Three Months of Lockdown. What Was Russia Doing?

Paul Goncharoff

Now that the world is beginning to emerge from the strict pandemic lockdown, many (like myself) find themselves continuing to work and function from home. This period of enforced isolation has afforded many the time and chance to think a bit more deeply about the various dynamics that are playing out and the changes wrought in our professional as well as individual lives. Perceptions change.

Most of us have been online more that in any other time before. Lots of news out there, mostly in English, hence about the English speaking world or how far flung regions impinge on our English speaking world. After all, Slightly over half of the homepages of the most visited websites on the World Wide Web are in English (59.3%), with varying amounts of information available in other languages. Surprisingly second place is Russian (8.4%),  Spanish (4.2%), then the others like German, Turkish, Persian, French, Japanese and Portuguese at between 1 and 3%) and Chinese at a surprisingly low 1.3%. I would have thought the China population factor alone would make it an easy top five.

The reason for my thinking about language, the internet and news is that whatever I read in English it seems that Russian business and interactivity simply closed down and died. To be fair, not much has been shouted about in Russia either, excepting for the noise surrounding the constitutional amendments vote. Mostly the global internet focus has been on the tragicomedies surrounding race, statues, pandemic, sanctions, conflicts and who did what nastiness to whom.

So what (thinking to myself) happened in Russian non-internet, bricks and mortar business say since March 2020? I decided to dig into the Russian webspace, especially the regions. The answer was surprisingly positive, and a local Russian version of MAGA, which I have heard jokingly called “Mr. GA”.

Kaluga Toilet Paper (Sanitary)

Apparently at least thirty (30) new manufacturing plants were in construction, are now finished and are working and employing people since April. Many of them were conceived to replace imports due to sanctions. Digging around I unearthed the following: Only 7 were opened in April, 6 in May (due to pandemic lockdown), and 17 in June. July and August should be quite active. It struck me that none of these are the giant behemoths of the past which attempted to do everything in one place. These as well as hundreds of others opened since 2015 throughout the Russian Federation are filling niche roles in market-agile ways with the latest in technology where applicable.

Helicopter gearing

One example is a factory to produce aluminium and chromium carbide. Who actually knows (or really cares) why these powders are needed at all? Now Russia finally has its one small plant, and incidentally before this spring if you wanted any of these powders you could only import them, which they have for years. Thinking along similar lines, why would anyone wish to open an electric cable factory, or aluminium pipe, or even gearboxes and transmission boxes? They are all components in Russia’s import-replacement scheme of things. Many are related to mechanical engineering, electric cables, pipes for technical fluids, gearboxes and transmissions for machinery and so on. Individually, not one of these items are stand-alone sexy, but they are vital parts of an integrated non-dependent economy.

Starline Cables

I can’t say that any one of them is hugely fascinating, but here they are, and they all have opened and started producing during these past three lockdown months. That in itself deserves a mention.

The industries covered by these new factories are as follows:

Engineering and metalworking – 8

Building materials and repair – 4

Chemical industry – 4

Electronics and Electrical Engineering – 4

Medicine and Pharmaceuticals – 1

Textile industry – 1

Woodworking industry – 2

Packing – 3

Other – 3

The investment sources:

Russian or mixed = 27. 

Foreign, non-Russian = 3.

1. Mechanical transmission plant, part of the ROM group in Naberezhnye-Chalny making transmission cases for KAMAZ and URAL. The new production capacity is 1000 units per year. The localization level exceeds 95%. The total budget of the project to production was approximately 300 million roubles.

2. PJSC ” UEC-Ufa Engine Industrial Association ” has started and run-in large-scale projects for the production of helicopter engines and components for manufacturing turbine rotors and compressors. Four new production and technology centres (PTCs) within this project are focused on the production of components of serial and advanced helicopter engines in a power class of up to 5,000 hp. (TV3-117, VK-2500, VK-650 V, VK-1600V). 

3. The “Development” glass company in Ruzaevka, Mordovia, opened a second phase of production of glass containers for the food industry. The launch of production has created more than 150 jobs. By the end of this 2020 year, more than 500 people will work there. The investment amounted to about 300 million roubles.

4. “IAC Holding” opened the first phase of its new facility in Novosibirsk. The first million linear meters of cable channels have already been shipped from the new site. The plant was built on the territory of the industrial and logistics park of the Novosibirsk region in 2019, and was commissioned in March 2020. Occupying 5.79 hectares, the production of double-walled corrugated HDPE pipes, rigid PVC pipes and PVC cable channels is now operating. Investment was about 500 million roubles.

5. Commercial refrigeration plant “Arcto” was opened June 23rd in Chuvashia, at the industrial park in the city of Canas. The company will produce refrigerated cabinets for commercial use intended for shops, catering points, and pharmacies. Currently eight line models of refrigerating and freezing cabinets have been launched. By end 2020, the company intends to expand its line of equipment to approximately 40 models. The total investment was 600 million roubles. Created 48 jobs.

6. The factory “Aeroball ” opened in Nevinnomyssk, Stavropol Territory, its first stage of production of aluminium aerosol cans which began to be built in August 2018. The factory’s capacity will be about 86 million units of aluminium cylinders annually. The total project cost was 890 million roubles. The company employs about 50 people.

7. The company “Russian Electronics Holding”, along with the State Corporation Rostec together with the Industrial Development Fund launched the first Russian production of intelligent electricity meters 100% based on domestic components and software. These devices will automatically collect and transmit online readings, as well as allow users to monitor the amount of energy consumed and pay for services through a mobile application. Production started in the Moscow Region, and the project cost was 756.2 million roubles.

Manufacturing smart meters

8. RUSAL launched a new casting/foundry complex for the production of high-strength alloysat the Boguchansky aluminium smelter with a capacity of 120 thousand tons of alloys per year. Investments in the project amounted to a bit more than 600 million roubles.

9. The company “Doke Home Systems” in the village Fedorovskoe Kirzhach, Vladimir region has launched a new line for the production of laminated tiles for pitched roofs. In total, about 500 million roubles were invested in the project.

10. OJSC ” Zalesye ” from the Yaroslavl region launched a new production of fiberglass. More than 175 million roubles were invested in the project, 14 new jobs were created.

11. “Saranskkabel-Optics” in Saransk launched a new project for the production of pipes made of aluminium and aluminium alloys. The company launched the production of two types of pipes. These are welded flat oval and round extruded pipes.

12. The company “NSplav” from Novotroitskoe in the Orenburg region launched the only production of aluminium powder and chromium carbide in Russia. Just over 270 million roubles were invested, and the capacity will amount to 6000 tons of aluminium powder per year, chromium carbide at 200 tons per year.

13. On May 15 , the “Volga Cardboard Manufactory” launched a new corrugated production in Togliatti. Its main activity is the production of three-layer and five-layer corrugated cardboard with a volume of up to 2 million m2 per month. Also, the company organized a site for the production of corrugated packaging.

14. The company ” Ai Plast ” from the city of Azov, Rostov Region has launched production at its plant for the production of plastic waste bins of 1100 litres of an innovative design, which will become part of a complete treatment system of municipal solid waste in the federal project “Clean Country”. With the launch of a new injection moulding machine, the enterprise will be able to fully meet the needs of Russian enterprises in the field of waste management with containers of 1,100, 770 and 660 litres. Project cost was 1.2 billion roubles.

15. The company “DNS Forest”, a resident of the Free Port of Vladivostok (SPV), has started production of OSB-plates in Spassk-Dalniy, Primorsky Territory which is the first of its kind in the Russian far east. Work on the  plant began in 2018. In Russia, OSB boards (oriented particle boards) were previously produced only in the Moscow, Kirov, Kurgan, Karelia and Bashkiria. It will be able to produce up to 60 thousand cubic meters of products per year, which will allow supplying the whole Far Eastern Federal District and Siberia with slabs. The total investment in the plant amounted to 1.38 billion rubles.

16. In Bashkiria, Blagoveshchensk, a new company “PRO Spect ” has opened, specializing in the manufacture and production of children’s playgrounds, and small architectural forms. Investments in the creation of production amount to 250 million roubles.

17. The company “Archbum Tissue Group” has launched a plant for the production of sanitary-hygienic products in the industrial park “Vorsino” . Production capacity is 70 thousand tons of sanitary products per year.  The total investment was estimated at 11.5 billion roubles.

18. The enterprise “Salavatsteklo” in Bashkiria started production in May of mirrors for furniture. About 30% of production will be exported to neighbouring countries. The company also plans to enter new markets in EU countries. The company launched a line for the production of high-quality and environmentally friendly (lead-free) mirrors based on its own thermally polished glass (float glass). The capacity of the new production is 4 million square meters of glass plate area per year. In 2021, it is planned to increase the production of mirrors 1.5 times, including the launch of new products based on anti-glare glass. The total project budget amounted to 524 million roubles.

19. “Nelleks” clothing production was launched in the Stavropol Territory within the industrial park “Master”. The new facility can produce about 30 thousand pieces monthly. In particular, T-shirts, hoodies, fleece suits, knitwear: scarves, hats, snoods, sweaters.

20. “ESKOM” of Stavropol launched a new production line for infusion solutions. In 2020, the plant launched a production line for the production of infusion solutions in a plastic bottle. Such a container simplifies the process of using intravenous drugs due to special rings for hanging and a smaller gross mass. The launch of the new line allowed a 25% increase in production.

21. “Starline” NPO in the Leningrad region launched a new contract manufacturing facility for cable products. Robotic and automated cable manufacturing now allows it to produce up to 10 000 ready-made cable products a day and compete with Chinese producers. The contract production of StarLine NPO is the first in Russia today, ready to work on a large scale with small Russian customers. The new facility is equipped with unique robotic lines for processing wires and assembling harnesses. Two of which are uniquely cutting-edge and only working in Russia. Only Russian raw materials of the Prettl-NK company are used in production. Manufacturers of automobiles GAZ, KAMAZ, UAZ, Renault, Nissan and others are in cooperation with this supplier.

22. The “Akron” Group has launched on its site in Novgorod a urea granulation plant. The new facility will complement the company’s product portfolio with premium granular urea, which is widely in demand around the world. The total investment in the construction of the installation amounted to about 2 billion roubles.

23. “ULK” Holdings opened a pellet plant in Pestovo, Novgorod region with a capacity of 60 thousand tons of wood-fuel pellets per year. These are the new production facilities of the Pestovsky Timber Industry Complex, which is part of the Ustyansky Timber Processing Company Group of Companies. Investments amounted to almost 1.4 billion roubles.

24. “Voronezhsintezkauchuk”, part of the petrochemical holding company “Sibur”completed in April the start of a facility to increase the production of thermoplastic elastomers by 50 thousand tons. The volume of investments in new production amounted to 5.1 billion roubles.

25. The Segezha Group has commissioned a new semi-automatic line for the production of industrial packaging at a plant in Salsk, Rostov Region. Production capacity is 83 million units pa. Investments in this project amounted to a bit more than 500 million roubles.

26. A new company “MPS” (“Marine Propulsion Systems”) for the production of marine engines and control systems had an April grand opening in the industrial zone “Fedorovskoye” in the Tosnensky district of the Leningrad Region. The new plant will produce marine engines and diesel generators based on Deutz AG engines (Germany), marine compressors based on Ervor compressors (France) and control systems. The company is also engaged in its own development and repair of engines. In 2021, the company will introduce a marine diesel engine entirely of its own in-house design. The volume of investments in the opening of production amounted to about 1 billion roubles.

27. “Sivezh” a new logging and wood processing facility in the Vologda region completed implementing a series of investment projects in forest exploitation this April. Total investments amounted to 546 million roubles. 144 people are now employed.

OSB Boards Russian Far East

28 & 29. In Novokuznetsk two new factories were launched in April, OOO “SZRO” making lattice towers, and OOO “Metiz-NK” which galvanizes metals. Total investment amounted to more than 300 million roubles, and 73 new jobs.

30. A geosynthetics production plant for fiberglass and composite materials “Steklonit”, located in Ufa, for production of structural, insulating and roofing fabrics. Today, more than 50 modern looms are already in operation, and the volume of production due to new equipment has more than doubled. In April, “STEKLONIT” launched a new plant for the production of composite materials. The total investment of the entire program is 600 million announced investments of about 31 billion roubles.

Paul Goncharoff

Moscow July 5, 2020