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Summary of a paper in "The Continent Siberia Weekly", Novosibirsk, 24 September 2004, N35 (409)

Intensive growth of machine construction industry in Siberia/Russia

The Russian Ministry of Economic Development (http://www.economy.gov.ru/wps/portal) forecasts intensive growth of machine construction industry in Russia caused by extension of investment, customer, and export demands. The growth for 2004-2007 is expected at least 50% with a special accent in transport, building, road, agriculture, electro technical, and motor-car branches of machine construction industry.

Drastic growth is expected in machine-tool construction due to obvious need for update of equipment. Thus increase in cutting equipment and press-forging production by 2007 is expected up to 2 and 3 times correspondingly. This sector of so-called intermediate machine construction products is highly developed in Novosibirsk region (oblast) thus providing special advantages and prospects. SIBLITMASH (http://www.siblitmash.com/en/) has doubled its product release in the 1st half year of 2004 and plans to double it again by the end of the year. During the next 2-3 years 25% annual growth is expected. TRUD (http://www.zavodtrud.ru/eng/) expects 10% growth only caused by extension of a range of new products.

The experts of machine construction from KEMEROVO district (East neighbor of Novosibirsk) believe that the key argument for the success achieved and forecasts is constantly growing paying capacity of (regional) coal-mining and metallurgy industries. The CEO of Yurmash (http://www.yurmash.ru/) Boris Efremenkov informs that in contrast to 30 millions rubles of monthly contracts in 2003, the enterprise has about 70 millions per month in 2004 - basically due to release of a new cotton harvester KSP-22 as well as reanimation of orders from the defense field.

Victor Frantsev, the director of machine-construction department of the Novosibirsk oblast, believes that the Siberian enterprises must pay more attention to the so-called global technological chains aimed at end-user production - that are currently coming into being in Russia, like Interros (http://www.interros.ru/eng/) or Evrazholding (http://www.evraznet.ru). Mr. Frantsev says that those who are out of such chains will probably be out of efficient markets.

Machine construction branch of industry in Russia: Dynamics expected in 2003-2004

	2003	2004	2005	2006	2007
General growth, % compared to the previous year	9,4	14	8,5-9	9-9,5	9,5-10
Including:
Electrical	5,5	6	5	6	7
Chemical and petrochemical	-7	8,5	7	8	9
Motor-car	6	8	6	7	8
Other branches of machine-construction	5,7	10,4	12	12,1	12,9
Part of machine construction in overall industrial production (%)	19,9	21,2	22-22,1	22,9-23	23,8-24
Part of machine construction in overall growth of (%)	28,7	43,1	39,3-40,2	41-41,9	42-42,9

Source: The Russian Ministry of Economic Development
"Continent Siberia"