Transcript Document

Business Park Vyborg
How to organize production in Russia –
Opportunities and restraints
Timo Koivumäki
Gothenburg 04.04.2013
Company
• Finnish mother company Business Park Vyborg Ltd,
Russian daughter ZAO Business Park Vyborg
• Assists foreign manufacturing companies to establish
in North West Russia
• A service concept covering full range from planning
and budgeting through ramp up to full production
• Based on 18 years experience about production in
Russia
• Alliance with Integria SCM
Russian Vehicle Industry
Market development
• Light vehicles
– Creation of new production capacity,
changes in the industrial assembly
regime
– Development strategy and trade
policy promoting domestic
production
– Recovery of the Russian economy
and, to lesser extent the US and EU
development
20.7.2015
• Heavy vehicles
– General economic recovery and
improved financial situation in
Russia releasing credit resources
– Need to upgrade the commercial
vehicles fleet and bus fleet
– Expansion of the lending and
leasing markets
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Russian Vehicle Industry
Requirements and local response
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Logistics requirements
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Capability of local supply
– The severe shortage of capable
component manufacturers
– Excessive lead times and unusual
safety stocks in production
– Distant and inflexible inbound
supply chain inhibits adaptive
production planning
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Regulation on domestic origin
– The regulation of domestic origin
favors local production or refining
– The supply of Russian vehicle is
heavily directed by Industrial
Assembly Regime
– This act requires a 50-60 % level
of domestic supply in 5-6 years.
20.7.2015
– Very few Russian vehicle
component manufacturers meet
the industry’s requirements
– This is verified by several supplier
analyses performed by foreign
OEM’s operating in Russia
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Match of demand and supply
Match of demand and supply
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Huge market (7 Billion Eur)
Limited/no competition
Profitability better than in EU (if cost control ok)
Political support in Russia
OEM’s forced to do something
Opportunities
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Huge market (7 Billion Eur)
Limited/no competition
Profitability better than in EU (if cost control ok)
Political support in Russia
OEM’s forced to do something
Where to go
• OEM’s and Tier 1’s scattered
– 3 or 4 clusters
• OEM driven supplier parks
– Nissan, Hyundai, GAZ, Sollers, Kamaz
• J/v’s / partnerships with OEM’s,
– Kamaz
• Sequencing requirement?
• Talk to customer
Issues to consider
• Problems appear back home, rather than in Russia
• Russian operations define time frame and usage,
Responsible people are away from domestic operation
• Russians do not intend to become ”Finns” or ”Swedes”
• Must to find Russian partners/employees whom is
posible to trust to
Issues in setting up operation
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Time from decision to start up
Permits, inspections and authority clearances
Recruiting/Staffing
Middle management
Choosing location
Asian mentality
Cost drivers
• High property prices / rental fees
– Taxation value / market price
• Local banking terms
– High interest, short payback times
• Relatively low salary level
– Huge variation between regions
• Accounting and taxation bureaucracy
– 4 times more staff than in Nordics
Hints
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Structures are not an issue
Premises are an issue, but not a problem
Focus on people, knowledge and culture
Emphasis on middle management training
Make sure you know the law and order
Ensure all documentation to be properly in place
Customers know local business, ask for start up support
Networking helps problem solving
Alliances for cost saving
Twin hub model
BORDER CROSSING
Capital
Information
Sourcing
Distribution
Material
Admin practices
Kouvola / Imatra Logistics Hubs
Vyborg business park
Service structure
• Business Park Vyborg provides production support
services
• Premises are provided by property developer, but a
sublease arrangement via Business park Vyborg is
possible depending on agreement model
Services
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Planning phase services
Start up phase services
Running phase local services
Running phase trans-border services
Exit phase services
Examples of available services
• Planning phase services
– Market studies trial sales
– Operations planning & budgeting
– Start up planning and budgeting
• Start up phase services
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Site reconstruction
Recruitment
Personnel background surveys
Data systems development
Permissions acquisition
Equipment import and installation
Examples of available services
• Running phase trans-border services
– Warehousing (Finland)
– Customs clearance services
– Transport services
• Exit phase services revenues and cost
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Premises vacation and equipment relocation
Employment termination and personnel relocation
Permissions and responsibilities transfers
Logistics and customs clearance transfer
Examples of available services
• Running phase local services
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Authority clearance
Staffing
Local maintenance
Small purchases
Personnel transport
Canteen
Back office
Security services
Forwarding and transport services
Company health care
Waste removal
Business Park Vyborg 2013 - 2014
Production premises standard sample
Timo Koivumäki
Managing Director
Vanha Talvitie 11 C, 6th fl.
FI-00580 HELSINKI
[email protected]
Mobile +358 40 524 4411