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Consumers in need could be processors’ friends indeed

Article-Consumers in need could be processors’ friends indeed

Visitors to the Interplastika show in Moscow take in Netstal’s Synergy 1200-460 molding PP ice-cream tubes at sub-3-second cycle times.

Few large markets are booming as deafeningly as Russia’s is, as consumers demand more and better cars, buildings, and packaging.
Russia’s economy, spurred by rising oil and gas prices and the country’s positioning as the global natural-gas export leader, has created a Gold Rush-type market in which a pack of coffee, available for about euro 4 in Western Europe, retails in Moscow for triple that price. Inflation is outpacing interest rates, and the cost for consumers to upgrade their lifestyles remains beyond the reach of many Russians, with the per capita average income about $8850. Additionally, the country’s infrastructure remains in desperate need of a makeover.
But change is afoot, and rapidly, and the car-jammed streets of Moscow are a case in point; only 15 years ago privately-owned vehicles there were almost a rarity, and now the capital city has multi-hour traffic jams heading in and out of the city. Moreover, the cars parked in those jams are not limited to Lada or Mercedes-Benz, but now include every major brand as Russia’s rising middle class acquires the accordant middle-class cars. Russians bought 2.07 million vehicles in 2006 and 2.3 million vehicles in 2007. More significantly, Russians spent $53.4 billion on cars in 2007, a 67% increase versus 2006, according to a PricewaterhouseCoopers LLP report; the spending increase outran the sales increase as consumers opted for better cars. Predictions are that Russia will pass Germany as Europe’s top car market in 2010, when sales in Russia are predicted to hit 3.5 million, with most of those made in the country. By 2015, some reports expect the country to pass Japan and become the third-largest car market after the U.S. and China.
Manfred Reichel, speaking on the KraussMaffei (Munich, Germany) stand at the Interplastika show in Moscow in late January, could only agree, saying, “The automotive market here is growing very quickly, and demand for large molding machines is as well.” Reichel, who runs the firm’s extruder manufacturing operations but also has managed its injection molding machinery business, added, “Russia is a very good market for us…we’re adding Russian-speaking personnel, we’ve an office in Moscow already, and will open a sales/service office in St. Petersburg in the spring. We have one in Tatarstan already and will open one in Kiev, Ukraine, this year.”
His firm is not alone in its Russia-induced euphoria. According to statistics released at the show by the VDMA, the trade group representing German machine manufacturers, for the months November 2006-October 2007 the group’s members saw significant double-digit sales increases compared with the same period in previous years for exports to Russia for every category of major primary processing machinery (injection molding, extrusion, blowmolding, and PUR processing), as well as an 18.9% jump in thermoforming machinery sales. Extrusion system sales, driven by Russia’s pipe extrusion explosion, jumped some 83.6% in that time period versus the previous year.
German manufacturers hardly have a monopoly on the developing market, though. Dana Hanson, president of single-screw extrusion systems manufacturer PTi (Aurora, IL), says his firm also is seeing increased interest from Russian processors, one reason PTi added the Interplastika event to its tradeshow schedule. The firm services the country from its subsidiary in the Czech Republic.
Plastics suppliers also are storming into the market, with Sabic Innovative Plastics (formerly GE Plastics) and Sabic Europe (formerly DSM’s polyolefins business in Europe) both making the trip to Interplastika for the first time. “Russia is a top priority for Sabic Innovative Plastics’ global expansion plans,” said Juri Bercovitz, area sales manager for Russia, CIS, and Baltic States, at Sabic Innovative Plastics, adding the firm sees especially great potential in the country’s automotive market. Last year the supplier formed a Russian automotive division to response to accelerating market and application development there.
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