Swiss construction products manufacturer Sika is bucking a trend by investing in greater production capacity in Russia at a time when capital flight from the country is rife.
Even though the continuing low oil price and Western sanctions are squeezing Russia’s finances, the company said sales have increased "considerably" in Russia, and that the market there is expanding faster than "the market as a whole".
Sika said today it is opening a new mortar factory as well as a plant to produce concrete admixtures in Volgograd, in southern Russia.
Despite cautious forecasts for 2015, Sika is confident that there is long-term potential in Russia’s infrastructure and industrial construction sectors– Paul Schuler, Sika Regional Manager EMEA
And at an existing site in Lobnya, 30km north of Moscow, it is bringing on stream a new production facility to manufacture polymers for concrete admixtures.
The news comes after Russia’s Central Bank announced in May that net outflow of capital from Russia reached $32.6bn during the first quarter of 2015, and forecast that capital flight may reach $131bn by the end of the year.
Last year was worse. The bank said capital flight out of Russia hit $151.5bn in 2014, the highest annual total of capital flight since the bank started tracking the trend in 1994.
But Sika’s said today it is gearing up to be a market leader for concrete admixtures in Russia, where it already has three plants in St. Petersburg, Rzhev and Lobnya.
It said expanded production capacity within Russia would save on transport costs and import duties.
"Despite cautious forecasts for 2015, Sika is confident that there is long-term potential in Russia’s infrastructure and industrial construction sectors," said Paul Schuler, Sika Regional Manager EMEA.
"The new production facilities will contribute greatly to improving our cost structure in Russia, as transport costs and import duties will be eliminated."