Alexei A. Mordashov was just 30 years old when in 1996 he was named general director of Severstal, a giant steelmaker in the city of Cherepovets in northwest Russia. It was a time of tumult for formerly state-owned manufacturers, but also a time when a new generation of managers could leap to the top. And that's what Mordashov did, after acquiring a large chunk of shares through the government's privatization program. Once he attained the top job, Mordashov didn't bleed the company dry as many ex-Soviet managers did, but skillfully restructured it to thrive in the new era. As a result, Severstal is now considered one of Russia's best-managed manufacturers. "Severstal has been at the forefront of corporate reform," says Rob Edwards, a metals analyst at Moscow investment bank Renaissance Capital.
Mordashov established cost and profit centers so that managers would be more accountable, and he brought in international consultants. He also took painful steps to boost productivity, slashing the workforce from 53,000 to 38,000. Last year, Severstal earned net income of $116 million on sales of $1.93 billion and exported its products to 90 countries. While steel remains Severstal's core business, the company also has invested in the mining and automotive industries.
Mordashov's early career was typical for a Soviet-era manager. A native of Cherepovets, he studied at the Leningrad Institute of Economics & Engineering in the 1980s, then went home to work at the steel plant as an assistant manager. His big break came in 1992, when then-general director Yuri V. Lipukhin promoted him to finance director. "At that time old experience wasn't considered worth anything, but young people were much more flexible," Mordashov recalls.
The finance job was the perfect place to be when the government decided to privatize the company in 1994. Mordashov made the most of his insider status -- not unusual and perfectly legal then in Russia. His management post put him in a position to acquire shares. He now owns 16% of Severstal outright and indirectly holds another chunk through a holding company -- putting roughly 50% of the shares under his personal control, according to Moscow investment bank Troika Dialog. That makes him a wealthy man, since Severstal's market capitalization is currently $1.5 billion.
After working six years as general director, Mordashov became chairman of the board last year. Though still actively involved in running the company, he also devotes time to lobbying for Russia's entrance to the World Trade Organization. Expect to hear more from this influential industrialist.