Support The Moscow Times!

British Construction Equipment Maker Not Ready to Localize

A JCB excavator digging near the Sanoma Independent Media building. Vladimir Filonov

David Hill, the country chief of the world's third-largest construction equipment maker JCB, said Friday that Russia was not a big enough market for setting up a local production unit.

"Localization still remains a problem," he said at a conference.

His comment came months after the company opened a $100 million plant in Brazil in September to capitalize on that country's major spending on infrastructure improvements.

Despite having no production capacity in Russia, Britain-based JCB leads its rivals in sales of some types of machinery on the Russian market. Its excavators and loaders are a frequent sight around Moscow.

Volvo is the latest foreign competitor to start producing construction equipment — excavators — in Russia, with a grand opening in May. John Deere and Komatsu are some of the other international heavyweights that operate plants in the country.

Last year, Russia purchased $715 million worth of American-made construction equipment, up 10 percent from the previous year, according to the U.S.-based Association of Equipment Manufacturers.

In addition to the modest size of the market, choosing a location for a local plant would be a challenge, Hill said. He praised the Kaluga region as a "good place to invest," but said there was a risk of a labor shortage.

Hill also lamented the lack of opportunity to remanufacture equipment, saying it requires a change in Russian legislation. The capability to refurbish used products locally by renovating their components would make the machinery more affordable and be a positive step for the environment, he said.

Read more

We need your help now more than ever.

Independent media outlets and journalists in Russia are being increasingly targeted with “foreign agent” and “undesirable” labels, threatening the existence of the free press day by day.

Your donation to The Moscow Times directly supports the last independent English-language news source within Russia.