We’re boosting investment in manufacturing localization
It’s rare to hear good news from the business sector these days. More and more often, financial news feature threatening words like “crisis,” “recession,” and “slowdown in growth.” But it turns out there are pleasant exceptions as well.
You have to be flexible and know how to change. This is perhaps the main conclusion that can be drawn from everything the head of 3M talked about during the meeting at a Moscow restaurant on Prechistenskaya Embankment. “We have to shift the focus of our activities,” said Mats Friberg, who has been Managing Director of 3M Russia CIS since December 2017.
According to him, there has been a slowdown in global economic growth. In particular, there is a drop on the Chinese and European markets, which impacts Russia – according to forecasts, GDP growth will remain around 1.4% in 2019. The drop in oil prices also continues to put pressure on the ruble. In spite of these inhibiting factors, 3M Russia CIS wrapped up 2018 with good results. The company revised their investment plans, and is expanding localization in Russia.
Last year, 3M announced that it will be investing $5.5 million in local manufacturing in 2018 and 2019. In fact, investment volumes in 2018 totaled $4.9 million. They were directed toward the expansion of manufacturing capacities at a factory in Volokolamsk outside of Moscow, as well as the manufacturing facilities located in the Alabuga Special Economic Zone, which is in Tatarstan. Now, 3M has announced the expansion of manufacturing facilities in 2019, and additional investments totaling $6.5 million.
Overall, last year was quite successful for the company in Russia and CIS – their sales grew by 13.3%. In spite of a general slowdown in Russian manufacturing, all of the company’s areas of business activity grew by 4-20% because 3M shifted its focus to the points of economic growth, ramped up local manufacturing, and modernized their business models. Obtaining a certificate regarding 3M’s status as a Russian manufacturer of respiratory protective equipment from the Russian Ministry of Industry and Trade was an important step.
The company really has had a lot of success in manufacturing protective equipment recently. Suffice it to day that not so long ago, the respirators were merely assembled in Russia. The components were shipped from other countries, such as the UK or Brazil. Now, all the necessary components are also manufactured here. And while the respirators were first made for the domestic market, they’re now sold abroad as well. Among other markets, they are supplied to France, Italy, and Eastern European countries.
Aside from Russia, Kazakhstan and Belarus are considered priority markets for the company. In these countries, 3M is planning to increase its presence across sectors like oil and gas, mining, and the food industry. Uzbekistan and the Transcaucasian countries of Armenia and Azerbaijan are also of considerable interest to the company. According to 3M forecasts, sales growth in these countries can even double the results n Russia.
3M sees the development of local manufacturing and further modernization as some of the driving forces behind their successful growth in Russia. The company will continue to invest into expanding its presence and manufacturing capacities in Russia. Among other projects, 3M plans to expand the range of anticorrosive coatings for gas pipelines that increase the efficiency of gas transportation, as well as a protective film for cars.