The Russian Composites Market
JEC International Composites Summit
Paris, March 30th, 2011
1
Background on Bautex
• German-Russian Production Company
• 25.000 tons annual glassfiber consumption
• HQ in Moscow, branch office in Wladimir
• Plant in Gus-Khroustalnij, Russia
– > 40.000 m2 production area
• Plant in Pabianice, Poland
• Plant/ distribution center in Germany, Thuringia
• 500 employees
• Annual growth > 50%
2
Background on Bautex
• Glassfiber Fabrics
–
–
–
–
–
–
roofing fabrics
fassade cladding meshes
grinding wheel meshes
wall covering
roving fabrics
asphalt reinforcement meshes
• Moulding Compounds
– bulk
– sheet
3
Background on Bautex
• BauTex is working without corruption
• Further growth esp. in the field of composite
materials
• BauTex as a docking station/ platform for partner
companies in similar or downstream applications
• Provider of infrastructure, production base,
Russia Know-How
• Looking at joint venture potentials
• www.bautex.ru
4
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
5
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
6
Brief profile of Russia
• Largest country in the world/ long distances/ 9 time zones
• Strong academic, technological and industrial legacy
• Enormous natural resources – gas, oil, minerals, world biggest oil
producer
• Population of 142 mln offers large potential markets e.g. automobiles
• Large construction programs with government encouragement
• Harsh climatic conditions present opportunities for composites
• Strong metal tradition and industry base, steel is key (russ. stal)
• Composites so far relatively underdeveloped especially local resin
production
7
Sustained Russian growth:
running at 7% p.a. up to 2008
•
•
•
After the crisis of 2000, the
Russian economy had
many years of good
growth averaging around
7% until the financial crisis
of 2008/ 09
This growth was helped by
the growing funds that
Russia was receiving in
payment for oil and gas
The recession of 2009 was
brutal with a GDP
reduction of 8% but the
economy recovered in
2010 to show a 4% growth
Forecasters are estimating
that the Russian economy
will grow in the 4 % range
for the coming years
Russian GDP, Annual Growth
10,0
8,0
6,0
7,7
7,2
7,3
8,1
6,4
5,6
4,0
4,0
2,0
in %
•
0,0
2003
2004
2005
2006
2007
2008
2009
2010
-2,0
-4,0
-7,9
-6,0
-8,0
-10,0
8
Foreign Currency Reserves &
Trade Balance recovering
•
Russia has become the world’s
biggest oil producer.
•
The oil price expected
to hit $ 200/ bbl this year
•
Russia has enjoyed a positive
and growing trade balance
over recent years which is
growing again after the 2009
drop
Russian Foreign Currency Reserves
Russian Imports and Exports
9
Source : Deutsche Bank
FDI into Russia needs to recover
•
FDI inflows to Russia spiked
in 2008 at just over $70 bln
and then plummeted in
2009, in 2010 down to 40 or
$ 14 bln ?
•
Some recovery took place
in 2010 but the government
expects levels of $60 80bln in the next years
•
this would bring FDI close to
the Chinese levels
•
Russia is attracting slightly
more FDI inflow than India
and Brazil
FDI Inflows to BRIC countries
Source : IIF reported by Deutsche Bank, Feb 2011
10
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
11
Key Russian industry sectors
• Automotive Industry
• Pipe Industry
• Aerospace Industry
• Railway Industry
• National Projects
– Olympic Winter Games Sochi 2014
– World Football Cup 2018
12
The Russian Automotive Industry
•
2012 sales to be 2,9 mio
units
3.000
2.000
1.000
12
20
11
20
10
20
09
20
08
20
07
20
06
0
20
However the market saw a
drop of some 50% in 2009
but recovered by over 30%
in 2010 and sales prospects
remain good for the future
4.000
05
•
In 2008, before the crisis,
there was talk that Russian
light vehicle sales would
supersede Germany’s by
2010 ( Germany being the
largest country car market
in Europe)
New light vehicle sales
- in Russia and Germany
20
•
New light vehicle sales
grew in Russia at an ACGR
of 24% from 2005 to 2008
'000 units
•
Russia
Germany
13
The Russian Automotive Industry
•
Continous growth of localization is a prerequisite for reduced
customs duties on import parts !!!
•
Foreign carmakers have stepped up efforts for J/Vs with Russian
firms
•
300.000 units p.a. make companies eligible for a range of
incentives
•
The Sollers/ Ford J/V was announced in Feb 2011. The goal is to
reach a target of at least 300.000 vehicles p.a.
• Volkswagen and GAZ plan a joint venture to produce 300.000
cars p.a.
180.000 at Kaluga VW plant, 120.000 in N.Novgorod at GAZ
• BCG expects Russia to be the 6th largest global auto market by
2020 with sales of 4 mio units p.a.
14
The Russian Automotive Industry
Russian light vehicle market
- by source
3.000
72%
73%
52%
2.000
'000 units
• The Russian
government, seeing
that imports of foreign
cars were rising very
fast, has imposed high
import duties on
imported cars to
encourage local
production
64%
1.000
10
20
09
20
08
20
07
0
20
• In 2010 the share of cars
sold - but produced by
foreign companies in
Russia - reached parity
with the cars produced
in Russia by local
companies
% Rus s ian produce / total for eign
br ands
Im ports
Fore ign br ands produce d in Rus sia
Rus s ian br ands
15
Most major foreign producers are
invested in production in Russia
•
•
As shown on the map
there are four main
clusters for automotive
production in Russia
Most of the world’s
leading car producers
have invested in
production in Russia,
partially motivated by
the government’s heavy
import duties on cars :
Source : AEB/E&Y
16
The Russian Construction Industry
•
The drop of 15% was due to
a buffering by the state
which is directly involved in
constructing houses and in
various infrastructure
projects e.g. Sochi
Early in 2011, the prime
minister has announced
house construction targets
which for a 50% increase in
spending, some of which is
supposed to come from
private investors
Russian Construction Output 2005 - 2010
5000
20,0%
4500
15,0%
4000
10,0%
3500
5,0%
3000
2500
0,0%
2000
-5,0%
1500
-10,0%
1000
-15,0%
500
0
-20,0%
2005
2006
2007
2008
2009
2010
17
Annual growth in %
•
Overall Russian
construction grew by an
ACGR of 17% between
2005 and 2008
bln RUB
•
The Russian Pipe Industry
•
•
•
•
Russia’s large distances combined
with the size of the oil and gas
industries means Russia is a huge
consumer of steel piping
The corrosive environment means
that pipes often have to be
changed as often as every three
years
There is certainly a large potential
opportunity for composite pipe but
steel is a very established material
in Russia while composites are at
their beginning
There are several small diameter
filament winders in Russia but the
industry needs strong promotion of
the benefits of composites as well
as ensuring standards are
established and respected.
18
The Russian Aerospace Industry
•
•
•
•
•
•
Russia had a strong aerospace industry
prior to 1990 in both passenger and
military planes
In 2006 the Russian government created
the United Aircraft Corporation (UAC)
which merged the aircraft activities of the
three major producers, namely Sukhoi,
Irkut and Tupolev
UAC currently has five major aircraft
development projects underway
including the regional Super Jet – 100 and
the short/ medium range MS - 21
The Russian Technologies State
Corporation (RT) founded in 2007 is an
umbrella for many aircraft related
technology companies
RT has set aside funds for a new carbon
fiber enterprise in Ulianovsk
Production facilities have been upgraded
including the purchase in 2010 of 1 MAG
CF tape layer
19
The Russian Railway Industry
•
Russia plans to build an expanded
high-speed railway network with
Sapsan trains
•
until 2017 Moscow - St. Petersburg
660 km, € 15 bln
•
in total 3.000 km new HS-tracks until
2018
•
for the Public-Private-Partnerships a
concession-modell is foreseen:
Design-Built-Finance-Maintain (DBFM)
•
www.hsrail.ru
•
a very old park of waggons of
„electrichki“ the suburban trains,
which need to be exchanged
•
Alstom bought 25%+1 in Transmash
20
Football World Cup 2018
• Russia will spend € 7 bln € 14 bln on upgrades to
infrastructure in the 13
host cities
• 13 new stadiums with a
lot of new seats
• Russia needs to build or
renovate an enormous
amount of hotel rooms,
FIFA said
Zur Anzeige w ird der QuickTime™
Dekompressor „“
benötigt.
21
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
22
The Russian Composites Market
•
The Russian Composites Industry is focused
mainly on glass fibre composites
•
There is only a very small production of carbon
fibre and 2 of Basalt and natural fibre
composites have yet to be seriously developed
•
•
Glass reinforcement fibre volumes (excl. yarns)
have been publicly reported but glass fibre
consumption takes place in both non-polymer
and polymer based composites segments :
–
–
–
–
Mesh production (for façade cladding)
Fabric for bitumenous roofing
Veil production (for roofing and PVC flooring)
Geotextiles
–
Moulded polymer composite production
2010 total Glass fibre reinforcement
Consumption
in Russia/ Belorussia
Geotextil
in 2010 (est.): 100 kT
5%
Mesh
1%
Veil
11%
Roofing
21%
Composites
62%
The composites segment in Russia, which was
156 kT in 2010 (based on 33% glass content)
grew by an ACGR of 16% over the 2006 volume
of 86 kT
23
Per capita comparison
8,0
6,0
4,9
4,0
2,5
2,0
1,1
SS
IA
R
U
IN
A
0,0
C
H
Russia in 2010 was at a level of 1,1 kg
per capita per year
8,6
27
•
China in spite of its fast growth in
consumption of composite materials is
only at a level of 2.5 kg/ person/ year
10,0
EU
•
The EU 27 produces 4.9 kg/ capita/
year
12,0
A
•
The US leads the world with a
consumption of 8.6 kg/ person/ year
2010 per capita production
of composites by country
U
S
•
The potential for growth of the Russian
composites market can best be seen
by comparing the 2010 per capita
production of composites
in kg/ capita/ year
•
Source : Connectra
24
2010 status of key composite
manufacturing processes in Russia
Process
Status 2010
Hand Lay Up,
RTM
Glass
k tpa
Additional Comments
6
Only in 2011 a Chopped Strand Mat line
was started, so either fabrics are used
or mats were imported
Spray Up
Relatively few machines in Russia
1
Filament
Winding
There are multiple filament winding
companies who have converted
themselves from making rocket launcher
tubes
12
Pultrusion
Well established as a process with some
leading companies
1
SMC
BauTex has started an SMC production
with a capacity of 12.000 tpa
establishing a Technicum for Moulding
0,2
BMC
Traditional product used in the electrical
industry was a phenolic based BMC, tiny UP
market
1,5
Thermoplastic
Compounding
Several large TP compounders specialised
in glass reinforced
10
For composites to penetrate the pipe
industry to any reasonable degree will
require a large industry effort
the Russian car producers have no
experience with SMC, trucks just start
a deficit in presses and technology
25
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
26
Challenges and Hurdles
to Success in Russia
•
High inflation of an average of 10% per year, 2011 expected 7 - 8%
versus a very strong Russian Rouble
•
Coming years economy maybe stagnant
•
Cartels and price collusions because of a non-functioning
anti-monopoly comittee
•
bad business climate because of corruption, permanent danger from
executive organs such as tax inspection, customs, fire inspection etc.
•
unsecured investment conditions because of bureaucracy and a lot of
red tape (missing one-window-stop)
•
very little support culture and attention to SME
27
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
28
Future prospects
for Composites in Russia
• Challenges
– Need for creating greater awareness of composites within industry
– Life-time cost saving, a usual argument for composites replacing
traditional materials, may be more difficult to sell in a country which
thinks in terms of job maintenance and early replacement repeat jobs
– Need for local production of high quality resins
• The composite producers, represented by their association “Union of
manufactureres of composite materials”, have recognized the
importance of National Standards for the composite materials
• a National Standard for “Pipes out of fiber-reinforced thermosets” ready
to be inked
29
Future prospects
for Composites in Russia
• in 2011 another 20 National Standard projects shall be prepared,
during the following years 30 - 40 p.a.
• the All-russian Institute of Aviation Materials has prepared the
following Standards:
– carbon fiber fabrics, technical requirements and testing methods
– nano-modified prepregs, types and main parameters
– nano-composite materials, binding nano-modified polymers, types and
main characteristics
• these Carbon specification initiative by GOST showing the focus on
catching up with progress on the international composite markets
30
Future prospects
for Composites in Russia
• Market potential
– two new furnaces of glass fiber in Russia: 20 kT and 45 kT will give rise to
new and additional applications because of client’s support and easier
access
– Given today’s low usage of composites in all major potential markets
there appear to be good prospects for continued double digit growth of
the composites market
– especially in selected fields connected with oil & gas
and with projects, which are strongly funded and supported by the state,
such as infrastructure in roads, railway, aviaition and housing construction
– given the pressure for localization the automobile industry will give strong
growth incentives, esp. quality-wise
31
Thank you for your attention
32