Import replacement in road construction equipment: the situation is vague

Import replacement in road construction equipment: the situation is vague
Tags: Photo source:

How is the program of import replacement and state support in the sphere of production of road construction equipment and machinery being realised?

The necessity of replacing imported products with Russian ones started to be spoken about a little before the RF governmental statement, “On creation of the governmental committee on import replacement” was adopted in August, 2015. Agriculturists set the pace, while other branches, including producers of road construction machinery, supported. An ambitious target was then set concerning a decrease in the share of imported products on the important industrial markets and to increase the output of domestic production from 20% to 80% by 2020. As a result of the two-year-long import replacement activity the percentage of Russian goods increased to 50% and then froze. Why so?


An underwater bulldozer

Recently, the CTT exhibition was held in Moscow, during which representatives of companies shared their experience of updating their production and expanding the line of road construction machinery.

There are plants which have managed within 5-7 years to achieve the output level of 100 differently classed vehicles a year. It should be taken into account that a final vehicle is created for a definite customer. Thus, the Power of Siberia project required a large number of heavyweight pipe-layers. It usually takes several years to design such a vehicle, but some Russian companies managed to do it within a year.

Import replacement in road construction equipment: the situation is vague


These unique products are duly created, such as an underwater bulldozer which is able to work at a depth of 40 meters. It is a prospective project as such a vehicle might also be used for the Arctic shelf development.

Actually, economic difficulties, sanctions and the introduction of a car recycling tax for imported goods are known to give a positive effect. Involuntarily, the plants had to produce extra parts for the imported equipment, to produce the equipment of higher quality in Russia, and to expand their export to the countries where it is used, including Venezuela, India, Vietnam, etc.

— Recently we got an official letter from a widely known producer saying that our control modules, having been successfully tested on heavyweight construction equipment (the T-11 and T-9 bulldozers, and more) confirmed the opportunity of fully replacing similar imported units, — Alexei Kalenov, Head of Marketing Department of “Pneumostroymashina” JSC (Yekaterinburg) told our correspondent. — Thus, Russian producers might replace a rather large number of foreign assemblies and parts, including those that are branded.


State support — what is it like?

How did it happen that we had to buy equipment abroad? The answer is explicit. During “perestroyka” the Russian machine building industry lost ground significantly. During the period of the crisis and sanctions the state took a number of measures. Thus, the governmental statements of 2014—2015 actually banned the purchase of foreign construction equipment. Not all of it, of course, but by 2018 imported parts are to be fully replaced in the production of bulldozers, for example.

The measures of state support concerned the investment activity, the opening of new plants and updating old ones, and subsidising credit rates, etc. as well. The implementation of the lease subsidising program in 2017 will stimulate the purchasing of modern machinery and equipment. In May, the program of production development support provided a 50% allowance for expenses on primary materials, engineering design and logistics, etc. Also, the support of the Industry development Foundation is substantial.

Import replacement in road construction equipment: the situation is vague


Transfer problems

At the same time, pressure points began to come into view. Not all producers are included in the program. If the state were more attentive to the unique enterprises of the industry they may have become the key growth points for the Russian industry on the whole. 

According to Alexei Kalenov, there is some scepticism towards actual import replacement in Russia. Some well-known companies report the fulfillment of the program of Russian equipment production, but use brands from large western suppliers of hydrostatic transmissions, for example, for the sake of marketing. The situation in the industry is ambiguous.

Sergei Kataev, Marketing Director of the HydroNT company (Yekaterinburg) agrees with him:

— As the import replacement program in Russia was triggered very quickly, I do not think it is realistic to fully replace the imported products under the assigned terms by 2018—2020. Conditions for that have not been created in the industry as of yet, the expert remarks. 

Following him, a positive factor is that the quality of Russian products in many branches of the industry has improved. Some companies have started producing new equipment.

— Our company commercialised the output of hydraulic distributors and valves, and hydraulic power stations. But we use very high quality imported components which are not yet produced in Russia.  The thing is that state support is provided to those who show what they have achieved, but not for ideas and projects. Investors do not like to finance the future.

However, producers do not lose time and cooperate with universities, trying to solve such problems.


From import to export

Pavel Kuznetsov, Director of the Road machinery plant JSC (Rybinsk), is sure that an enterprise must work not only for the interior market, but should also export up to 50% of its products to steadily develop.

Certain products, such as hydraulic hammers, are very competitive on the world market, and are sold even to such distant countries as Australia that are already rich with equipment.

Last year was very difficult for many road construction companies. However, sales and output volumes started to grow, and serious financing was allotted for scientific and research work and production updating.

We can feel the state support of the Russian machine building industry. Also, stuff training, an adequate credit policy, introduction of special customs taxes and some other measures are required for the enterprises producing machinery and equipment. Otherwise they will stagnate and will not develop.