Economy

Russia: Manufacturers face bleak investment landscape

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Whilst the economic situation for Russian manufacturers remains undoubtedly challenging, that six-year, €10.5bn forecast is likely to make the country a lucrative target for companies exporting equipment from other parts of the world. The 2014 Metalloobrabotka exhibition saw over 1,000 machine tool equipment makers – only 462 of which came from Russia – showcase equipment with exporters from China, France, Germany, Spain and Switzerland organising country focussed stands backed by their respective national machine tool industry associations. This year’s exhibition – scheduled for May – is expected to be equally well attended and an equivalent trade show for mould makers – Rosmould, supported by the Russian Chamber of Commerce and Industry and the Association of Russian Automakers – will take place in June.

Export opportunities for mould makers

A similar pattern of Russian import and export activity emerges for the plastics and mould making industry. Russia was a major importer of plastics in 2013 according to figures from Eurostat, the Directorate-General of the European Commission. It estimated that the country accounted for 8.5% of all exports from the plastics manufacturing industry in the 27 European Union member states behind Turkey, China and the US, with 11.4% of exports from EU plastics processing companies also going to Russia which was second only to the US as an importer.

Russia is the only one of the four BRIC countries – the four largest economies outside of the OECD – that sustained better growth than most other economies during the last recession, and comparisons are worth making if only to highlight the abruptness and extent of its recent market disruption and the scale of its spend on plastics components. Around $8bn of US plastics exports combined (resins, products, machinery and moulds) found their way into all four BRIC countries in 2013 but Russia accounted for only $396m of that total, down 2.9% on 2012 – this despite growing 739% from just $47.2m in 2000.

In evaluating the BRIC countries specifically for mould-making export opportunities, only China and Russia showed overall growth for moulds from 2012 to 2013 however. The top growth areas identified by mould type being exported were: injection (74.6%), injection/compression for semiconductor devices (198.9%) and injection/compression for shoe machinery (25.4%) in China and non-injection/non-compression (62.2%) for Russia. Even Brazil and India showed some growth from 2012 to 2013 when evaluated by mould type being exported.

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In the thirteen years between 2000 and 2013 Brazil saw a 53% growth in compression moulds, with injection/compression moulds for shoe machinery up 38% and injection/compression moulds for semiconductor devices rocketing by 979%, although the latter category had some years without any exports and exhibited significant ups and downs over the period. India’s growth by mould type exported also came from injection/compression moulds for shoe machinery (up 3,212%), and compression moulds (1,476%) but again the country had years without any exports and exhibited significant ups and downs from 2000 to 2013.

All in all, tough times are likely to continue for machine tool, die and mould-making companies involved in Russian markets but those with the right investment strategies and resources have an opportunity to lay a firm foundation for future growth.

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