Analysis of Investment Environment of Russian Crane Industry Market

Russia’s richest man, Oleg Deripaska, said in an interview that there is a saying in Russia: “Strong and Stable to Win the Competition”. Deripaska discusses his practice of establishing a strong business relationship with China and the need for substantial investment in domestic infrastructure. After that, he told Bloomberg: "Investments in railway connection port facilities and throughput at border junction power grids and pipeline construction should be expanded by a factor of three. These constructions are very important. (Russia) The government attaches great importance to these areas. Progress."

Deripasca not only “strongly and steadily” increases his immense wealth. His diversified portfolio also includes Basic Element, Russia’s largest aluminum product company; and a manufacturer’s materials manufacturer. A large construction company composed of civil engineering contractors; including the Gorky Group, the second-largest automobile manufacturer in Russia. At the end of May, Gorky Group CEO Bo Andersson signed a joint venture agreement with Terex Filipov, Terex’s president in charge of Emerging Markets. Terex supplied engineering machinery and road construction machinery technology, while Gorky Group was responsible for manufacturing manpower. Resources and sales network. So far, there are no cranes in Delhi Pascal's investment, and it remains to be seen whether the new relations established with Terex will behave in this regard.

Bo Andersson was the head of the Swedish GM-Saab company. The group's construction machinery includes Tver excavator plants; Kovrovets, a subsidiary of medium and small crawler and wheel hydraulic excavators and material handling machines; and narrow-series wheel loader crawler dozers and Russian market-leading heavy graders. The construction of a road-building machinery factory in Riyabbinsk; Bryansk-Arsenal; and Zavodzhsby crawler plant for the production of crawler trucks.

As in the case of most factories in the former Soviet Union, many of the Gorky Group's branches are named after their cities. The Chelyabinsk and Chelyabinsk Machinery Plants mentioned here are not a unit. The latter is a mobile crane manufacturer with a long history of arms production and is also located in this city. Similarly, the Gorky Group and Gazprom Cranes are also completely different companies, which is part of Russia’s largest crane manufacturer, Avtokran Ivanovo. Although Terex-Gorky’s product plan for the first time in the St. Petersburg International Economic Forum announced cooperation is not yet clear, Bo Andersson made it clear at a press conference that the joint venture will produce large dump trucks for backhoe loaders and micro-loaders.

Deripaska not only gained great benefits in the famous Russian infrastructure transformation, but also had a great personal influence in accomplishing its goals.

If this transformation is truly successful (it is very important to Russia's long-term economic development), it should have the ability to produce comprehensive construction machinery and cranes. Whether it is a Terex joint venture that will become a fundamental element of this potentially huge national enterprise, or if Delhi Pascal has another bold move to invest in construction machinery, only time will tell.

Today, the Gorky Group produces road construction machinery and construction machinery at a relatively small scale. In 2006, the company’s output value on these machines was 6.6 billion roubles ($238 million). At that time, the company’s goal was to reach 36 billion roubles (1.3 billion US dollars) in 2011, but due to the global economic crisis, the company’s construction machinery sales did not reach 3.5 billion roubles (1.1441 billion US dollars) last year.

Basic Elements The other assets of the company are mainly from the expansion of construction machinery companies, including the Yaroslav plant. The factory, with the help of Ricardo UK, produced diesel engines up to 400hp based on Renault technology licenses. In May, the Gorky Group also signed an investment memorandum of understanding worth 50 million U.S. dollars with German operating room manufacturer Fritzmeier to produce engineering machine control rooms at the Tver plant. Similarly, in Gorky's own automotive business, there is Ural Automobile Factory, known for producing heavy-duty 4-wheel drive trucks, whose chassis is used by numerous Russian crane manufacturers as 15t to 25t telescopic crane chassis.

Due to the economic crisis, Russia’s demand for cranes and most types of construction machinery has dropped significantly.

For many years, imported cranes are mostly of the type and type that cannot be produced domestically, and the quantity is limited. However, the number of imported second-hand cranes has steadily increased. They are mainly Japanese rough-terrain cranes and truck cranes and German all-terrain cranes. The Russian crane manufacturers Ukraine and Belarus continue to dominate the traditional small-arm crane tower cranes and small truss-arm crawler cranes. From 2007 to 2008, the domestic crane industry faced the challenge of survival for the first time. The threat comes from China, as hinted by the latest statement of Drapaska.

Since the “Iron Curtain” collapsed 22 years ago, the development of the former Soviet Union and the People’s Republic of China’s construction machinery and crane industry was very different. In the 1950s and 1960s, China’s access to engineering machinery and the automotive industry was completed. Joseph Stalin and Mao Zedong signed an agreement to provide technology from the Soviet Union. But time has passed. In the past 10 years, the government’s large investment in production facilities and technology has enabled China’s XCMG and Zoomlion to become the world’s two largest batch mobile crane manufacturers with a rapidly expanding product range.

In the past 10 years, China's crane manufacturers have made rapid progress at an unprecedented rate in the world. Its telescopic crane truck cranes have expanded 10 times from 3,450 in 2000 to 35,000 in 2010, starting from the largest. Weight 50t developed to 1000t. In comparison, Russia was about the same as China 10 years ago, with an annual output of 2040 telescopic crane trucks with a maximum capacity of 50 tons. Although the output of Russia's truck cranes reached 6,500 units in 2007, only 2735 units were produced in 2010, the largest of which was Ivanowitz's 50t telescopic crane truck crane.

Since 2007, Chinese manufacturers have directly integrated the markets of Russia and the Commonwealth of Independent States into their sphere of influence. In 2008, Russia imported the largest number of mobile cranes in history, with a total of 673 units, of which 189 units came from traditional suppliers, such as Liebherr 57 units, Grove 48 units, Tadatao, and 35 units, Terex 20 units. Kato is the rest of 5 other manufacturers, and China has no less than 484 Taiwan, including Xugong's 385 16t to 25t truck cranes Zhonglian's 90 30t to 70t truck cranes.

The cranes that China sells to Russia belong to the same specification area as the local manufacturers, but the lifting performance is better and the design is more advanced, and the price is more competitive than the local products for the first time. This phenomenon does not occur because Russia has not long recognized the importance of advanced technology. As early as the 1980s, Liebherr and Tadano signed an all-terrain crane technology transfer or technology license agreement with a Russian manufacturer. However, due to the lack of investment, localization efforts of these local joint ventures have failed, and most have failed in the development of the necessary high-strength steel and high-quality and high-efficiency complex components.

Therefore, the biggest question is: Can the crane industry and engineering machinery industry in Russia and the CIS countries combine domestic or foreign investment with technology transfer to achieve modernization? In other words, in the 20-year period, the construction machinery market in Russia and the CIS countries has been transformed from the monopoly of domestic enterprises to all or part of foreign-funded enterprises, or imported from China, South Korea and Germany.

On June 24th of this year, Willie Liebherr and Nizhny Novgorod Regional Administrator Valery Shantsev participated in the opening ceremony of Liebherr’s first factory in Russia. The decision to establish this factory was announced in 2007. One of its great significance is that it is the first foreign-owned wholly-owned construction crane factory based in Russia, among other products.

This Liebherr plant is planned to invest 200 million euros (280 million US dollars) and covers an area of ​​120 hectares. It is a Liebherr-Nizhny Novgorod Construction Machinery Plant and a Liebherr-Nizhny Novgorod aerospace component. The company's joint base, which is a joint venture with Russian Aerospace components manufacturer Hydromash JSC. In addition to the announced tower cranes, Willie Liebherr also revealed at the ceremony that the new factory will manufacture steel structures for the company's earth-moving machinery and export it to Germany, France and Austria. The new plant plans to recruit 600 employees and currently has 150 employees in place.

In this wave of foreign companies investing in the Russian crane industry, in July, Palfinge announced a high-profile announcement of the acquisition of Inman Corporation in Ischimbai, the Republic of Bashkortostan in the Volga region. The newly acquired company employs 415 people and is located in two factories. It produces folding arm truck cranes and is the first company in Russia that foreign companies acquired in Russia. Palfinger said that the Inman brand will be retained and sales in 2011 are expected to reach 20 million euros (28 million US dollars).