said Oleg Dorin of Saint-Gobain. - CCIFR

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RUSSIA–FRANCE
A Saint-Gobain factory producing construction materials in Cognac, France. The company opened one of two factories in the Nizhny Novgorod region in 2006.
solvency of Russian consumers, Baranov said.
The situation in construction sector is far from
stable: Since the beginning of the year, the
industry has shown both positive and negative
indicators.
In March of this year, according to the
state statistics service, the volume of residential
housing made up 4 million square meters, which
is 13.5 percent higher than in February of last
year. But in February of this year, the result was
much worse, as residential housing declined by
6.1 percent.
“These seesaw movements exert a significant
influence on the market for construction
materials and don't allow companies to count
on confident growth in the market or, consequently,
on the growth of their own financial
indicators,“ Baranov said.
“Manufacturers also have the opportunity
to increase their output thanks to the secondary
market, which is the market for housing
renovations, individual residential construction
and construction of dachas,” he said.
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“These tendencies can be explained by the
fact that the population has experienced an
improvement in its financial situation, there is
a stability in income, a possibility to plan for
the future, and so citizens can direct a part of
their income to renovate their homes, and also
to build houses and dachas,“ he added.
“These types of work will require construction
mixtures, among other supplies. And this
growth can contribute to a growth of this
segment by 5 percent to 9 percent per year,”
Baranov said.
FRENCH PLASTER OF PARIS
This year, Saint-Gobain will begin construction
in the Pavlovsk area of its second large factory in
the Nizhny Novgorod region. It will produce drywall
panels. Currently, this project is in the final
planning stages, Thierry Fournier, the general
director of Saint-Gobain Construction Material
Rus, told Vedomosti in November 2010.
According to Fournier, the company bought
more than 10 hectares at the end of 2009 for
Return Investors
Net volume of foreign investments in the Nizhny Novgorod region (2005 -2010)
$ MLN
2005 2006 2007 2008 2009 2010
SOURCE: Nizhny Novgorod region administration
future development, and construction of the
project is slated to begin in 2012.
In June 2007, Jean Laronza, president of
Saint-Gobain for Poland, Russia and Ukraine,
promised to begin, in the second half of 2008,
the construction of a factory with a capacity
of 30 million square meters of drywall per year.
Investments into the project would have totaled
2.9 billion rubles ($103 million), and costs
would have been recouped in six years to nine
years. The drywall was to be sold in the Nizhny
Novgorod region and the surrounding regions.
“All the parameters remain the same,” the
company's press service said about the planned
factory.
“Saint-Gobain has adjusted its strategy due
to the crisis on the market for construction
material in Russia,“ Fournier said when explaining
the delay. “Now, the crisis has changed
direction.”
According to a manager of one of Nizhny
Novgorod’s construction companies, Saint-Gobain
will begin processing gypsum at the Gomzovsky
deposits in the Pavlovsk area of the city, extracting
approximately 30,000 tons a year.
According to Vladimir Volkov, general director
of Stroiinvest Nizhny Novgorod, demand for
drywall in the region fell 70 percent in the last
two years, but in the future it will grow 30 percent
a year.
“The market in Russia will grow 15 to 20
percent a year in the foreseeable future,” said
Volkov, manager of Volma, a producer of drywall
in Volgograd.
Drywall panels will continue to grow in
popularity because right now the majority of
residential buildings are delivered with an open
PIERRE-ALAIN DORANGE / WIKIMEDIA COMMONS
floor plan, said Safonov from Investkafe.
“Drywall is a relatively new material for the
Russian market, and without a question it has
strong potential for growth,“ Baranov said. “It
is already considered one of the most popular
construction materials in Russia.”
According to data provided by Knauf, one of
Russia’s largest producers of drywall paneling,
this material has numerous benefits. It has the
ability to “breathe,” which means that it can
take in excess moisture from the air and give it
off when the air is dry; it is easy to install; “wet”
processes are not needed during finishing; and
it allows for the realization of the most varied
types of architectural and design solutions,
including creating curved surfaces. In addition,
drywall is not only ecological but also provides
a comfortable temperature indoors; it cuts construction
costs by making the wall hanging
faster; and it increases labor efficiency.
Demand for drywall panels in the next few
years will grow by 4 percent to 9 percent a year,
Baranov said.
FRENCH ROOF
Fellow French investor Onduline, one of the largest
world producers of construction material,
launched its first Russian factory for producing
wavy roofing sheets in Nizhny Novgorod in
2008, said Natalya Khoroshkova, manager of the
marketing department at Onduline Construction
Material. That’s the Russian daughter company
of the French company.
“We chose Nizhny Novgorod because of its convenient
geographical location,“ Khoroshkova said.
“It is not far from Moscow, on the intersection of
major highways, which is very convenient for delivering
our product to other parts of Russia.“
The factory’s capacity is 7.5 million sheets
per year. The company has began construction
of factory in February 2006, Onduline deputy
general director Andrei Nezhkin previously told
Vedomosti. The factory is located on an area of
more than 10 hectares on the territory of Gorky
Automobile Plant (GAZ).
According to Nezhkin, the volume of investment
in the project is $20 million of company
money and borrowed funds.
‘We chose Nizhny Novgorod because … it
isn’t far from Moscow, at the intersection
of major highways,’ said Natalya
Khoroshkova of Onduline.
The company gets the bitumen and organic
raw material that is necessary for production
from Nizhny Novgorod and other Russian markets.
Using cheap local raw materials and work
force, as well as cutting back on costs on logistics
and customs payments allows the company
to significantly lower production costs, an
Onduline employee said.
“This material is ecologically clean, does
not contain any health-harming asbestos, has
a neutral color, and is very easy to install,“
said an employee of the marketing department
of a Russian company that produces
fiber-cement.
But, at the same time, he said Onduline’s
roofing products are less economical than regular
slate and some forms of shingles in large
construction projects. “Onduline’s main market
remains the construction of individual homes,”
he said.
FUTURE PROSPECTS
“Foreign investors, including French companies,
will continue to actively invest in the creation
of manufacturing in the Nizhny Novgorod
region due to positive outlooks for demand of
their products in the future, especially since
local officials are actively working to create a
comfortable investment climate in the region,”
Timofeyev said.