04 March 2009

Touring Ukraine’s Economy – Day 2 Donetsk

08:00 Kharkiv. The buffet breakfast in the basement of “Art Hotel Cosmopolit” is packed with Germans. They are talking business from what I can gather.

09:00 I take photos of our dealer’s construction site. Another silent half-completed structure except for a few workers welding something probably for my benefit.

09:42 DAI. I am quasi-lost seeking the exit from Kharkiv in the direction of Donetsk. The navigation keeps saying “Re-calculating, Re-calculating”, looked left, nothing, made a right, notice the red light after making the turn…only to find myself at one of those little two story DAI posts with a smiling DAI guy waving his stick at me. I play the foreigner card and he, remarkably, lets me off with a warning.

10:30 Pass the huge Philip Morris Factory. Middle of nowhere. Try to take a picture of it, but it’s really flat and long. Needs a different kind of camera.

11:11 DAI pulls me over. Second time. A road block type situation in which they are pulling over all cars that have out of town plates. He explains that there was a crime involving guns and asked if there are guns in the car. No. Ok. Company car? Yes. You have all the docs. Yes I do. Ok have a safe trip. Ok thank you.

12:20 Donetsk Oblast, AVIAS gas station.
After using the clean bathroom, I ask Sasha the pump attendant:
“Have you felt the impact of the global economic crisis?”
“What do you mean?”
“Have you seen a drop in cars and trucks traveling on this highway?”
“No, not really,” Sasha smiles and then becomes serious, “people are who own cars aren’t going to stop using them are they? Just let their cars sit there?”
Clean bathroom:

13:00 Snow covered fields. The sun makes an appearance. Long orderly rows of Topoli (English name?) line the road. I am struck, yet again, by the natural beauty of Ukraine and a recurring urge to don a pair of cross-country skis and go in a straight line for miles.

13:30 Driving through Kramatorsk, Donetsk Oblast, population I’m guessing around 200k, I’m fascinated by the massive, sprawling New-Kramatorsk Machine building Plant (Novo Kramatorskiy Mashynobydivelniy Zavod - NKMZ). After passing dozens of rotting, defunct Soviet era plants it’s great to see one that is still operational. The plant stretches for miles. Smoke coming out of various chimneys indicating life. The administrative building has been revamped with new windows and, in an apparent attempt at branding, there is are many new “NKMZ” signs consisting of huge navy-blue bloc letters.

13:35 At the edge of Kramatorsk, I stop at the “Art Nirvana Café” for a cup of coffee. It’s an empty, formal restaurant with table cloths and all manner of fancy napkin folding in the glasses on the tables. Intimidated by the pristine table tops I sit on one of four bars stools by the small bar in the back. Anton appears happy to have a task to do as the Saeco coffee maker loudly grinds the exact portion of coffee beans required.
“Have you felt the impact of the global economic crisis?” I ask.
“Not really, business at the restaurant is the same,” replies Anton.
“What about the plant? How many people work there anyway?”
“About 45,000. I haven’t heard of any layoffs. There are several other plants in Kramatorsk as well.”
I sip the 14 Hryvnia coffee and ponder its value. Last August $2.80, last month $2.00, and now judging from the rates I saw at an Obmin leaving Kharkiv, less than than $1.40.
“So I imagine you are a Yanukovych, Party of Regions fan?” I ask. The word I use for fan is “bolivalnyk” stolen from soccer terminology, a hopeful linguistic stretch.
“Sure am. Kramatorsk voted 99% for Yanukovych,” says Anton proudly.
I recall the allegations during the O.R. that factory workers were instructed to vote a certain way – or the factory may shut down.
“Who knows, maybe he’ll become president while Yushchenko and Timoshenko fight each other,” I speculate.
“That would be great.”

15:10 Donetsk. Dima (not his real name) our dealer in Donetsk is a smart, young guy. Bright and talkative. His father, a coal-miner (Shakhtar) died of a heart attack leaving Dima to provide for his mother and his little brother. He’s a new breed of Ukrainian businessman of the non-smoking, non-drinking variety:
“How could I drink when my father died of a heart attack and I had a nine year old brother and mother to look out for? Between work, night school, and sports I had no time to drink. Now that I have a little time for social life, it’s like I don’t have the skills to ‘party’ or drink with my friends. The whole thing seems odd to me. Like people willingly letting go of their minds.”
Dima rambles about “the customer experience”, about how he trains his team to work on first impressions, to be helpful and courteous to customers, to listen to their needs, and so on. I've lived in Ukraine too long to automatically get enthused by his words. Is he rattling off what he thinks I want to hear, or is he genuinely a standout?

“Watch this” he says as he maneuvers into the right lane and veers off in front of a decrepit Soviet era building with a huge Mercedes-Benz sign on it. Above the sign, the pukey yellow bricks are crumbling, in front of the “dealership” are five new Mercedes covered in two day old snow. We exit the car and walk to the door of the showroom.
“This is the official Mercedes dealer in Donetsk” he says.
A sign hangs on the inside of the glass door: closed (zachyneno). I look at my watch. 6:03 PM. A sticker on the door reads 9-6. Dima tries the door since there are still sales people inside and the lights are on. It opens and we walk in.
“We’re closed!” yells a sour faced sales consultant rising from behind his computer.
“I have a budget for new car and I was thinking…” I say.
“We’re closed!” he cuts me off, “come back when we’re open!”
“Can I leave you my contact information? Do you have a card?” I add.
“Just come back when we’re open.”
Back in the car Dima starts fumes about the encounter.
“You see how primitive it still is here? God forbid if that should happen at any of my dealerships. I’ve fired people for not answering the phone by the third ring,” he reflects for a minute while nonchalantly swerving around a big blue Kamaz, “I just don’t get why people don’t see that the answer is simply to work hard. The guy doesn’t want to work, but he’ll be the first one protesting on Lenin Square saying wages are not fair.”

Not a protestor to be seen on snowy Lenin Square, Donetsk:

Mario restaurant sits on top of the latest office tower built by Rinat Akhmentov, local billionaire. The restaurant is not empty. At one table four grim, grumbling, overweight men sporting Yanukovych haircuts huddle around a clear glass decanter of vodka and tall glasses of tomato juice. At another, a well-dressed family sits politely, with an air of formality, often taking turns standing and making a toast no doubt acknowledging some date or achievement. Nearest to us is a grey haired American man in jeans and a sweatshirt sitting with a primped young lady in heels and an evening gown and another young lady translating. In all, there is way too much cologne and perfume in use for the size of the room.

Dima orders and a salad, veal medallions, and a “fresh”. When the waiter turns to me, Dima chuckles to himself.
“You didn’t ask me what kind of fresh!” Dima says to the waiter.
The waiter looks puzzled at first and then begins a long rationalization. Dima looks at me while the waiter is spinning the situation, and then back at the waiter.
“It’s not complicated, I ordered fresh it would be logical to ask what kind. That’s all,” he says calmly.

I ask about the mines Dima’s father worked in before his heart attack. There were days, explained Dima, that his father would spend his entire shift on his knees struggling with the hydraulic jackhammer because the tunnel was only 1.5 meters high. If not on his knees, it was common to be standing knee deep in water for the whole shift. Rats were like best friends. Why would someone become a coal miner? Because they are proud of the mining tradition and enticed by early retirement after 20 years service.

I bring up politics and Dima doesn’t really want to go there. He says he’s interested in it but there is no one who has an idea for Ukraine that he can get behind. He is clearly impressed with Rinat Akhmetov and frequently references Akhmetov’s contributions to Donetsk. He is proud that Donetsk will soon open the best stadium in Ukraine, the best airport, etc. Driving me around Rinat’s compound, earlier, Dima explained, with great detail, the construction of the five meter walls encircling the estate. Thickness, steel reinforcement, and so on. Half his compound is protected state natural park (zapovidnyk) he says, but no one can touch Rinat.

Mr. Akhmetov's stadium project:

I leave Donetsk with many questions unanswered. The son of a coal-miner, born and raised in Donetsk understands what it means to be “customer focused” better than most Americans and Europeans I know. How is that? And what’s with the city itself? Is it a real, vibrant and energetic economy at work or a Rinat Akhmetov theme park? A pet project of popping up shopping malls, hotels, a stadium, airport etc…Is it a model of how Ukraine can be built or the path to a grumbling dictatorship in a cloud of cologne?


Tetyana Vysotska said...

What a great report! Thanks, Petro.

John Kalitka said...

Fascinating report. I found this quote from Dima most enlightening:

"I just don’t get why people don't see that the answer is simply to work hard. The guy doesn’t want to work, but he’ll be the first one protesting on Lenin Square saying wages are not fair."

Actually, we see a bit of that here in the U.S, too. But, those, like Dima, that want to succeed generally have such opportunity. Trouble starts when you haven't the personal responsibility or initiative....

Michelle said...

WOW! Fascinating....

roxolanus said...

It's a great report! Thank you! Kaizen is quite popular among Ukrainian business, due to many translations published in Russian. By the way, "topoli" are poplar trees:

petro said...


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