A QUALITY SYMBOL IN CONSTRUCTION MATERIALS: SPARK JV

You are a leading company in concrete sector in Azerbaijan. Would you please enlighten us on the establishment and development process of your business?

As in all subjects, there was a monopoly in construction sector, as well as in concrete manufacturing sector before the independence of Azerbaijan. Construction and concrete factories were under government administration. Concrete elements such as column, beam and slabs manufactured in certain factories were combined in a pre-cast system to make constructive structures. It was obvious, with usage of old technology, elements manufactured in separate places plus continuous workmanship defects will not result in esthetic and strong structures. With the development of computer technologies, there was a great improvement in many sectors, as well as in concrete sector in developed countries in the last 30-40 years. Unfortunately, our country lag far behind of our era in concrete sector by old regime that strived to protect him in this period. To adapt high technology there was a need for large investment, I mean capital, in this new and open market economy. However, which capital could people have, except their courage, where they lived in a system in which everything was belonging to government? So, people outside the country should have made the investment. But this was completely different case. Just collapsed hundred years' system, a modern but also very young Republic beginning to establish on the ruins of that system... Nothing is predictable now. There must be various reasons to invest in this country. Trust was the main reason. Being the leader of country, national leader, Haydar Aliyev ensured that trust not only to us, brother Turks, but also to whole world. Second reason, is to be a Turkish person, who accepts what Ataturk said about Azerbaijan as his last request. Third reason is hearty love to Azerbaijan. These reasons were enough to make us invest in this country. Spark B.M. was established at the end of 1997. It was turn to build a Concrete plant. Determination and purchase of 5,5 hectares field, preparation of plant in Turkey, transportation and installation, import process of machines, mixers, concrete pump and etc. from Germany lasted up to May of 1998. Our factory with total paid capital of USD 2.000.000, at last realized first production in May 15th, 1998, birthday of national leader Haydar Aliyev. With computer assisted 110m3/hour manufacturing power concrete plant, 10m3 Mercedes brand mixers, 37 meters concrete pump, 4m3 capacity Kawasaki loader, 350 kw power electric generator and laboratories equipped with European technology, we have started production in 1998, and as you have mentioned before, Spark was born to be LEADER of the sector, and made all necessary investments to maintain its position.

What are the financial results of 2004 and expectations from 2005?

As you are aware of, activities started in construction sector in mid 2003, gained acceleration in 2004 and still continue to improve in Azerbaijan, especially in Baku. These positive improvements have also positively affected development of the level of construction sector. When we talk about construction we always mention iron, concrete, brick and various instruments. This is not right. These are needs to construct the buildings. We also need to consider the furnishing materials of flats inside the buildings. In furniture, rugs, TVs, refrigerators, ovens and etc., kitchenware, home textile and sanitary products sectors also develop together with development of construction sector. One of the main problems of Azerbaijan is unemployment, and considering Mr. President Ilham Aliyev's policy to create work opportunities for 600.000 unemployed citizens, it's obvious that construction sector along with above mentioned sectors is going to make a great contribution. Think of manufacture, import, trade and transportation of construction materials, furniture and home appliances... New work opportunities for our people are being created. People will earn and spend for food, health and etc. needs. This cycle brings welfare, peace and national prosperity. I wish 2005 would be foreshadowing abundance and peace of coming years. It's obvious to everyone this increase in business volume started in 2003 will gain acceleration with the finalization of investments in oil sector, will result in decrease in unemployment rate and increase in growth rate. Together with political stability and trust in political system which already exists, Azerbaijan will attract more attention for foreign investors from all over the world. This will result the development of our country, to be in the rank of advanced countries. We have to keep in memory that, only by working hard and honestly our nation can be rich; and by being rich we can reach the power.

What are the achievements of your company last year?

Spark BM has been positively affected by the development of construction sector, because we produce ready-mixed concrete. Concrete production has been doubled in 2003 compared to 2002, and increased 50% in 2004. Plus we enlarged our equipment by purchasing two concrete pumps in 2003. Spark JV holds a strong position in prospering construction sector in Baku, just because of its high capacity, production and service quality. It was mostly preferred in valuable and large projects where the priority is strength, resistance, quality and architecture. Not only for 2004, but also for all the time this position will be success of Spark.

Will you please inform us about development plans regarding new equipment purchase and production areas enlargement for 2005?

Seven years of continuous high quality production and superior service makes us to believe that we do not have marketing problems. However we still have problems with raw material inputs. Main problem is, we can not find enough cement from cement sources due to their production shortage. We solve this problem by importing cement. But imported cement is not supplied in regular intervals. In addition, we are frequently having problems with sand and gravel. And we still can not use the high production capacity of our plant. So, to increase production volume is not in our hands now. Undoubtedly, increase in raw material supplies will result in additional equipment investment which in turn will add to our production capacity.

Considering increase in investments, there is a relative increase in complains about the quality of construction materials, especially concrete. Could you please inform us about the quality control problems in production process of raw materials (sand, gravel) of concrete?

The idea of diminishing production quality by the increase in construction can be accepted for esthetic items considering their artistic value. For example, in new buildings we cannot see the carpet style parquet floors, wall decorations, which we used to see in old style buildings in our capital city, because their production cost is high and lead time is too long. However, when it comes to structural matters, lack of quality should not be concerned. On the contrary, increase in development brings the improvement of control mechanisms also. Moreover, media follows up all the mistakes in the society in democratic countries like ours, everything is revealed openly in advanced countries, thus people are becoming more conscious to demand and look for healthy, beautiful, and quality products. Our product needs to be paid more attention to its quality. 20-25 floor buildings are built in our capital which is situated in a seismic belt which did not have a large activity for a long time. God bless our people from any danger, but still iron and concrete are the main materials to protect people who live in these buildings from any possible earthquake. Regardless of the nation and religion people living in these buildings are human beings, moreover, most of them are our people. Our own children and grand children will be living in these high buildings, which we or another concrete plant provides with concrete. We pay utmost attention to this subject since establishment of Spark in 1998, knowing that quality issue is the most important in concrete production and there is no compensation for physical and mental damage to people caused by low quality concrete. The laboratory established at the very beginning, equipped with latest machine and technology brought from Europe, has been Accredited by the Azerbaijan Republic State Agency of Standardization, Metrology and Patent issues. In addition, all our concrete products have been awarded with Conformity Certificate by AZS National Certification System. Raw materials as cement, sand and gravel purchased for production, as well as produced concretes are subject to regular quality control process in our laboratories. AZS Agency is also controlling our laboratory and products as necessary.

Besides, pursuant to our agreement with highly experienced and dedicated Dadasov Institute monitors our raw materials and production too. We can reach the desired quality in concrete production, yet we still have serious problems. As it is known to all, cement is the basic and main raw material of concrete. The only cement factory in our country (except small mills), Qaradag Cement, started stable production of cement in world standards after the privatization of the factory by world giant Holcim Company. This helps us to make first successive step in quality concrete production. However it is hard to say the same for other raw materials, like sand and gravel, which we receive from other regions. The main reason for the low quality of these raw materials is production insufficiency. To produce quality concrete we use 20% more cement than world standards, only because other raw materials as sand and gravel are not sufficiently washed, and due to ecological reasons we can not wash them in Baku, and this causes high concrete prices. Moreover, in out of date road-metal plants, stone size and shapes cannot reach desired quality and again we need to use more cement to increase resistance, strength and pumping quality.

Unfortunately, sand and gravel producers do not pay enough attention to our quality requests, because they can sell all of their production, especially after the development of construction sector, in last two years when demand for raw materials made a remarkable increase. As a result our country loses a lot. If sand and gravel was produced and washed in world standards, we would save 20% cement in all brands of concrete production. Considering that, our country uses 2,5 million tones of cement per year, and 20% is 500.000 tones save 35 million US dollars. We can provide many refugees with living places with this expense. Moreover, considering one of our serious problems is the shortage of cement produced in our country, saving 20% in cement quantity means, as if Qaradag Cement increases capacity by 20%, where in short term it is almost impossible to increase its capacity. And this will contribute to development in all sectors, which means 20% more work, money and time is needed to express a Turkish saying "grout is finished, so stop the work". Considering, long term development of construction sector, I would like to drive attention of local and foreign investors to road-metal and sand production. We also hope government will implement various investment incentives to attract investors.

What else would you like to mention?

Quality has utmost importance in our production facility. Low quality production of concrete is as same as to fight in enemy ranks against your country. Both destroy your own nation. However, your enemy is also a human being in peace, and human values should be always our priority.