A Slump in Road Construction and Utility Equipment Production

8 april 2016

“At the moment we have got to be watching the situation in various industries very closely, with each sector being monitored separately. In the big picture it is often impossible to see the effects of state support or the problems that require pinpoint and clear solutions,” said Gleb Pokatovich, the Deputy Head of the Analytical Center. He went on to note that in its current work with specific sectors of the economy, the Analytical Center is currently paying special attention to machine building. “We recently held a round table on power machines building. Today we are having a round table on import substitution prospects in the manufacture of construction, road building and utility equipment,” Mr. Pokatovich explained.

During the round table experts looked at the existing state support tools available to domestic manufacturers, and whether additional measures of state support could be offered, taking into account Russia’s membership in WTO and EAEU.

The Head of the Foreign Trade Information Analysis Centre of the Ministry of Industry and Trade of the Russian Federation Sergey Briginevich noted that in the past two years many important decisions and resolutions have been passed to protect domestic manufacturers and to encourage them to export their products. “The laws and regulations that already exist today are more than enough to allow companies to run efficiently when doing this kind of business. The problem is that some of our manufacturing companies are not taking full advantage of these new opportunities, so we need to help them do that,” the expert said.

Stanislav Chertoryzhevsky, a representative of the Russian Ministry of Industry and Trade, cited statistics on key types of road building equipment. “In 2015, output fell by more than 63%,” the Government official said.  “Companies working in this sector manufactured 8 thousand pieces of equipment, which was 38.9% less than in 2014, while the amount of imported equipment was down 73.5%.” As far as imports are concerned, we are seeing an increase in the share of used equipment in total imports, the expert noted. This stems from the deteriorating economic conditions as companies are trying to get cheaper prices, he explained.

“Unfortunately, Russian companies practically do not use Russian equipment. Russian equipment simply cannot meet the requirements set by the Federal Road Agency, so we need imported equipment,” said Nikolay Seregin, the Chairman of Board of Directors of "Dorozhno-Stroitelnaya Kompaniya "Avtoban" JCS. According to him, Russia simply does not have the necessary equipment such as wide steam rollers and special equipment used by asphalt and concrete factories.

“Unfortunately, Russian companies practically do not use Russian equipment. Russian equipment simply cannot meet the requirements set by the Federal Road Agency, so we need imported equipment.”

Nikolay Seregin

Chairman of Board of Directors

"Dorozhno-Stroitelnaya Kompaniya "Avtoban" JCS

The Deputy CEO of "Kominvest-AKMT" CJSC Stanislav Dorokhin believes that not only should the Federal Roads Agency allocate orders for services but monitor their performance too. All information about the number of equipment pieces used by companies must be open and transparent, according to the expert.

Experts also pointed out existing problems with leasing that are putting constraints on possible growth in production. Lack of an information policy is also slowing down the sector, according to the Analytical Center's expert Evgeny Gasho. “It is important to help develop information exchange in the industry because we still lack information and cooperation,” the expert believes.

The event was organized by the Analytical Center and the Foreign Trade Information Analysis Centre of the Ministry of Industry and Trade of the Russian Federation, and with the support of the Russian Ministry of Industry and Trade.