Как готовятся проекты UST Inc.? | How are UST Inc. projects prepared?
Greetings to all viewers of this program. My name is Evgeny Petrov. I am the Deputy General Director for Marketing of Unitsky String Technologies Inc. In this program, as well as in the next four episodes, we will summarize the work of Unitsky String Technologies Inc. and our other satellites that help us bring string transport technologies to life. The sixth and final episode will be the annual traditional address of the General Designer and CEO of Unitsky String Technologies Inc.,
which will summarize the results of this year's work and outline the overall status of the project to date. These five episodes will also be focused on answering the questions that people who have been following our project have sent us throughout the year. We will try to answer most of these questions as comprehensively as possible. Naturally, only within the framework of the competencies and activities carried out by Unitsky String Technologies Inc. and our marketing offices located in Moscow and Dubai. Today we are on the line with Oleg Zaretsky, Director of uScovery DMCC, Arsen Babayan, Director of Moscow-based Unitsky String Technologies LLC, and employees of key divisions of Unitsky String Technologies Inc. Maxim Gusev, Head of Project Management Division,
and Maxim Kubyshkin, Head of Design Engineering Department. We will start with explaining how a project is generally framed, what a project to implement uST transport complexes consists of. I would like to suggest that we talk about who our customers are, what their specifics are, how we find them, how negotiations are arranged, and what main stages we can identify at the initial phase. I would like to ask Arsen Babayan to be the first to speak. He is currently in charge of all project implementation activities in the CIS countries. Hello, Arsen.
Arsen Babayan: Greetings, everybody. Evgeny Petrov: Tell us about who our customers are, what their specifics are and how we interact with them. Arsen Babayan: Hello, dear colleagues. I would like to outline the key customers depending on the types of string transport systems, and in this case, we are only considering them. We have two types of potential customers: authorities and corporations. There is a clear enough distinction between them that the authorities are mainly interested in passenger transport systems, while corporations are mainly interested in cargo transport systems.
Accordingly, in the city, we have a slightly more complex structure related to land issues. In the case of production cargo transport systems, these tasks are a little bit simpler, but again the timelines for land approvals are the same.They are not fast. And, of course, it requires expenses. Who will bear these costs is in many ways an obstacle to a quick and efficient acquisition of orders. I think I have outlined the main points. Evgeny Petrov: So, in essence, we are talking about the fact that there are corporate customers, and these are mostly large businesses.
There are customers represented by municipalities and federal authorities, if we are talking, for example, about the Russian Federation. And there is an issue that you have outlined, which I would like to highlight. You say that when we come up with a proposal, everyone is interested in where our solution has already been implemented.
And how do we answer this question? Oleg, let's assume that you are conducting negotiations. Oleg Zaretsky: The most difficult question is addressed to me? I thought you were going to ask me for my opinion on the projects. I'll tell you, just a little later. First of all, I want to say that, of course, I don't agree with Arsen on everything.
Because it is not the fact that, let's say, cargo services are easier to sell or they are more profitable. They may be commercially more attractive, but we must not forget that they are more expensive, first of all. Secondly, they are more difficult to design and build, while the passenger services are, of course, more developed by us. We have the first operating line in Sharjah. Evgeny Petrov: Oleg, we should also say that today the projects that Unitsky String Technologies Inc. is carrying out are all passenger routes. Oleg Zaretsky: Yes, however, the point is not whether it is passenger or cargo transport, or even whether the customer is private or public.
The point is, where does the payment come from? Actually, there can be only two types of funding. It is either from the budget. It's the state or something else, that is, from public funds.Or private investments. At the same time, you have to understand very well that, as a rule, most public transport projects are unprofitable as such. The subway in New York, the metro in Moscow, the subway in the Dominican Republic. We were told that in Santo Domingo every month the state pays an extra $9 million dollars just to keep this subway running.
But the municipalities of the state will never refuse to build these subways. Why? Because building such public transport provides a bunch of secondary benefits: regional development, employment, rising real estate prices, and so on. But the problem is that budgets are usually drawn up for 5, 10 years ahead. Infrastructure projects are planned. There is a city development plan, which is approved every 5–10 years. A private investor would find no interest in such a project. They will never finance such a project. Only a project with a tangible return on investment will receive funding from a private investor.
The project can be either a cargo or a passenger one. Purchasing power is the key factor in this situation. How much will a person be able to pay for a ticket? The price of a metro ticket in Santo Domingo is 40 cents, and the government pays extra for people to travel. Because they know: if you stop the metro, there will be a revolution.
But if we connect the city with the airport, other type of passengers will be traveling there. They are willing to pay both 10 dollars and 20 dollars for a ticket. Because passengers going to the airport have already bought a ticket for $1000. Accordingly, you can find a commercially attractive project whether it is a passenger or a cargo one. The issue is in finding it. And here is the main question: who will finance the project? Either it will be the budget, or a private investor. For this reason, I would, for sure, divide two main areas of work. And I would speak about the long-term one, which includes working with the government, working with city planners, includes city development plans, architectural plans, and so on. And we are already there.
There are already several cities where our type of transport is already included in the city development plan. Correspondingly, the time when the project will be implemented, probably depends on the availability of budget funds or something else. This is a long-term project. But there are projects that we can start quite quickly if there is private investment. And private investment will be if investors do not wait even for 10 years for a return. Private investment will be for a project that is commercially very attractive. And such projects exist. Evgeniy Petrov: By the way, Mr. Oleg, it should be said that it is precisely the specifics of the technology developed by Unitsky String Technologies Inc.
that allows us to achieve payback and profitability in much shorter time, and we benefit greatly from this. Oleg Zaretsky: Of course. Firstly, we are at least three times cheaper than any other similar transport solution. A monorail was built in Las Vegas, I think, at a cost of almost $130 million per kilometer. We can solve the same transport problem for $20–30 million. That is still $20-30 million. And we should realize that this is America, be aware of the ticket cost.
But in fact, calculating the payback of projects roughly is quite simple. There are people, enthusiasts from Africa, figuratively speaking, from South Sudan, who come and say: “- Let's build a line of 30 kilometers between two cities.” Well, 30 kilometers is a project that will cost at least $150-200 million. “- How many people will be traveling?” “- 10 thousand people per day.” “- Okay, how much can they pay for a ticket?” “- 10 cents.”
Accordingly, it turns out that this line will never pay off. It is unattractive for a private investor. And the budget of South Sudan or some African country is very thin. Accordingly, it is the point on which I think we should focus. The payback on a cargo project is, of course, very attractive: either uTrans, or container turnover, or cargo transportation in general. Because, again, this is quite simple to calculate.
So, to find as many such projects as possible, reach potential customers, reasonably prove the advantages of uST technology, and then, if a person or a private company is interested, then, I believe, this is our opportunity to apply the technology quickly. And I’ll tell you the answer to the question. When they ask me: “But there isn’t any active line yet.” I always say: “Yes, there is.” This statement, that we do not have a functioning line, is completely incorrect.
We have the first passenger line in Sharjah that has been built, which has all the elements of the transport complex: a station, technical station, track structure, vehicles. And the main thing is that it is certified. Again, certification is a special pain. We will probably talk about it later. Evgeniy Petrov: Yes, we will talk later. Oleg Zaretsky: Yes, sure. I will not focus on how and by whom it is certified.
But as a result of this whole process, we have a document from the Government of Sharjah, from a governmental authority, that we are allowed to carry passengers on this line. And we do it. I think, if we count, a thousand students have already been transported, just like visitors of our center, and various delegations. Oleg Zaretsky: Even kings and ministers took rides in our transport. Evgeny Petrov: As far as I know, we carry out controlled operation there every day. Oleg Zaretsky: Controlled operation is carried out every day. This is a line that is in exploitation. Yes, it is 400 meters long, but what is the difference: whether it is 400 meters or 4 kilometers? It is in daily use. We transport people legally.
The only thing is that we don't sell tickets. We do not have such a license. Evgeniy Petrov: We can sell if someone needs it. Oleg Zaretsky: Yes, if someone wants to buy, they should come and buy it. Maxim Gusev: Can I add a little? I wanted to add some words regarding one of our very first projects, which was built back in 2015. If we think about this figure, when talking with the client, we realize that eight full years have passed.
And soon it will be almost nine - in March or April, around the beginning of the year. This means that our line has been in use every day for nine years. That is, we have a certain potential for improvement and so on. But I would like to emphasize one more time that this line has been operated every day since 2015. So, we can’t deny that people use it.
Being honest with the audience, we understand that there is no difference in technical terms between a person and a bag of sand. If we put sand or bottled water or something else in the transport, then in fact the uPod moves with a full load. Our complex is being tested continuously for 24 hours with a full load on the track and transport.
And we are trying to find the end of the resource within eight years (soon it will be nine). The fact is that our lines will not be exploited in commercial projects so much because they have time for maintenance. However, our first line has been still running for nine years; you can see it is working when you come to Minsk. It is well used and has performed well.
Maxim Kubyshkin: Mr. Zaretsky gave a very good example about the first test site in Sharjah. How long did it take us to build it, don’t you remember? In my opinion, a little over 2 years passed from the moment of implementation to commissioning. Oleg Zaretsky: In fact, even considering just 2 years, there was also COVID. Maxim Kubyshkin: So, I would like to expand on this topic in more detail. Why? Because in fact, for an infrastructure project, even if it is a short one - 400 meters, but 2 years is like Stakhanov’s time frame - is very fast. And first, why did we succeed so quickly? I'll reveal a little secret.
The design itself can be done very quickly. And even a complex project can be designed in one year. That is, you can make technical decisions by yourself, prepare models, prepare drawings, all the necessary engineering calculations can be done in one year. And so it was, we completed it even faster. But the issues Mr. Arsen Babayan spoke about, such as bureaucratic machine, those procedures, land management matters, coordination with interested parties - this takes a very long time. Why did we succeed quickly in Sharjah? Because, firstly, it’s a short section. Secondly, it’s all on one plot of land. We talk about the coordinated work of the team, the project team, those who was involved in the implementation, the coordinated work of the administration of the park where this project was implemented.
And with all the positive factors, we implemented this project quickly. When we talk about a targeted project, we should not forget that our projects are linear objects. That is, as a rule, it is several tens of kilometers, if we are talking about a real route.
Evgeny Petrov: Sometimes they can embrace several countries. Maxim Kubyshkin: Exactly. So what we face first of all, I mean the primary thing we do as designers is to choose the optimal route, typically at the stage of some pre-project studies, and at the stage of feasibility studies we work out several routes.
And for each option it is, as a rule, several land users, several stakeholders, it can be dozens. We have a project (which is in Belarus) for twenty-one kilometers, which is high-speed. There were, I think, thirteen land users there. We have to coordinate with each of them – they all have their own visions. And it takes years, but then there are also land-surveying aspects...
That is why the timeframes in which we have implemented these projects of ours are actually very tight. When we talk about an actual project, the planning itself (I'm not talking about the actual design – what Arsen Babayan was talking about) takes years, and with coordinated work, with the interest of the client and the customer, it is only possible to meet some tight deadlines. And I think that the tight timeframe is 2-3 years, and only after three years it is possible to enter the stage of implementation and construction. That is, we must understand what an infrastructure project is. This is what I wanted to convey.
Evgeny Petrov: I remember Arsen and I were talking, and Arsen said that in our projects, the customer and the wallet are not walking together, they are walking separately. And our task in many cases is to bring together the one who will use, say, a passenger route, and the one who is ready to pay for the construction and design of this passenger route to become the beneficiary. Well, as for the question that everyone is asking, where we have done construction, we see that we have something to answer to it, quite convincingly, and in general it all gets resolved. So there is the government, there are large business corporations, there are land issues that we need to solve, and there are many more different components of this puzzle that we call a project, but can we still identify some of the main stages? Maxim, I would ask you to comment, and I would ask you, my colleagues, to add to it. Maxim Gusev: You have to understand that I and my staff, project managers, are responsible for linking a variety of departments and other units.
It may look like there's nothing to do and nothing to think about. Even for the smallest commercial proposal, do not forget that we have building structures – standard and non-standard, but still they are building structures, a track structure. Building structures are dealt with by structural engineers, but a project also involves designers, I mean engineering. And there are also vehicles – uPods. Evgeny Petrov: So, designers… Maxim Gusev: Yes, there are designers involved too. And also IT staff for the control system. If you think about just these four elements, they are taught in universities even by different faculties.
These elements use the most diverse terminology possible. There are many companies in the USA and Europe I have managed to work in. They very rarely find common ground. Remember that we also have a certification process, that is, we have lawyers, accountants, as well as buyers, logisticians, chief designers headed by Anatoli Unitsky, and also salesmen – the people you have already heard, and so on.
If you take it all together, we need about 300–600 people for a project. Yes, and it sometimes feels like we're still doing it in small numbers. But to keep it basic, let's go step by step. We have an incoming request, and this is understandable: customers are interested in our technology. We answer some questions, which, as a rule, is the responsibility of our sales professionals.
Then we collect data about the customer and their business needs: why this project is needed, what the customer's business goals are, and so forth. And at this stage we sign a non-declaration agreement, which is why we are so discrete about any projects, names or countries. Simply because we're legally bound, and the customer always wants to have the right to speak first, when they're interested about us working with someone. Because business likes silence, actually. And then a project manager is appointed and the technicians are involved in the discussion. This is where Maxim's work begins, and mine, and the work of all the other engineers, as we said, 300 and more of them.
Oleg Zaretsky: I apologize, I just want to add that we (after all, it happened to us before) do not disclose where we work, not only because we have obligations to our clients, but also because we have examples of unfair competition. We have specific examples. Again, the most important thing is the project; if we find a good project, there are usually already competitors there. It can be Chinese or European companies. And as soon as they find out about some project, possible payments and commercial benefits, they adopt a very disturbing behavior, which often creates huge obstacles.
So, of course, I personally prefer not to disclose a project until everything is finalized and until the funds are allocated for it. So, I want to say that if no one hears specifically what projects we're talking about, it doesn't mean they don't exist. They are there. They are in the works. We are just waiting for them to be confirmed, for funds to be allocated, and we are doing everything we can to get them as soon as possible. Evgeny Petrov: But we will talk more specifically about the projects that are currently in progress, about why we say some things and why we don't say some things – this will be the next topic. But, Maxim, you have not finished. We are not disclosing anything at any stage, but what are we doing in the meantime?
Maxim Gusev: Look, basically, after we appoint technicians, managers and others who are responsible for deadlines, budgets and everything else, we collect preliminary data, and it would seem the easiest step but it's not. You have to realize that countries are very different and projects in the US, in Indonesia, in Russia, or in Belarus involve different regulations and laws. A certain product or specification is suitable for one country but not for another. Sometimes we need to adapt products or do something else.
Or if we haven't been paid yet, we don't have to adapt it, but we also have to understand how much it will cost. Then, as Maxim Kubyshkin said, we have to collect information on land plots. How to make it more profitable? Because sometimes, say, the shortest way in terms of solving the land issue is more expensive than a slightly longer one.
And we start to prepare (after we have discussed all the things we are interested in with the customer) a preliminary commercial proposal. And it may seem that a commercial proposal is not such a big step, but even so, sometimes up to 50 engineers are involved. Because we must understand and analyze the market of suppliers, as we need to immediately, even at this stage, understand what will be, for example, produced in Belarus and what will be shipped there; if shipped, what is the tax base for this? So here is a basic example – a vehicle. We can produce it in Belarus and take it there, while paying, in some countries, a tax of up to 50% of the value of this product. It will go to the state, and for the customer the vehicle will be more expensive. And we can have up to a hundred or more of these vehicles in a project. Or, suppose we supply them in parts, assemble them there, and then we get a five to ten percent tax. But at the same time we have to find a trusted supplier, and in some countries this is quite a challenge.
And then we have to figure out the itinerary, that is, we have to decide on the logistics, because we have different numbers of vehicles. As I recall, there are about sixteen of them, ranging from two-seaters to fifty-seaters and beyond. And which is best: a minimum interval with 10 people aboard or a slightly larger interval with 25 people aboard? And a larger interval implies more rails and more anchoring structures, but the number of cars will be smaller. And where is this perfect middle ground in terms of price, in terms of everything else, if we have calculated capital expenditures (don't forget that there is also operating expense)? When we were talking about ROI (the investment spent or return on investment), Oleg said that 10 years is too long so the period should be shorter, and so on – it also must be calculated, including how maintenance is done, how electricity flows, and so on and so forth. Evgeny Petrov: We have not even reached the stage of preparation of design documents, stage A, stage C (there are special steps there), but you can already see how many difficulties there are. And yet, if we are talking about the state, if we are talking about big business, this is a very specific target audience.
Oleg, I would like to ask you to comment: how do we get into these offices? What do we have to go through before we are heard? And I would also ask you to comment on the level of meetings. Well, say, over the last year, just to make it clear to our viewers, again, what level we are talking about and how many potential clients there are for us in the country, for example, in the Arab Emirates or in India? Oleg Zaretsky: We are selling a complex, as we call it – a transport and infrastructure complex. This is a complete solution that includes not only vehicles, but also the construction part, stations, control systems, and everything like that. This is what makes the sale of such an infrastructure project so special and so exclusive! Of course, I said that there are 10 million people in the Emirates, of which at least 5 million can potentially buy a Mercedes or BMW, but, let's say, there are probably ten or fifteen people who can decide to build such a project. I think there are no more than 1000-1500 of them in the whole world.
The question is how to reach these people and how to explain to them the advantages and benefits of our system – this is probably the main question. We, of course, participate in exhibitions. I would say that we have participated very successfully in exhibitions in Turkey and the UAE, namely Abu Dhabi. If we take, for example, the United Arab Emirates, I can say with certainty that everyone who may be interested in our transport system knows everything about it and we are working with everyone. We are negotiating with everyone. There is no need to hide it – we already work with the Dubai Ministry of Transport (it's a long story). It's the same in other countries. There are countries where we are actively working. There was a meeting with the governor of Jakarta in Indonesia, and we showed him our advantages.
After that relevant orders have been received by certain authorities. We are working with the Minister of Transport of India – Nitin Gadkari, a very big politician and official. He visited us, looked at the technology, and took a ride on the first line. And when he got off the uPod, he said: yes, the technology exists, and due to its accessibility and security, it should be applied in India. After that no one could say that we do not have an active line – it exists, and a person took a ride on it and made certain conclusions.
Evgeny Petrov: Not just a person, but… Oleg Zaretsky: Yes, not just a person, but the Minister of Transport. That is, we showed him the evacuation of people using an emergency descent. We also showed emergency towing and all these issues. What I am saying, we did not just drive him back and first, but put the safety first. And I also want to say that in many countries the potential decision-makers know about us. Not in all, of course. Another question is why this decision has not been made yet, how close is this happy moment? Evgeny Petrov: Well, let's say that such a decision has simply not been made everywhere yet. Oleg Zaretsky: Yes, I agree. A decision has not been made everywhere, but in many countries work is underway, and, of course, it takes time. This must be understood, it takes time.
Evgeny Petrov: Thank you, Oleg. Let’s discuss it, but very briefly, because we are already running out of time. Arsen Babayan: In fact, the question is very deep and interesting: how do we look for projects and how should we find and sell them correctly? The first project is to popularize string technologies. We carry this knowledge. Evgeny Petrov: This is exactly what Mr. Oleg said about participating in exhibitions. Arsen Babayan: We carry the knowledge, but this is not the only approach. The second approach is the approach from the top: we are trying to convey out position to the higher-ups, the higher the better. Of course, all this is perceived with great positivity.
I do not know a single governor or major executive who has not given a high assessment of our transport systems. And then it goes down, but, unfortunately, it steps on a fading path. This approach has the right to life. It has such a disadvantage, and this descent down here requires so-called constant activity.
I am sure Mr. Oleg uses this in his practice on the international market, focusing on the fact that we must solve the transport problem. As Anatoli Unitsky says, transport should not be a source of problems, but a tool for solving them. So, we understand very clearly what transport tasks are solved by passenger systems and what transport (not only transport, maybe environmental) tasks are solved by our cargo systems. And based on understanding what kind of problem can be solved, and who has what kind of pain, we look for contacts and come out with suggestions. And sometimes it can be very effective. We understand that we are an off-street transport.
This is an effective solution to the transport problems of megacities. We enter the field with this targeted specific technological solution and meet with a positive attitude. And the project somehow starts to really move. Evgeny Petrov: We will talk about this in our next episodes. I remind you that we have planned at least five of them by the end of this year, and the sixth will be a speech, namely an address by Anatoli Unitsky, CEO and General Designer, annually summarizing the work of the group of companies for this year. Thank you, colleagues, for sharing your opinion and vision of the project specifics.
As a summary, I would like to say that despite the fact that our clients are very high-ranking people who have a lot of weight in society we see that the doors are open for us. And they come to us, and they are happy to see us everywhere. And they know about our technology and accept out technology. And then the task is to increase the number of projects that are already in operation today and bring our customers (their number is not very high) down through the very sales funnel, which in our case has its own specifics. And we talked about these specifics. And next time we'll talk about those current projects that are in the works.
Thank you all for your attention. See you again.