Читать книгу Guide for Investors - Falk Tischendorf - Страница 13

Oliver Cescotti, Senior Vice President, GEA Group

Over the past few years localisation in Russia is often mentioned together with the import substitution strategy. As a rule two types of import substitution stand out. The first type involves the import substitution of machinery and production processes for the manufacturing of end products; the second type relates to the import substitution of products for the end consumer. To implement the first option, it will take Russia a number of years to close the existing gap with other countries. In addition, it is extremely hard for the country to close this gap in many sectors by relying solely on internal resources. Technological progress proceeds at such speed that in many production sectors it is quite difficult to compete with international production concerns and global market leaders consisting also of German medium-sized “hidden champions”. This is especially true in the mechanical engineering and machine-tool building industries. At the same time, the implementation of the second option appears plausible, as demonstrated by the efforts made over the past three years. After Russia introduced restrictions on the import of specific products (for example, cheese and dairy products) in 2014, Russian manufacturers received an incentive to manufacture substitute products. As a result they began offering “home-made products” instead of the previous imports. This happened thanks to investments in local production facilities.

For the GEA Group of Companies this implied an increase in the number of orders for the machinery and equipment required to manufacture the end products. If state enterprises or enterprises closely connected to the state were in such instances a potential client, then such orders might contain requirements on substantial added value in Russia. In other words, companies had to set up local assembly or production sites in the country.

Three years ago the aforementioned circumstances incentivised us to expedite our strategic localisation plans. At this time the Russian government launched the special investment contract to stimulate foreign investors to invest in production capacities in Russia. To be eligible for tax benefits and the other advantages offered by the special investment contract, a company had to invest at least approximately EUR 10 million.

Instead of making such investments in the indicated amount and availing ourselves of the benefits of a special investment contract, we adopted a slightly different approach at GEA. This approach is based on our extensive experience of work as an equipment manufacturer in Russia. In 2012 we won a tender to supply gas compressor stations in Siberia. This had been preceded by three years of preparations and field tests of a trial unit that we had developed and built in cooperation with our local partners. The general requirements included, but were not limited to the compression of crude natural gas directly from the source. The requirement on the equipment stipulated intervals between maintenance work of eleven months at an ambient temperature of +45 to -55 C° and uninterrupted round-the-clock work (24/7). Consequently the reliability of the technology was subject to the highest requirements. The core of the system initially was GEA’s own screw compressor manufactured at our plant in Berlin.

After winning the tender and signing the contract, we faced extremely stringent timelines, stipulating the supply of the first eight units within six months. The experience of the reliability and the quality of the equipment that we had acquired thanks to the trial unit led us to conclude that we should perform this assignment independently without engaging subcontractors. The order stipulated the supply of eight identical next-generation compressor stations that we had to start developing immediately. While our local engineers worked on the design, the procurement department ordered the main components and the project management group started looking for the appropriate site for the creation of the eight units.

Heated production facilities over an area of 2,100 square metres within reasonable reach of our head office in Moscow (65km away in Klimovsk) were leased, with 2x10-tonne overhead cranes, and also office premises over 400 square metres. Based on our experience as an equipment manufacturer used to organising installation and assembly work in any weather conditions and in any season, these production facilities provided us with simply sumptuous conditions! During two months we equipped the production shop with all the necessary infrastructure, installed metal processing equipment, permanent welding columns equipped with the required ventilation systems and a paint-spraying booth, and organised all the devices ready for use with 80 assemblers working in three shifts. The white floor in the production shop led to major debates. In the end, however, management decided that this would symbolise our support for a sophisticated production culture. Our best local project manager was appointed head of production, and one of our most experienced dispatchers was appointed his deputy. Both were competent, but without real manufacturing experience. During the first month after the start of operating activities we sent them on study visits to GEA’s enterprises in Europe, in order to provide them with an understanding of existing manufacturing concepts. One of the main keys to success was the mentoring of colleagues from Italy, Germany and the Netherlands at GEA. By this time we realised that after we completed the first order, we would be able to manufacture all manner of units based on the GEA product range. And that is how we came up with the idea of establishing a multi-functional assembly plant. The required investments in the first year equalled less than 5 % of the amount of investments stipulated by a special investment contract, and even today three years later after the further expansion of the product range, we have still not attained 10 %.

The indicated gas compressor plants were supplied on time. In the meantime our sales department had received other orders in completely different areas: regarding gas separation technology and the installation of GEA’s own separator from plants in Elde and decanters from Niderahr. When we learned quite by chance about an impending order for the assembly of GEO pasteuriser units from high-quality steel, including GEA’s valves for breweries, we took the initiative into our own hands and received the order shortly after studying the assembly drawings. We immediately acquired the necessary processing equipment and machinery, including an orbital welding machine for pipes made from high-quality steel, and organised on the platform approximately 300 square metres of separate processing and the assembly of components from high-quality steel. In the case of the procurement department, the extent of the diversity of the projects represented a real challenge, as almost none of the components were standard items, while suppliers had to be selected with due account of the technical specifications of our design department. Our engineers had to deal for the first time with countless production components, while there was always a limited choice of manufacturers owing to the requirements of Russian legislation on the availability of the required certificates and permits. In the case of our HR department, the search for competent temporary employees – assemblers, electricians and welders, including a number of Ukrainians – was also a difficult challenge. As a number of employees did not have the necessary qualifications, they had to be replaced by other candidates. The related need to prepare migration and employment documents must never be underestimated. This requires not only the engagement of resources, but also a high degree of competence and accuracy.

In Russia the regulatory authorities can also be relentless, and one hundred per cent compliance with all local legislative requirements is the only legal way to counter bureaucratic arbitrariness. We have had only positive experience in our communications with the regulatory authorities. Transparent and consistent compliance with health, safety and environmental requirements, and also the discharge of all other local requirements have been perceived positively by the state authorities. Accordingly, we have not faced any other obstacles to the further development of our assembly plant.

Based on the results of the first year we built an electrical workshop (approximately 200 square metres) to assemble the control cabinets in the clean room separated by sandwich panels. Currently, already over 50 % of the equipment supplied to Russia are furnished with control cabinets manufactured in Russia.

Based on the results of the first three years, the concept of a multi-functional assembly plant became a truly competitive advantage for GEA. A quality audit conducted by leading Russian oil and gas and chemical companies and also food manufacturers demonstrated the high quality standards of the assembly plant. We have persistently expanded our local presence (over 350 employees, including over 20 engineers, over 120 service employees, 18 employees in Klimovsk and up to 80 other temporary employees) and our efforts have been rated highly both by our clients and also the Russian state. Our clients appreciate the proximity of the production facilities and the ability to perform an audit without having to go abroad. Foreign exchange risks may be partially covered, but there is no point in holding big hopes here. Savings on labour costs are possible, but may once again come to naught owing to inefficiencies. Many components designed as “Made in Russia” contain foreign production components, whose import value is affected by exchange rate fluctuations. Based on our experience, the biggest difficulty during localisation concerns suppliers. Owing to the fairly insignificant number of Russian suppliers, quality may suffer, together with the continuity of supplies and reliability, and on occasion a complete lack of interest owing to the small size of the orders.

Notwithstanding the aforementioned difficulties, positive trends can clearly be observed in Russia. After the past three years we have realised how insignificant investments have been in the industry that remained after the Soviet Union and how dramatically the development gap has widened compared to Western and Asian countries. It goes without saying that the current strained relations between Russia and many countries have stimulated a new understanding of industrial development priorities, and that Russia is now trying to reduce this gap. Cooperation in the area of localisation and maintaining a presence in a country with such huge resources represent a serious framework for closing the current gap. Russia and Germany have in their histories experienced hard times. However, dialogue between the two countries has never stopped. The presence of German R&D in Russia can only benefit mutual understanding between our countries.