IMTS International Breakfast
14 September 2010
CENTRAL EUROPE & RUSSIA
AMT Central & Eastern Europe
Central Europe
from Baltic to Black & Adriatic Seas
…
Source: AMT
... and Russia
Source: Wiki
A few academic points about regional specifics
Multinational region,
apprehensive about history
Bohemians (Czechs), Hungarians & Poles had independent states, but
CE often part of foreign powers, Germany or Austria
Since 18c Russia a dominant power in EE, overshadowing part of CE
Most of South CE (Balkans) except Dalmatia (Croatia) till mid-19c under the Ottomans
Today’s 23 states of CEE the product of two WW and the fall of Communism.
Multilingual region
Latvians, Lithuanians, Estonians, Hungarians Romanians, Moldovans, Albanians, Caucasus people and most ethnic minorities in Russia not Slavs, all others are, but...
Slav languages different, similarities may mislead
Lingua franca formerly German, now English
Russian language less popular in CE, even if partly understood; widely spoken in Belarus and Ukraine
Source: AMT CEE Research
Our focus:
Poland Czech Rep Slovakia Hungary Romania RussiaThe reason? Over $2.5bn p/a imports of manufacturing technology
2009 GDP Per Capita
0 10000 20000 30000 40000
Slovakia
HungaryRomania
Czech Rep
Poland
TurkeyRussia
Germany
$ / Head
Source: AMT CEE Research
Prominent Industries
Source: AMT CEE Research
Automotive Precision EngineeringGeneral Engineering
Auto Gen Engrg Appliances Off-roadPowergen Aerospace Armaments Metallurgy Precision Engrg Transport
AutoGen Engrg Aerospace Armaments Precision EngrgTransport
Auto Gen Engrg Metallurgy
Powergen Aerospace Automotive Electronics & Modern Tec Industrial Military Complex Machinery & Equipt Earth Mov’g & Constr’nTransportShipbuilding
(Per revised governmentalplan of modernization)
AutoGen EngrgAerospace Off-road
Industrial Output Mid 2010 to 2009
Source: AMT CEE Research
Note: in 2009 most CE economies did better than “old” EU
CEE External Finance
European Bank For Reconstruction And Development (EBRD)
European Investment Bank (EIB)
World Bank
EU Funds (Available To All Established In Member Countries Of European Union)
Watch www.bankwatch.org/projects.shtml For projects in CEE countries
Source: AMT CEE Research
Source: AMT CEE Research
CEE markets -
realities of today CE economies continue to grow
CE -
mature markets; full sales & marketing techniques applied; CE certification; useful shows (Brno, Poznan, Moscow)
Rewards –
for organized professionals (long term)
Yet to consider: Bulgaria (EU member), Croatia (EU imminent membership), Serbia (largest industry in Balkans)
Note Ukraine & Belarus, but economies need fixing
Russia’s potential is greatest
European Union Environmental Directives (not applicable to Russia)Such as:
RoHS (Restriction of Hazardous Substances)WEEE (Waste of Electrical and Electronic Equipment)EuP (EcoDesign Requirements for Energy Using Products)Not complying products cannot enter EUManufacturers self certifySource: AMT
Revision of RoHS Directive
Key websites:
www.buyusa.gov/europeanunion/weee_rohs_revisions. html
www.buyusa.gov/europeanunion/weee.htmlhttp://ec.europa.eu/environment/waste/weee/index_e
n.htm
Contact Information
Bob StraetzOffice of EU Affairs
US Department of CommerceTel: 202-482-4496
Update for Russia
Red – defence production, blue – civil aviation, grey - otherSource: MinProm Russia
Aerospace Industry 1992–2009
Aerospace Industry Doing Well
Governmental subsidies to sector: 2008: 10 times more than in 2002 2009: doubled 2008 level -
over $5bn
Up to 2015 no reduction envisaged 2007 up to 2015 program continued
Revenues planned for 2015:-
ODK (aircraft engines) –
over $3bn
-
OAK (aircraft)–
over $11bn -
Vertolyoty Rossii (helicopters)-
over $10 bn
Source: MinProm Russia
Aerospace Industry till 2015
Projects in implementation or pending:
Regional Superjet SU-100, Sukhoi -
HQ Moscow, KnAAPO Works Komsomolsk, $1.4bn project, 1st
flight 2008. Boeing consultancy
5th
Gen Fighters: Irkut MS-21 (Komsomolsk Works), to fly 2014, engine bids Salut Moscow, Saturn Rybinsk, Motor Sich Kiev Ukraine; Stealth PAK FA or Sukhoi T-50 (Works n/a yet), 1st
flight 2010, $8-10bn project
5th
Gen Fighters SU-35 (Komsomolsk), MIG-35 (N Novgorod)
Passenger/Cargo Tupolev-204SM&S (AviaStar Ulyanovsk, KAPO Kazan); wide cabin Ilyushin 96-400-M (Voronezh)
Stretched fuselage AN-158 (Kiev Ukraine, Voronezh –
Antonov merged with OAK), international certifications pending
Medium transport helicopters Mi-38 (Kazan) & civil transport Ka-62 (offspring of already used anti-tank/anti-helicopter Ka-60, (Kamov Works Moscow/Arsenyev/Komertau)
New gen engines, incl the 9-18–ton thrust engine for MS-21 (see above)
Source: MinProm - Ministry of Industry & Trade of the Russian Federation, AMT CEE Research
Aerospace Industry till 2015
International co-operation sought , e.g.:SU-100 Regional Superjet (Boeing,
Honeywell, Goodrich & others), Boeing and VSMPO Avisma JV (titanium
processing, Ekaterinburg Region)Integration with Ukrainian manufacturers (see
Antonov and OAK)
Source: MinProm - Ministry of Industry & Trade of the Russian Federation, AMT CEE Research
Blue – Russian-owned, grey – foreign owned, red - assemblingSource: MinProm Russia
Automotive industry 2005-2009
Bleak picture? Yes, but at present, in Russia, a several-
month wait for cars!
Supply will have to resume
Other industries of Russia
In 2009 two significant sectors growing. Industrial military complex (reportedly modest) & shipbuilding (output doubled)
Other in decline, included machinery & equipmentSince Oct 2009 moderate upward trend in all sectors
(However, 2009 output only equal to that of 2005)President Medvedev’s plan -
Continuation of retooling,
part privatisation of Fed enterprises, incentives for investors, competitive product driven economy in place of raw materials driven.
Source: AMT CEE Research
Machine tools brief
Russia depends on imports
Machine tool production and trade in Russia
Year Output ($m) Exports ($m) Import ($m) Consumption ($m)
2008 420.5 111.8 1733.2 2041.9
2009 230.1 64.1 1072.7 1238.7
Note 1: Russian industry is dependent on imports, as it covers 85 % of needsNote 2: 2008 was a record import year ever
Source: ITO Russia
Russian m/t import 2009 by countries
% Share (clockwise)
G'many 30.3China 13.8Italy 12.3Spain 6.1USA 5Japan 4.9Czech R 4.9Switz'nd 4.7France 2Ukraine 1.9Other 14.1
G
Note: US suppliers in 2009 noted an increase from $37.8 m to $54.5 m; other countries to record small increases were only China, Italy and Spain
Source: ITO Russia
Russian m/tool import structure 2009
Codes explained:
8456 –
EDM, laser, plasma8457 -
Machining centers8458 -
Lathes (turning centers)8459 -
Drilling, boring, milling, threading other than lathes
8460 –
Grinding, honing , lapping, deburring, other finishing, other than gear cutting etc.
8461 –
Planing, shaping, broaching, gear cutting etc.
8462 –
Metal forming 8463 –
Other m/tools
Source: ITO Russia
Shows remain good promotion tool in Russia
Metalloobrabotka Moscow -
May 23-27, 2011
Russian version of IMTS
Metalloobrabotka 2010
Acme & Sierra
Overview of Main Hall
MAG
OMAX
Conclusions for Russia
Russia’s potential unquestionable
3 out of 4 m/tools need replacement, most over 30 years old Local machine tool manufacturing very limited.Oil and gas revenues reduced but still available Retooling program very much a priorityMore transparent tender procedures introduced Fed enterprises more open, less red tape Easier to promote (e.g. Metalloobrabotka Show) Distribution becoming professionalMore private stake holding sought Private investors promised better treatment
Source: AMT CEE Research
Thank you for your attention!
Please useAMT Central & Eastern Europe Office
Warsaw-Poland
+48 22 7662311 +48 22 7662312 (fax)+48 502 751105 (cell)