| Tier-one suppliers may be eager
to follow OEMs into Russia, but the experience of one suggests they could
face big problems in sourcing materials, writes Susan Brown.
After 15 years of working there, GKN Driveline has only been able to buy
a small amount of steel and some forgings locally.
On the face of it, Russia’s low wages and rapidly developing domestic
markets make it an attractive prospect. GM and Renault are already there;
Toyota and Nissan plants are coming on line. VW is also considering a
plant near Moscow. All will need reliable local suppliers.
“Russia’s steel producers just aren’t hungry for business,”
said GKN marketing director Alastair Kitson. “They don’t need
to be flexible and are unable to supply start-up low volumes.”
Kitson, speaking at a conference on Russia in London in June, said GKN
considered eight plants in detail as a source of hot rolled rounds, but
only one came up to standard.
Many local steelmakers, he said, just aren’t interested in requests
for high quality and low volumes, particularly when demand for steel is
high and plants already have large orders.
“The Russian industry needs more reforms before large plants can
operate economically,” said Kitson.
GKN has, however, had a success with the new Oskol Electrometallurgical
Kombinat plant in Stary Oskol, in the Belgorod region.
GKN sources 7,000 tonnes a year from it. Kitson said its quality is “better
than some German suppliers”.
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