Development of Building Materials Market is the Key to Effective Implementation of Construction Industry Development Strategy through 2030

3 july 2019

How to ensure implementation of the Strategy for development of the construction industry? Will the industry have enough resources to achieve the goals of the Strategy? Will the industry be able to achieve its goals in the medterm? These and other issues were discussed by the participants of the round table at the Analytical Center.

"Development of the Strategy is in one of the most active phases," said Diana Kaplinskaya, Head of the Expert Analytics Department at the Analytical Center, as she was opening the round table. "Project teams described the current situation in different areas, as well as identified the main areas to be further developed in the Strategy, which will describe the key tasks Our task is to identify the main problems facing the industry."

Vladimir Guz', Managing Partner with SMPro LLC considers the main problems of the industry to be the reduction of domestic demand, high financial burden due to the inefficiency of plans and overproduction. This leads to forced exports, price wars in the domestic market, bankruptcy threats and suspension of production. The main risks, according to the expert, lie outside the industry. These are logistical bottleneck and high transportation costs. "Most of the building materials are the goods that are large in volume and low in value," Mr. Guz' explained. "All transport innovations increase the cost of their transportation."

At the same time, according to the expert, the industrial potential of the construction industry is able to provide the country's economy with materials for the period of 5-7 years, and for some material items – even further. He noted that Russia has a sufficient raw materials base and well-developed infrastructure for building new processing lines in any region, except the Far North.

Important, according to the participants, is the problem of import substitution. Thus, the expert of the Analytical center Daniil Nametkin thinks that the industry maturity indicator is the ability to compete in the international market. "We have to lay such a foundation so that such concept as "european-style remodelling" could be a thing of the past, so that in many segments we could be on a par with foreign manufacturers. In potentially successful segments the state needs to support manufactures to reach this level," Mr. Nametkin said.

In addition to making a strategy of the industry development as a whole, the participants discussed the problems and achievements of individual industry segments. Alexander Kvashnin, Executive Director of the Association of Heating Radiator Manufacturers noted the positive dynamics at the heating appliances market. According to him, in recent years the industry has suffered from unscrupulous manufacturers. However, the introduction of uniform quality standards and mandatory certification leads both to an increase in the quality of goods produced by Russian manufacturers, and to a more successful competition with foreign manufactures. In addition, the new rules of the game attract foreign investors: many regions are building new plants, and in the coming years the production plan will be even outstripped.