“We need to be able to buy steel sheets on credit”
CEO of Philver in an Interview with FelezatOline:

“We need to be able to buy steel sheets on credit”

Given the importance of steel sheets in the manufacturing of home appliances, we have interviewed one of the consumers of this strategic metal to understand the challenges and sources of obtaining sheets. Our guest in this Insider Talk is Mojtaba Safarian, CEO of Philver, to discuss the ups and downs of the home appliances industry and the consumption of steel sheets in the industry.

Could you please give us a background about Philver?

The company was established in 1343 (1964) and launched in 1345 (1966). Philver initially assembled imported refrigerator parts from Philco and Hoover. The company started the production of new refrigerators.

Why are you still using domestic steel sheets to manufacture refrigerators?

There are a number of reasons, but two are the major ones: we don’t have sufficient liquidity to import steel sheets, and using imported sheets requires special equipment with high precision and tolerance which we currently do not possess. On top of that, domestic steel sheets are of good enough quality for us.

Why do most manufacturers of home appliances (refrigerators included) import sheets?

Importing steel sheets costs more; it’s far from logical to import what is domestically available with high quality. But products such as pre-painted sheets have to be imported because they are not produced in Iran. These are sheets with specific dimensions, but we currently have no use for them in our production lines.

From which company do you usually buy sheets?

We try to buy our sheets from the leading producer of steel sheets, Mobarakeh Steel. Oxin Steel, Kavian Steel, and Seven Diamonds are also among the suppliers of high-quality raw materials for our production lines.

Why do you buy sheets from multiple companies rather than a single one?

We do want to do that, but steel consumers deal with a lot of issues in buying raw materials. To buy steel sheets, we have to pay the whole price before the products can be delivered to us. Thus, we have to buy sheets from companies that offer payment plans, against our will.

Can’t manufacturers of home appliances buy raw materials in cash?

Given the weak economy that manufacturers are dealing with, they prefer to order on credit. But steelmakers are insisting on cash sales, forcing companies like us to turn to the free market and brokers. For instance, over the past 12 months, we only bought two 10-tonne cargoes from a domestic producer; the rest of our need was met from the free market. To add to the problem, auto manufacturers have turned to the use of 0.6 mm sheets that are used for refrigerators. Owing to their good liquidity, automotive companies are in buying priority, cutting us short from the sheets that we need.

What problems ensue for producers from buying steel sheets on the free market?

The middlemen add their profits to the price of the sheets before passing them on to the next middleman; as a result, the prices are so high that the manufacturers’ predicted profits are annulled. Our production costs will drop if we can buy directly from the producer.

What is the share of metal sheets in your overall production costs?

Used in different parts of a refrigerator, metal sheets account for about 30% of our production costs.

What kind of steel sheets do you mostly use to manufacture refrigerators?

We mostly use cold-rolled sheets; they are formed, washed, painted, and prepared for use in different parts of the refrigerator.

What are your criteria for choosing raw materials?

We are proud to say that all parts of our products including sheets and paint are from domestic sources as far as possible. There are specific standards that producers of steel sheets are required to follow. Sheets should be rust-free, without any deformities, and 0.5-0.6 mm thick.

How about other materials and parts?

Philver is one of the few companies that adamantly use domestic raw materials as long as they do not affect the quality of our products. We have good interactions with domestic suppliers of raw materials and parts.

What parts do you import?

We only import parts that are not produced domestically. For instance, the compressor and thermostat that we need are not produced in Iran. Recently, we have tested some compressors produced by a company in Shiraz, but they still fail to match the grade that we need. We will definitely use them if they reach our standards.

What conditions are required to achieve self-sufficiency in the industry?

Since we import only a limited number of parts, we are not too far from achieving self-sufficiency. We are currently working with several knowledge-based companies to help them produce parts such as thermostats that we now have to import. Moreover, our R&D department always works with contractors and groups so that we can be self-sufficient.

Where do Philver products stand in the domestic market?

Some brands have taken larger shares of the market by proper investment and technological upgrades, while others have lost their market share to inadequate investment. If I were to rank Philver in terms of market share, I’d say we are somewhere higher than the middle. With all the problems over the years, our 13 cu ft refrigerator is still an outstanding product on the market in terms of quality.

Are you also considering exporting your products?

Regarding the markets of countries such as Iraq and Afghanistan, we have already exported our products and received positive feedback. But for major global markets, we are far from competing with our rivals. Not being up-to-date removes us from the competition.

What are your outlook and goals?

With a 60-year history, Philver’s golden days are over and it’s extremely hard to go back to that situation; rather, we should focus on preventing the company and the likes of it from collapsing. Philver can produce 1,200 refrigerators every day and 1,200 people once worked in its production lines, but now we produce only 250 refrigerators per day with only 230 people. As a matter of fact, we have not had new products for the past 20 years, mostly due to insufficient capital. Changes in our products have been rare and small, and only the quality of materials has improved. A company needs new ideas and investment to grow and expand. One of our major concerns currently is that we need to upgrade our production line with new budget plans to replace machinery so that we can maintain our market share.

Do you think the government and its dependent organizations can do anything to remove the barriers to manufacturing?

I definitely do. Over the past couple of years, the government has restricted the imports of foreign products to give domestic producers a chance to expand their capacities and market shares. Such actions can help domestic manufacturers of home appliances survive. The government can also further help by supervising over the prices. Between 1397 and 1398, raw materials prices went up 47%, but we have to observe pricing regulations for our products; the imbalance between the prices of raw materials and those of finished products seriously affects Philver and other similar factories.

How is the interaction between the steel industry and companies like Philver?

Given the share of steel sheets in production costs, the interaction between steelmakers and manufacturers of home appliances can definitely yield great results. Things will be a lot better if we can have credit contracts with steelmakers; we could also use special options offered by steelmakers, such as quotas for sheets before they are offered on the IME.

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کلیه حقوق این سایت متعلق به پایگاه خبری و تحلیلی فلزات آنلاین بوده و استفاده از مطالب با ذکر منبع آزاد است.

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