of casein plastic consumer goods made of a popular local product, curd. Setbacks often happened due to the lack of process expert help from Lumier, combined with the difficulties of running second-hand film casting and coating equipment from Agfa and SIMP. Almost all the raw materials required in the manufacture of motion picture film were not available domestically and had to be imported. In the beginning, the coating components were recycled from used worn movie film. In addition to all this, the government managed to persuade only seven skilled workers from France and Germany to relocate to Pereslavl. Finally, in the summer of 1931, helped by the enthusiasm of quickly learning locals and plenty of government ultimatums from Moscow, the first Soviet-made motion picture film began to roll out.
During war and peace
The company continued to grow rapidly, gaining more workers and engineers through government programs for technical education. At that time, the explosive growth of manufacturing industries was fueled by the Communist Party regime push to turn Russia from an agricultural country to an industrial powerhouse. By 1935 the Pereslavl Chemical Factory (PCF—the company’s name then) churned out 40 different types of photography film including high speed, high resolution, fireproof negative and positive films.
The country had cut the import of motion picture film from 100% to 4%. In the late 1930s the company established a research institute located on the premises, which served the industry developing new products and technologies. By the beginning of World War II the goal of being independent from capitalist rivals was almost achieved.
The Germans attacked the Western borders of the Soviet Union on June 22, 1941. For the next five years war dominated the country’s life. PCF’s production turned to special films for aero-photography and x-ray. At the same time the demand for microfilming documents and the rise of the talking motion picture industry hastened the company’s push for new product output. In December of 1941, PCF was prepared to evacuate to the Ural Region, when German troops were stopped on the outskirts of Moscow. After resuming operation the company also became a munitions supplier, replacing several major factories lost in German occupied territory.
The Soviet Union’s postwar economic problems were severe despite the munitions industry being in relatively good shape and growing. PCF would remain an important supplier for military and space industries in addition to making consumer products at the same time. The company introduced the first commerce-oriented products in the early 1960s with the dominating role going to soundrecording tape. In 1961, motion picture film with magnetic strip was developed. From 1971 to 1974 the company brought in a variety of products, from PET-film-based audio tapes to photographic paper, both color and black-and-white.
An unexpected event in the early 1970s gave a tremendous push for the development of solid state microelec tronics. Western intelligence reports on the most advanced Soviet jet fighter SU-27 became available to the Russian scientific establishment. The jet, brought to the West by a defecting Russian pilot, was taken apart into small pieces. As a result, it was acknowledged that all aircraft specifications including power, speed, and munitions were found to be nearly matching to the most advanced American planes, with one exception—electronics. These were found to be very bulky and antiquated. This study directly influenced an internal reorganization at PCF, which led to the development of special light-sensitive plates heavily used in photolithography (integrated circuits), mass-spectroscopy and astronomy.
Imported technologies and equipment from Great Britain, Japan, and Finland played a major part in new product development in the 1970s and 1980s. In 1972, the company purchased production lines for film and paper coating from Hunt & Moscrop (Great Britain). In 1975, the photo paper manufacturing plant from Wako-Koski (Japan) was acquired.
Conversion to consumerism
During the post-perestroika economic depression (1992–1996), Russia lost 28% of the gross national product (GNP) compared with 21% lost by the Soviet Union during World War II. The first years after the collapse of the Soviet Union were disastrous for the company. Manufacturing activity dropped rapidly due to the loss of defense industry orders (about 70% of production output) and uncontrollable inflation.
The company started to look for possibilities of conversion to marketable products without losing high technology potential. The new economic climate dictated the changes in company structure and management. In May 1995 the company changed its name to Slavich and turned a giant industrial combine into a corporation consisting of small and midsize businesses based on a diverse range of products.
During the 1990s an assortment of imported technology transfers and joint ventures took place. Gima from Bologna, Italy, built the automated audio-cassette production facility that once covered about 20% of the Russian market for that product. In 1997, a joint venture with Kodak allowed Slavich to expand production of photo paper for worldwide export.
In 1994 Slavich underwent quite a transformation. The management focused the company’s strategy on packaging. Flexible packaging became a key product for several Slavich subsidiaries. The purchase of Italian six-color 55-inch central impression flexo press Gloria from Bielloni Castello was the beginning. Later the company added three Windmöller & Hölscher Novoflex 44-inch presses, two W&H Soloflex-8L 38-inch eight-color CI flexo presses, and the W&H Varex Optifil blown film extrusion line.
Presently the company’s flexpack subsidiaries Slavpack, Polyslav, and Puma convert a wide variety of substrates, including metallized and white pearl BOPP, PET, PE, and two- and three-ply laminates. Slavnika, another flexpack business started by Slavich, was recently sold to Nordenia International AG.
The company’s location in the most scenic towns of Russia’s “Golden Ring” (in 2002 Pereslavl-Zalessky celebrated its 850-year anniversary) raises environmental issues. In response, Slavich recently introduced the ISO-14000 ecological standard into its operation.
With total flexpack production output exceeding 2,000 tons per year, Slavich keeps investing money in prepress, printing, and converting and believes that these and other advances in flexible packaging are enabling the company to compete with local converters and foreign importers. With talented people and modern technology, the company is prepared to continue to grow along with Russia’s packaging industry.
Source: Flexible Packaging Magazine