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Business news, 05.10.2005 14:01

Knauf Invests $71M In Building Plant in Kolpino

knauf_building_materials German building materials maker Knauf will invest 60 million euros ($71.4 million) in the construction of a plasterboard plant in the south of St. Petersburg, the company said Monday.

Knauf’s Russian subsidiary, Knauf Gips St. Petersburg, will start the plant’s construction in the Kolpino district this Tuesday, to be ready for production by the second half of 2006, the company said in a statement.

“Knauf will boost its efforts to develop the market for building and finishing materials in the Northwest region of Russia,” the statement said. “Setting up the production unit in Kolpino will create new work places and increase tax payments into the budget.”

The arrival of the new enterprise will annually add 350 million rubles ($12.2 million) to the regional budget, said Andrei Korotkov, head project management at the city’s committee for economic development, manufacturing and trade. The figure is an estimate based on an expected 1.7 billion ruble sales volume ($60 million), he said.

“Products made by Knauf are highly marketable, especially given the fact that our construction and renovation markets are currently on the rise,” Korotkov said.

Despite the German manufacture’s strong sales position in Russia, Gairat Salimov, analyst with Troika Dialog brokerage, saw Knauf’s move as an attempt to secure its market presence.

“In the plasterboard segment, Knauf already has a very strong position from their exports. The fact that they are building a new production facility anyway shows that the company is trying to protect its market share,” Salimov said.

Knauf’s new facility could notably lower costs for local construction firms.

Igor Kovalyk, purchasing director at Sodruzhestvo construction holding, said his company currently buys building materials directly from Knauf. After the German company opens its St. Petersburg plant Kovalyk said his company could count on a 15 percent cost savings.

“Even if they won’t give us a lower price, we will save on delivery,” Kovalyk said. “At the moment we have to deliver [Knauf’s plasterboards] from Moscow, with the cost of one lorry load reaching 15, 000 rubles ($526).”

Sodruzhestvo uses 90,000 square meters of plasterboard a year, which means a potential 1million ruble ($350,000) drop in costs a year, Kovalyk said.

Construction firm Peterburgstroi Skanska, which buys Knauf’s plasterboards through suppliers, said the benefits would be as much in quality as cost-cutting.

“I regard the launch of a new factory as very positive due to two reasons. Firstly, it’s an investment into St. Petersburg’s economy, taxes into the budget, new technologies. Secondly, these building materials will be produced on a very high technological level … providing competition to the ones currently stocked by suppliers,” said Vitaly Votolevsky, general director of Peterburgstroi Skanska. “We, as consumers, will only win from the competition.”

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