СЕО HD-group Borys Shestopalov on bread, business, struggle for enterprises, loss of factories in the occupied territories, confidence in victory at the front and in business
HD-group. The main assets of the company before the war:
- 3 bread factories in Zaporizhzhia;
- 1 bread factory in Chernivtsi;
- 1 bread factory in Orikhiv;
- 1 bread factory in Berdyansk;
- 1 bread factory in Melitopol;
- 1 bread factory у Beryslav;
- 1 jam factory in Dnipro;
- 1 grocery factory in the Kyiv region;
- 1 elevator;
- 2 mills;
- 1 logistic company.
Number of employees – over 2,500 people.
In Ukraine they say: if there’s bread, there’s a song. Today, Borys Shestopalov does not know what the song will be. However, despite the unbearable hardships of wartime, he maintains optimism and life values, which to some extent helped the HD-group to withstand the blow. For this, they had to urgently reorganize and instantly respond to new challenges: occupation of factories, shelling, fuel crisis.Your first day of war.
Where were you on February 24?
In the United Arab Emirates, at a food-tech conference. I had to be there because these markets are important for our company.
On February 23, I received an invitation to a meeting of business representatives with the President of Ukraine, Volodymyr Zelenskyy. I knew it was very important. I even booked a ticket for urgent return. But there were a number of important negotiations in Dubai on that day, so I had to stay. It cost me a lot of nerves. But not only work made me nervous.
At the beginning of the war my family was in Kyiv.
Were your children also in Kyiv on February 24?
Yes, Anastasia and Danylo were in Kyiv too. Although they told me there was no need to worry, the city was protected, its air defense was working, I felt very nervous. I was very anxious to go back to Ukraine, but the country’s airports had already closed, our plane landed in Warsaw – it was no longer possible to get directly to Kyiv. All that time I tried to help my family; we made a plan of action.
After a family meeting, my daughter Anastasia and her friend went to Chernivtsi. And we sent our son to Bucha to pick up relatives from there.
We were sure that the suburbs of Kyiv were an absolutely calm place to wait out the hot phase. But the enemy advanced unpredictably and at a catastrophic speed: already on the 25th, Hostomel, Bucha, Irpin and all neighboring villages were under fire, and it was impossible to leave. I can’t tell you what I experienced then. I’ll probably call it the scariest days of my life.
On February 26, our son Danylo tried to get out of Bucha several times, but ran into Russian tank convoys and actually found himself amid tank battles. I lost touch with him all the time and those were the physical hours and minutes of my pain. In the end, by some miracle, they managed to escape. Danylo behaved bravely and confidently, took his relatives and several other people out. They also followed Anastasia to Chernivtsi. It took two days to get there by a route that would take 10 hours in peacetime.
Now they help me with my business.
The children are now engaged in a completely new area of cooperation with foreign humanitarian funds, especially with the UN World Food Program. Nastya took over negotiations with humanitarian foundations, primarily American ones, and she’s managed to bring it to the level of signing contracts for the sale of bread to various foundations for humanitarian purposes. Danylo took on the most difficult work: contacts with the railroad, bread delivery and even its physical loading.
Did your business have a plan for the start of the war?
Our business had a plan in case of hostilities. But it can be called relative, conditional. While developing this plan and studying the possibilities for business relocation, our management came to the conclusion that it was unrealistic to move big highly specialized factories somewhere, instead we would have to build new ones. In addition, we believed that Russia could attack only from the east to capture the Donetsk and Luhansk regions. No one expected the Kremlin to launch a large-scale offensive in several directions at once.
We could not have imagined that troops would enter the narrow Crimean Isthmus so quickly and seize the Kherson region! I am convinced that the rapid seizure of the Kherson region will be the subject of an investigation, and it will be evaluated.
Meanwhile, events unfolded at lightning speed. In the first weeks of the war, three of our bread factories happened to be in the occupied territory: in Beryslav, Berdyansk and Melitopol. In addition, the front line was in the immediate vicinity of the factory in Orikhiv, Zaporizhzhia region.
How did you learn that your factories had been occupied?
One morning in early March, the director of the Berdyansk factory sent me a video surveillance recording proving that the factory was practically surrounded by the Russians. At first, the occupation authorities only inspected the factories and left for a while. Some of the staff took advantage of the moment and managed to leave for the Ukrainian government-controlled area. But not all: some believed it wouldn’t last long, some simply had nowhere to go. And the occupiers returned.
On March 15, fifty armed men in armored vehicles entered the territory of the Berdyansk bread factory. Russians gathered the staff in the assembly hall.
They said that people could stay and continue working. Two days later, ruscists took control of the factory. But there’s no gas in Berdyansk, as the gas pipeline goes from Mariupol, and it was cut off. The factory could hardly function even before that. Nevertheless, in March, the Berdyansk factory became the only HD-group enterprise in the occupied territories expropriated by the occupation authorities. And a local collaborator, who had been famous for several raiding scandals before the Russian invasion, became the new “owner.” Once again, I get convinced that during vicissitudes, when the government changes, such offended criminals come into sight to, as they think, “restore justice.”
In April we lost connection with another factory – in Beryslav. The enterprise has become a “thing in itself”: it buys raw materials, pays salaries to people, finds transport. Formally, the plant is still part of the group, but in fact it is not connected with it in any way.
The director of the Melitopol factory managed to restrain the occupiers’ intrusion until mid-May.
Raw materials were delivered to Melitopol and Berdyansk through humanitarian corridors, which were also used to deliver bread – they tried to sell something, but most of the products were simply given out to people. My employees and factory directors told me: we will bake bread as long as we can.
How did you work in the occupied territories? How was that possible?
It was dangerous, but possible.
In March, thanks to the AFU’s desperate resistance, the company had time to prepare our factories in Zaporizhzhia for new realities. Having studied the experience of our Kharkiv colleagues who survived the shelling, the HD-group management figured out that it was quite possible for the staff to work without leaving the company’s premises. Therefore, we created conditions for the permanent stay of employees: we bought sleeping bags, blankets, kettles, and other things. It helped at that time. People settled in factories.
In March, in case of power outages, we signed a contract with the Turkish company Onur: it provided powerful generators so that all enterprises of the group were provided with backup power sources.
But every day the situation was getting harder and harder. Late in March, they took away our flour truck and our rented gasoline truck at a checkpoint. They also shot at our bread van. It was direct fire and we thought our driver had been killed, but fortunately he survived. Locals managed to take the driver to the district hospital, and then transfer him to the regional hospital, where he is now going through a difficult period of multiple surgeries and rehabilitation. Every day we were losing people who fled to the Ukrainian-government controlled territory in various ways. We lost all logistical routes.
As early as April 3, the enemies set up their “LPR”-type government in Melitopol, Berdyansk. We had no idea what to do next. In those days, enemy military vehicles passed through Melitopol every day. Missile tracked carriers were transported along narrow railway tracks. At that time the territorial defense of the cities lost up to 15% of its personnel every night. The enemy constantly stole equipment and sent it to Dzankoi. In Zaporizhzhia, in early April, saboteurs went to the home addresses of key people in the city, checking and blackmailing them. At that time, grain prices fell by 500 hryvnias every week.
How did you personally work in those days?
I kept in touch with our relevant ministry.We agreed the details and, if possible, helped communities in other regions. Bread was shipped via railroad to Kyiv to various volunteer centers. The AFU support center delivered bread from the factory in Chernivtsi to the military commissariat and military units.
In May, the situation in those regions became even more critical.
At the beginning of May, the AFU managed to hold the line near Zaporizhzhia, but the fighting led to de-energizing the bread factory in Orikhiv. The problem was solved with the help of powerful generators, and the enterprise continued its work. However, in May, the company’s leadership decided to stop the factory.
The factory cannot work if it is located in the immediate vicinity of the combat area. People did their work selflessly, while missiles were flying over their heads. But when a neighboring enterprise 500 meters from us was bombed out, we stopped the factory. We keep paying our employees a minimum salary until this area becomes safe.
We’ve kept in touch with the Zaporizhzhia Regional Military Administration; we are their hope and support, because we make products and accumulate reserve together with them. The war has made adjustments to local logistics as well: it has been rebuilt so that the company’s vehicles do not have to cross the Dnieper every time.
After half a year of war, you have lost your factories in the occupied territories. What are your losses now?
We could not risk people’s lives. The group completely lost access to the following enterprises located in the occupied territories: Melitopol bread factory LLC (Zaporizhzhia region), Berdyansk bread factory ALC (Zaporizhzhia region) and Beryslav bread factory LLC (Kherson region). Another enterprise, Orikhiv bread factory LLC (Zaporizhzhia region) was mothballed, because constant shelling and damage make it rather dangerous for people to be there.
It is no secret that at the beginning of the war and even now, it was most difficult to manage the so-called war finances, which are shrinking, and companies that are losing people and resources every day. How did you cope?
In the chaotic first days, it was difficult for the holding leadership to understand what to do; solutions were found gradually. For example, we had to organize our structure. For years, the company’s top management has been building a centralized model. Even services physically located at regional enterprises have been consolidated into central departments responsible for different areas, e.g. IT, sales, transport. Under the new conditions, we had to break that system by 70%.
We had to disband a number of departments and transfer people to enterprises. There were several reasons for that. The factory director, as a decision-maker, bears full responsibility on the ground, and he can better see what the employee’s workload is and where he is now more important.
Only a few functions remain centralized, e.g. financial management. However, even with a centralized treasury, reserve accounts were opened for all the group’s businesses in case it is impossible to get in contact with them. Company directors had and still have a payment plan with ‘protected items,’ e.g. payment for raw materials, fuel, payment of wages, and on certain days – payment of taxes.
Since the invasion, the company has not fired a single person.
Although the departments of development and capital construction have become unnecessary, the company pays their staff a minimum salary. We managed to provide at least part-time employment for them so that they could receive from 50% to 100% of their pre-war salary depending on the workload. Besides, we’ve preserved pre-war salary levels for those employed in production.
The company authorized part of the staff, primarily financiers, to relocate. There are the company’s offices in Zaporizhzhia, but we do not require people to stay there, only if they want. All enterprises have bomb shelters.
There was, of course, a maximum reduction in production costs and a significant reduction in the company’s product portfolio.
Even now, relations with banks remain complicated – despite the fact that a group of companies continues to pay off the credit lines of the enterprises located in the Ukraine-controlled territory, the fate of the loans that had been issued to the enterprises, which happened to be in the temporarily occupied territory, remains uncertain.
How do you plan the work of your business now? And can it be called work planning?
I don’t know what to expect from the business in the future: you can’t make any forecasts now. The planning horizon is a month. A one-week ‘race’ with possible adjustments every three days. Every day questions arise that require non-standard steps. For example, the recent fuel crisis. The company independently provides all fuel logistics support. We have created our own filling modules to avoid fuel shortages. The company reached an agreement with importers on direct fuel purchases.Or another example: the military asked me to sell flour and deliver it to Bakhmut. I gather my guys and say: “We need to take flour to Bakhmut at the request of the Armed Forces.” They closed their eyes, breathed in and breathed out – and drove away. They made two trips to deliver flour to Bakhmut. This is a non-traditional decision. You can’t order them, you should talk to them, explain everything and ask.
Despite the losses, how can you evaluate the performance of your business now?
In spite of all we have been through, the HD-group is quite resilient and, in my opinion as CEO, the company will be able to survive the war, no matter how long it lasts, unless the situation at the front worsens. The main question is how things will develop in the Zaporozhzhia sector. In case of a threat to our employees’ lives we will have to stop our enterprises.
We are sure that Zaporizhzhia will not surrender, there is a huge number of our troops there. I do not believe any city in any sector may surrender, but we must understand that they can be bombed.
This confidence is not just words. Despite many war-related problems, the company increased its flour production and even undertook implementing new projects.
Before the war, we planned to start converting our enterprises to solar energy and even purchased a complete set of solar batteries for the Zaporizhzhia elevator and mill. No one even thought about it, but in March, the guys from the Green Energy company found me: “We are ready to start.”
The first solar energy plant was launched during the war. Within two months. It works very efficiently at the mill. We will see the figures, but I think, taking into account the cost of electricity, this investment project will pay off in 3-3.5 years.
You have not only saved business, but also helped the army, not only physically and materially. Please, tell us briefly about it.
Our employees also helped the army. In Shevchenkove, (the east of the Kyiv region), where intense fighting was going on, representatives of the Ukrbakalia protection and security service gave the AFU coordinates of the concentration of the occupiers’ vehicles. This allowed our gunners to almost surgically destroy a certain number of armored vehicles. I don’t know exactly how many (large figures were mentioned), but after the factory was liberated and demined, the command presented our employees with a certificate of merit from SBU for their help. I kept in touch with the central and military authorities as much as I could. I coordinated and daily looked for solutions for the army, business and people.
Both the company and my family have spared no effort for the army since the first days of the war. We’ve been buying helmets, body armor, first-aid kits, radio communication means, pickup trucks for the AFU – whatever they ask. I can’t tell you the final cost as it hasn’t been calculated yet, but it’s millions of hryvnias.
What drives you to work so much and not give up?
I work hard for our common aim – our future victory over the aggressor so as not to feel sorry for haven’t done what I was able to, because in the future I want to live in a great, strong and indomitable Ukraine.
Photos by Ihor Tyshenko, from “Family Business” magazine and Borys Shestopalov’s archive
Larysa Mudrak
21.08.2022