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Business news, 04.03.2005 09:41

Bosch-Siemens to Build Plant in Neudorf

Bosch-Siemens German Bosch-Siemens Hausgeraete will invest 50 million euros ($65 million) into refrigerator plant construction in St. Petersburg's new industrial zone, the company said Wednesday.

The construction will start in the first quarter of 2007 on a 25-hectare land plot in the Neudorf-Strelna land development, 20 kilometers west of the city center near Peterhof.

The Neudorf-Strelna zone is one of the few in the city with modern engineering communications networks, a factor that played a decisive role in the company's choice of location.

"We chose St. Petersburg because of its excellent assets in terms of infrastructure and manpower, the transport accessibility, and availability of potential suppliers," Eva Delabre, BSH corporate communications officer, said in an e-mail from Munich.

"We found the local investment climate good and the administration competent," Delabre said.

Bosch expressed interest in building a factory in Neudorf back in December, but was unable to confirm the decision until now. It will be the company's second plant in Russia, the first being a gas-stove factory that opened in the Moscow region in 1998.

"Russia is a big emerging market and the company hopes for further growth and development in the country," Delabre said.

The new plant is supposed to provide the nearby towns of Lomonosov and Peterhof with 500 new job places in the first year of operations. This is especially important considering 30 percent of the towns' population commutes to St. Petersburg for work every day.

"The plant will help the city in easing traffic volumes and solving social problems in the suburbs," Vladimir Blank, the head of the city's economic development industrial policy and trade committee, said Wednesday.

Since the plant will output a finished not an intermediary product, it is also likely to subcontract local companies, which will aid the area's industrial development, Blank said.

The city reportedly spent 96 million rubles ($3.5 million) on the modernization of infrastructure networks in Neudorf, and investments Blank said will pay off within half a year of the plant's operation.

In addition, as soon as the company's tax payments exceed $5 million, it will receive profit and property tax breaks according to the existing investment conditions, Blank said.

Besides the Bosch plant, there are 35 hectares of land available to other investors interested in the Neudorf-Strelna zone. Since the area has been developed as part of the Russian-German economic cooperation program, Blank said he expects other investors to also be German companies.

"We will fill the Neudorf zone within half a year," he said, saying negotiations with potential investors are underway.

Earlier the head of German Economic House Stefan Stein named Henkel, KBE, Knauf and major German banks Raiffeisen and Dresdner among companies that are potentially interested in expanding to the area.

"It is important that companies with worldwide brand names such as Bosch-Siemens are coming to St. Petersburg. It helps improve the city's image abroad and also restores domestic consumer confidence," Blank said.

Bosch said the plant will have an annual capacity of 500,000 refrigerator after the first order of assembly lines is installed. Considering that, according to the city statistics bureau, St. Petersburg has only about 2 million households, and the average refrigerator life span is 12 years, the factory will provide a considerable contribution to the local consumer appliances market.

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(c) 2000