AEB Business Quarterly 07.2009

Business Quarterly

Sum

mer

200

9

Quality Information • Effective Lobbying • Valuable Networking

AEBA s s o c i a t i o n o f E u r o p e a n B u s i n e s s e s

MOVING FORWARD: New Technologies and FrontiersAn Overview of Russia’s Machine Building & Engineering Sector:

Adv

ertis

ing

The Crisis Management Toolkit • Project Management in Russia A Survey of the Labour Market • AEB Member News

Danya Cebus Rus LLC Subsidiary of Danya Cebus Ltd

Smart Construction

Contacts: 11/10 bld. 4, Letnikovskaya street, Moscow, Russia, 115114, Tel.: +7 (495) 796 9983, Fax: (495) 796 9984

Danya Cebus Rus LLC has been working • in Russia since 2001.

The Company is the subsidiary of interna� onal • Israeli Construc� on Company “Danya Cebus Ltd.” (www.danya-cebus.co.il).

Danya Cebus Rus executes all types of • construc� on projects of any complexity.

The scope of Company’s ac� vity bases on • implementa� on of projects such as hotels, trade and offi ce centers, roads, schools, kindergartens, residen� al construc� on.

Quality, safety and customer service are • the basic principles that guide the Company through its day to day business.

AEB BUSINESS QUARTERLY • Summer 2009

1

Dear Readers,

AEB SPONSORS 2009

Austrian Energy & Environment, Russia • Bank Credit Suisse • Bank WestLB Vostok • BMW Russland Trading • BP • CMS International • Deloitte • DHL International (Russia) Ltd • E.ON Russia OOO • EMAlliance • Enel Russia • Eni S.p.A. • ERGO Insurance Group • Ernst & Young (CIS) BV • Ford Motor

Company ZAO • Fortis Life Insurance • GDF SUEZ • ING Wholesale Banking • Investment Company IC Russ-Invest • ITE LLC Moscow • IN2 Matrix • John Deere • KPMG • Mercedes-Benz Russia • MOL Plc • Novartis Pharma • OBI Russia • Peugeot Citroen Rus • PricewaterhouseCoopers •

Procter & Gamble • Raiff eisenbank Austria ZAO • Sanofi Aventis Russia • Servier Pharmaceuticals • Shell Exploration & Production Services • Sheremetyevo International Airport • StatoilHydro ASA • SWIFT Scrl • Telenor • Total E&P Russie • Volkswagen Group Rus

CEO LETTER

Welcome to the Summer 2009 edition of the AEB Business Quarterly. Technology as a whole enables a society use the knowledge of equip-

ment and technique to adapt to and control its environment in an eff ort to ensure continued survival. Engineering being a very broad discipline, ranging from collaborations to small individual projects, is broken down into several diff erent areas, which include civil, electrical, mechanical and chemical engi-neering. With the rapid advancement of technology as a whole, many new fi elds such as computer engineering, mechatronics and nanotechnology are becoming increasingly important within the society. In this edition of the AEB Business Quarterly magazine, we shall attempt to take a look at Rus-sia’s Machine Building and Engineering industry – its achievements, trends

and directions likely to be taken by future developments, bearing in mind that by its nature, technology evolves hand in hand with the society in question; therefore, is likely to diff er from country to country with respect to the direction taken on by its advancements. Th is summer’s edition shall focus on hot top-ics such as Supply Chain Management; Crisis Management and the Latest Innovations within Russia’s Machine Building and Engineering industry.

Also, the Summer 2009 edition of the AEB Business Quaterly shall provide you with details of the AEB’s participation in the EU-Russia Industrialists' Round Table (IRT) as well as a detailed update on the hugely successful AEB Anti-Crisis Forum. In May 2009, the Association of European Businesses was invited by the IRT European Co-Chair, Mr. Andersen, to become an observer member of the IRT. Subsequently, the AEB supported the fi rst IRT Round Table – EU-Russia cooperation: protect invest-ments, avoid protectionism, at the St. Petersburg International Economic Forum on the 4th of June, 2009. Likewise, this issue features updates on the briefi ngs by HE Tomas Bertelman, Ambassador of Sweden to the Russian Federation, Igor Shegolev, RF Minister of Telecom & Mass Communications and Th ierry de Montbrial, President of the French Institute of International Relations (IFRI) and member of the Institut de France; updates on the HR Annual conference, which enjoyed great reviews, as well as updates on the two AEB Regional Investment Forums.

Permit me to take this opportunity to welcome all our new members and assure each and everyone that even in the face of the ongoing crisis, the AEB shall continue the quality lobbying that its members have grown accustomed to, in an eff ort to ensure a thriving business community where foreign and Rus-sian businesses exist together in a mutually benefi cial relationship.

On a fi nal note, I would like to wish you all the best in the months ahead.

Yours sincerely,

Dr. Frank Schauff Chief Executive Offi cerTh e Association of European Businesses

BusinessQuarterly #02-2009.indd 1BusinessQuarterly #02-2009.indd 1 15.07.2009 16:07:3315.07.2009 16:07:33


2

AEB BUSINESS QUARTERLY, Spring 2009

CEO Letter

Introductory words from Dr. Frank Schauff , Chief Executive Offi cer

of the Association of European Businesses in the RF 1

An Overview of Russia's Machine Building & Engineering Sector

INTRODUCTION: AEB's Machine Building &

Engineering Committee – The story so far…

Peter Kraemer, Vice-president, EMAlliance; Chairman,

AEB Machine Building & Engineering Committee 4

Remote Possibilities for the Engineering

Supply Chain

Dan McGrath, Communications Manager, DHL Express 5

The Crisis Management Toolkit

Harald Schedl, Partner and Shareholder and

Dr. Dmitry Sharovatov, Consultant, Simon-Kucher & Partners 7

An Interview with Adam Gonopolsky, Holder

of Chair “Techniques & Waste Utilization

Technologies” MUET;Deputy General Director,

SUE «EKOTECHPROM»

Interview by Nina Anigbogu, Publications Manager, AEB 9

Crisis Management – Structuring Chaos In The

Business Environment Of Energy Companies

Mirja Mutikainen, M.Sc (Tech.), MBA, Director,

Poyry Energy Consulting (Helsinki) 12

Professionals Ride Out the Crisis

Irina Kurganova, Senior Key Account Manager, Manpower 15

Project Management In Russia –

An Interview With Tebodin's Top Management

Tarkhanova Varia, Business Development Manager, Tebodin

Eastern Europe B.V., talks with Mr. Barendregt, Head of

engineering department and Mr. Senichev, Head of project

management department about Project Management in Russia 17

Russia's Railway Transport

Patrick PASCAL, Country President, ALSTOM Russia 19

Latest Trends In Russia's Machine Building

And Engineering Sector

Updates from DuPont's Top Management 20

CONTENTS

Waste Utilization Technologies, pg. 9

Latest Trends In Russia's Machine Building And Engineering Sector, pg. 20

AEB Updates, pg. 22

AEB Networking, pg. 24

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

mP

rop

ert

y o

f w

ww

.dre

am

stim

e.c

om



3

Association of European Businesses

in the Russian Federation

Executive Board

Carty, Tim

Cohen, Philippe (Deputy Chairman)

Faidy, Eric

Hartmann, Reiner (Chairman)

Helin, Erik

Munnings, Roger (Deputy Chairman)

Novoselov, Dmitry

Sakuler, Gerald (Deputy Chairman)

Ziegler, Christian

Council of National Representatives

Austria – Wolfgang Leitner

Belgium – Johan Verbeeck

Cyprus – Don Scott (Chairman)

Czech Republic – Alexey Abramov

Denmark – Aage V. Nielsen (Deputy

Chairman)

Finland – Timo Mikkonen

France – Philippe Delpal

Germany – Gianni Van Daalen (1st Deputy

Chairman)

Hungary – Laszlo Pocsajl

Ireland – Gerald Rohan

Lithuania – Natalia Bucelnikova

Switzerland – Fred Jaumann

The Netherlands – Maarten Pronk

AEB CEO

Dr. Frank Schauff

Publications Manager

Nina Anigbogu

Advertising & Sales

Olga Pavlyuk

Ul. Krasnoproletarskaya 16, bld. 3

127473 Moscow, Russian Federation

Tel.: +7 (495) 234 27 64

Fax: +7 (495) 234 28 07

Website: www.aebrus.ru

The AEB Business Quarterly is registered

with Rosohrancultura, ПИ No. ФС77-24457

Circulation: 16, 000 copies. All copyrighted

images are taken from www.dreamstime.com.

The opinions and comments expressed here are

those of the authors and do not necessarily refl ect

those of the Association of European Businesses.

CONTENTS

Remote Possibilities for the Engineering Supply Chain, pg. 5

Trends & Talent in Industry Manufacturing in CEE Countries,

Greece and Turkey after the global fi nancial crisis

By Nikita Kazakov, Senior Consultant, Business Training Russia 26

«Innovations – A Mandatory Condition Of Successful Business

Development In The Power Machine-Building Industry” –

Thinks Ivan Shevchenko, First Vice-President, Emalliance

Alexander Rabotnov, Advisor to the Vice President, EMAlliance 32

On the Social Scene

Networking 24

AEB Updates

AEB participation in the EU-Russia

Industrialists' Round Table (IRT)

Marie Rondelez, Events Director, AEB 22

AEB Open Event: The Anti-Crisis Forum

Nina Anigbogu, Publications Manager, AEB 23

AEB Committee Updates 29

AEB Member News

Member News 34

Appointments 37

New Members

New Members 38

Pro

pe

rty

of

DH

L



4 INTRODUCTION

In 2008, pursuant to the initiative of Austrian Energy & Environment, Siemens and PJSC EMAlliance, the AEB Machine Building & Engineer-

ing Committee was founded; thus, leading to the creation of a forum that enables AEB members contribute to the development of Russia’s state policy in the energy and machine-building industries. One of the most important goals of the Committee is to set up clear and transparent rules that shall stimulate the development of the Rus-sian market and provide equal access to market players. Th e Committee mem-bers intend to initiate the introduction of changes to Russia's environmental law, taking into account strict environ-mental requirements and interests of future customers. Th is should result in increasing the eff ectiveness and effi -ciency rate of power plants, as well as in new technology applications.

During the work process, the Com-mittee members discuss up-to-date prob-lems related to the development of the machine-building market in Russia and share information and international expe-rience in the machine-building industry.

Th e Committee members defi ned the following most important issues for review in 2009:

Environmental Code of the RFIt should be noted that the Ministry of Natural Resources and Environment

of the Russian Federation is currently planning to make changes to the envi-ronmental law. Th e main idea of the draft bill is to improve the legal grounds of the state’s environment regulation and to ensure environmental safety based on the balance of environmental and economic interests of the society, as well as see to the legal support of the citizens’ constitutional right to a safe environment, within the norms of the Environmental Code of the Russian Federation.

Th e main goal of the RF Environ-mental Code elaboration is to codify legislative and other legal acts that regulate environmental relations; to transfer from legal regulation by object to the integrated legal regulation of environmental relations; to fi ll the gaps; to ensure an approved development and application of the RF environment law, mineral resources law, legislative and civil, administrative and other laws, making sure that these are in compli-ance with the norms of internation-al environment laws; to found new legal institutions that meet up-to-date requirements of the society’s economic development and to apply direct action acts to the fullest extent.

In order to increase the perfor-mance effi ciency of the new environ-mental code of the RF, the Committee plans to arrange an event that will involve members of the Government, representatives of the Ministry of Nat-

ural Resources and Environment of the RF, representatives of the Committee of the State Duma of the RF for mineral resources, use of natural resources and environment, as well as representatives of various companies.

Creating conditions for the utilization of waste, taking into

account the European experience and high European environmental

standardsAll over the world, the industrial and domestic waste utilization problem is becoming more critical. Th e main advantage of waste incineration is the fact that the volume of waste buried is 10 times less.

In EU countries, the waste utilization problem is solved with the help of incin-eration plants regarded as clean compa-nies that meet the highest environmental standards and are located in town. Apart from the direct goal – to utilize wastes, the companies, regarded as perfect ones from the point of view of architecture, generate both heat and power to meet the needs of the town.

In the beginning of 2009, the Com-mittee arranged a round table discussion dedicated to the above mentioned issue, “Incineration? Landfi ll? Or to be Buried under Waste? Ecological Technologies in Domestic and Industrial Waste Utili-zation in Moscow”. More information on this event may be found in this issue of the AEB Business Quarterly magazine.

Th e Committee invites all interested members of the AEB to take an active part in the Committee's work processes. In early September 2009, the committee plans to organize a meeting, where par-ticipants shall brain-storm on the lat-est machine building market trends in Russia, taking an in-depth look into the emerging developments, whilst making all the necessary arrangements for the upcoming Round Table on Machine Building development perspectives, which shall take into account the new Russian WTO policy .

Peter Kraemer, Vice-president, EMAlliance; Chairman, AEB Machine Building & Engineering Committee

Peter Kraemer, Vice-president of EMAlliance

INTRODUCTION: AEB'S MACHINE BUILDING & ENGINEERING COMMITTEE – THE STORY SO FAR…

Pro

pe

rty

of

EM

All

ian

ce


5


OK, it’s true that the controversial statements above need to be tem-pered with a very healthy dose of realism. Many companies are suf-

fering as a result of fi nancing bottlenecks, drops in demand, inability to service debt obligations and other diffi culties. Capital expenditure programs have been slashed, workforces reduced and credit terms have tightened, putting the squeeze on resources. Th e forecast of a decline in 2009 GDP of 4-8% by the Minister of Economic Development and Trade in a May interview with Bloomberg under-scores the challenges that lie ahead. Oil has returned to 60 USD per barrel, but most of the oil majors have already sub-mitted conservative budgets based on much lower prices, and investment is unlikely to be resumed with much enthu-siasm until prices stabilize at a high level. With the exception of gold and one or two other commodities, the majority of natural resources which help make up the staple of Russia’s economy, are in a similar predicament.

For the transport industry, as a tra-ditional bellwether for the economy in general, this has put tremendous pres-sure on just about everyone. Growth has slowed dramatically, overall ship-ment levels on many routes are drop-ping, and smaller players with a weak cash position are hurting. Ignoring the outlook for fuel costs, which would merit a separate article (and perhaps a magic crystal ball that can predict the future), it’s safe to say that most players, if they haven’t started already, are going to be forced to adapt to a very new environment in the near future.

But there is a silver lining to this very dark cloud of doom: just a year ago, before the world economy got a very sudden reality check, supply chain man-agement and logistics was something of an afterthought for many companies in the engineering and manufacturing sec-tor in Russia. Transportation was seen as a necessary channel for getting growing volumes of equipment and parts into the hands of the customer as quickly as costs would allow, while supply chain management involved improving the visibility of the order-delivery process. But, with a few exceptions, they were not always seen as a strategic compo-nent of the business. Th e Supply Chain Manager of a leading engineering com-pany servicing the oil and gas industry noted that the recent past was all about service, about getting parts in to feed the demand driven by booming produc-tion. At that time, companies could live with excess working capital at multiple sites dotted throughout the country if it meant that they could comfortably build customer loyalty through exceptional service. Th e decision-making on orders was often made by sales managers or engineers, with transportation expense regarded as “peanuts”, secondary to the bags of cash on off er in the contract. Today, in an environment where cost control and cash generation are now seen as priorities for this capital inten-sive industry, the focus has begun to

shift. And, surprisingly, despite the fact that new trends in the engineering and manufacturing sector are likely to refl ect the lower volumes in logistics and sup-ply chain, companies off ering transpor-tation services could see themselves gain a much higher placing on management agendas for the foreseeable future. Th is will be particularly noticeable where customers are located in Russia’s remot-est areas. No-one reading this article will be surprised by the news that Russia is a very big country and the producers of natural resources are usually found in the deepest darkest corners of its territory. Any minor defi ciencies in a company’s supply chain are likely to be multiplied tenfold where the near-est international entry point is 3000 km away or where access is restricted by the river navigation schedule for around 7 months per year.

So why will logistics suddenly get its day in the spotlight?

Well, the fi rst reason is that companies, particularly Western suppliers of industri-al equipment, and the after-sales market that supports them, are now seeing a great opportunity to improve their cash fl ow by drastically reducing the excess inventory that sits throughout their network. Th e key challenge facing any service company today is that of weighing up the lead time

AN OVERVIEW OF RUSSIA'S MACHINE BUILDING & ENGINEERING SECTOR

REMOTE POSSIBILITIES FOR THE ENGINEERING SUPPLY CHAIN

Dan McGrath, Communications Manager, DHL Express

A fi nancial crisis is a wonderful event for the transportation and logistics industry. An economic slowdown which makes its presence felt in Russia is great for the country’s supply chain. A decline in demand among engineering and manufacturing customers in remote Russian regions? Fantastic!

Pro

pe

rty

of

DH

L



6

for essential inventory (with some parts taking from 6 to 12 months to produce and deliver) against their need for cash. Having millions of dollars of working capital sat in a workshop in Noyabrsk to eliminate a low risk of service failure will become signifi cantly less attractive as refi nancing debt at the “Bank of Hous-ton” becomes tougher. Many companies will have to revise their current models of acceptable inventory throughout their chain and to lose some more of the fat. At the same time, to compensate for this loss of buff er inventory, they are going to have to get much more creative in the way that they build their supply chains. Pro-duction forecasting will change. Sourcing or producing in country may become a more tempting option if quality levels can be maintained, with the added benefi t that local content is seen as an advantage by many customers now. And although consolidation is seen as an eff ective tool for reducing logistics expense, traditional methods of consolidation will be under review. Hubbing at one or two strategic regional locations in Russia (i.e. outside of Moscow) may become a preferred option to consolidating at origin or having

inventory on site. Some companies may see advantages in freeing up inventory in exchange for quicker modes of transport. Customs clearance will become even more critical to a company’s competitive positioning, as closer attention is paid to its impact on lead times. With the help of IT systems, companies will leverage better visibility on shipments and achieve economies by reducing the number of suppliers in their supply chain.

Secondly, the revised capex plans of major Russian producers are going to lead to a steady rise in the average age of fi xed assets. For the after-sales market, this signals more demand for maintenance contracts and warranty services. Th ey, too, will have to combine the demands of lower inventory with service commitments. To achieve this, they will have to work closely with their suppliers in the transportation sector to identify the infrastructure that will off er the diff erent levels of service that balance the requirements of their customers.

For their part, transportation com-panies are going to have to adapt their game. Express logistics companies, for instance, will see their infrastructure

play an increasingly important role, with geographical coverage becoming ever more critical. Th ey will have to maintain competitive prices while ensuring the quality and reliability that helps custom-ers to iron out the risk in their supply chain. And they will have to operate with a new level of fl exibility that allows them to cater to an increasingly diverse range of customer requirements, employing a broad off ering of time defi nite, day defi -nite services and integrating customs clearance into their service off ering.

Challenges remain, including the sheer geography of Russia and the devel-opment of its transportation infrastruc-ture, the specifi c Russian operational and language requirements of IT sys-tems for vendor management and even, in some cases, the weather! For many, this will necessitate having more inven-tory on site than many service compa-nies are used to around the world. But every challenge brings an opportunity, and, despite the negative economic cli-mate, this is indeed a wonderful time for transport and logistics companies to demonstrate their value to the engineer-ing and manufacturing sector.



7



During periods of economic pres-sure, two types of managers emerge; those aff ected by the negative climate and those who appreciate the reality of the marketplace and regardless, strive onwards. Companies that have a plan to fi ght their way through the down-turn and prepare for the upturn will head the list of winners; and in every fi ght, there are always winners.

In an economic downturn, manage-ment usually focuses on cutting costs. While this is important, reducing costs by 15% is not going to save you if your sales volume dips by 30%. We are not in a cost crisis; we are in a revenue crisis.

A look at Profi t and Loss (P&L) shows that only a plan covering all profi t drivers, cost and revenue has the stability required to guide a company over the next couple of years. Realisti-cally, the objective cannot always be on improvement and instead should focus on avoiding further decline.

Management needs a plan that combines tactical and strategic ele-ments. Tactical actions must be low cost and off er immediate results. Th e

infl uence of labor laws, union deals and redundancy packages on P&L can take several quarters. Th at is too long. Th e strategic dimension is important as companies must position themselves to benefi t from the rebound of the econo-my, the beginning of which is probably less than a couple of years away.

As consultants with a global pres-ence, we meet several dozen CEOs every week. From these discussions we have developed a toolkit of key tactical and strategic actions that if combined smartly into a comprehensive overall program, will help an organization to weather the fi nancial storm and emerge a stronger player than before.

Actively reduce volume/outputSimple mathematics proves that profi t-wise, a volume cut is less damaging than a price cut. Smart companies try to actively reduce volume and aim to keep prices reasonably stable rather than the other way around. In Novem-ber, ArcelorMittal announced it would drastically cut its monthly global pro-duction and expected to see the ben-efi ts in the spot market prices.

Give discounts in kind, not price reductions

Price cuts may be unavoidable in a downturn, yet they should be imple-mented as discounts in kind rather than as direct price discounts. A boat builder is giving his retail partners one free unit for every fi ve boats they buy. While this still equates to an actual discount of over 16%, volume revenue and margin remain higher than if 16% had been knocked off the products directly.

Re-deploy offi ce staff into the sales force

A common view is that offi ce staff are not good sales people. In many cases this might be true, but not in every instance. One could argue that in the current downturn there is not an over-capacity in production, but an under-capacity in marketing and sales.

European wholesale company Würth, for example, moved 10% of its offi ce staff into the sales force during the 1993 crisis, with successful results;

THE CRISIS MANAGEMENT TOOLKIT

Harald Schedl, Partner and Shareholder andDr. Dmitry Sharovatov, Consultant, Simon-Kucher & Partners

When an economic crisis hits, good planning can see a company through the course. Great planning; however, will see a company ready itself for the upturn.

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m



8

and we've heard similar stories recently, both in the service and more indus-trial sectors. Th is approach can come in many shapes and forms, from giving offi ce staff short and intensive training and then letting them work off a 'hunt-ing list’ of potential new customers, to teaming them up with sales veterans in a particular territory to take administra-tive work off the sales reps' shoulders.

Other roles include sending techni-cal staff to discuss the development of customized technical solutions with customers and manning trade shows in new markets. More people will typi-cally achieve more sales, especially if you have the resources to attack new segments/markets.

Use customized solutions to address your customers' anxieties

With customer anxiety exacerbated, creative suppliers have the chance to shift priorities. For example, Georg Kofl er has just launched Kofl er Ener-gies AG in Austria; a company that covers the complete cost of any energy-saving investments and guarantees cus-tomers a 10% energy cost saving. Th e company receives all savings above this level for 10 to 15 years. Th is is an exem-plary business model that addresses specifi c customer needs and fears and should work well even in the current climate.

Strategize to meet the upturnTh e strategy dimension must also be part of the overall management pack-

age and companies must address three exemplary questions:

How can I diversify my business further to reduce the dependency on

particular segments or markets?It is obvious that the re-deployment of sales resources from traditional markets with slowing demand into completely new segments (whether they are geog-raphies or customers) can be signifi -cant. Th e strategic dimension; however, is to carefully select which segments to focus on from a mid-term perspec-tive. For example, one of the leading manufacturers of kitchen equipment for restaurants is now expanding into

the hotel segment and we see suppliers to the truck industry deploying sales teams to emerging markets in Eastern Europe and the BRIC.

Can I take the competition out of the market?

Many companies were smart and horded cash or secured access to debt during the recent boom years. Th ey are now in a perfect position to con-duct the necessary due diligence and buy selected competitors in the mar-ket. BA and Ryanair are cases in point, with discussions with Qantas and Aer Lingus respectively, as is Microsoft and its renewed pursuit of a part of Yahoo.

Can I use the current market price for a share buyback programme?

Tool hire fi rm Speedy Hire announced extensive share purchases of its top management a few months ago. Such actions signal the strong belief of man-agement in the future of the company and puts investors in a position to ben-efi t from the rebound. It also shows management's confi dence in the suc-cess of the crisis strategy it has put together.

Th e right combination of activities in a well coordinated package is the key to ensuring quick wins and better positioning in the mid-term. Successful managers have the vision to develop a clear plan.


Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m


9



Could you tell us how the recycling of waste products is organized in such an enormous city as Moscow. What are the main streams of municipal waste prod-ucts; is Moscow now ready to solve the problems facing it in this sphere?Moscow is a European city and recy-cling problems here are solved in the same way as they are in all European cities. Th e annual total amount of waste products in Moscow is approximately 5,300,000 – 5,400,000 tons. All industrial technologies used in the world are being applied in Moscow today. Moscow has garbage sorting and garbage process-ing factories and a two-tier system of removing garbage, which involves the transfer of garbage from small sized gar-bage collecting trucks into large vehicles for transporting garbage from one point to another. Moscow has modern, eco-logically safe incineration factories. Mos-cow’s waste management services take the garbage to collection ranges, which are not dumps, but well-equipped tech-nical facilities for burying solid house-hold waste; the primary goals facing municipal services are being solved with the use of the aforementioned technolo-gies. Th ere would be no problems if it were not for the shortage of available land for garbage collection facilities in Moscow and its regions, which will be exhausted completely by 2014. Th ere-fore, it is necessary to change accents in processing garbage. First of all, we must

switch to garbage industrial process-ing, which will replace the practice of burying garbage. Moscow’s authorities have analyzed these opportunities and off ered the following scheme (Diagram 1) for the processing of incoming gar-bage.

First, we must determine the resources that the territory possesses.

Th en, we must determine the amount of energy in the form of heat and electricity that can be allocated for garbage processing; after all, con-veyors do not turn by themselves, they need energy; Moscow, however, has an appreciable shortage of energy (there are new buildings that can not be occupied due to the absence of elec-tricity). So, the issue becomes - how much energy can be spent on process-ing garbage? What is the capacity of the garbage disposal systems? How much and what type of water is necessary to process garbage? All these engineering systems should be harmonized with the requirements for garbage disposal. Today, about 81% of the solid household waste in Moscow is buried and 19% of all garbage is burnt or recycled. As we run out of land for garbage burial sites, the picture will change. Th e cur-rent volume of 5,300,000 – 5,400,000 tons will have to be restructured by

2012/14. An analysis of the biological processing capabilities showed that 18% of the waste can be biologically pro-cessed. An analysis on the possibility of applying engineering processes showed that 27% of the household garbage can be recycled; while garbage disposal sites will be operating at a maximum capacity of 13%. Th ere remain another 42%, which we don’t know what to do with. To maintain equilibrium, we must choose a type of garbage processing technique that is applicable to Moscow. A decision was taken to install modern, ecologically safe garbage disposal facto-ries/incineration plants, in commercial areas, as far away from residential areas as possible. Th ese modern and ecologi-cally safe garbage disposal plants will be responsible not only for garbage incin-eration, but for the simultaneous gener-ation of energy in the form of electricity and heat. Th is is the future of the city of Moscow. In Moscow, a new govern-ment program makes provision for the establishment of recycling enterprises near incineration plants, so that the energy produced by the plants during the incineration can be used to recycle other types of waste products. Th is is a worldwide state-of-the-art integrated approach, which Moscow is also fully in tune with.

INTERVIEW WITH ADAM GONOPOLSKY, HOLDER OF CHAIR “TECHNIQUES & WASTE UTILIZATION TECHNOLOGIES” MUET;DEPUTY GENERAL DIRECTOR, SUE «EKOTECHPROM»

Interview by Nina Anigbogu, Publications Manager, AEB

Adam Gonopolsky, Holder of Chair “Techniques & Waste Utilization Technologies” MUET; Deputy General Director, SUE «EKOTECHPROM»



10 AN OVERVIEW OF RUSSIA'S MACHINE BUILDING & ENGINEERING SECTOR

In the Russian Federation 90% of house-hold waste is taken to dumps. This meth-od has been recognized as ineffi cient and dangerous to the environment. How much time is required to replace these dumps with incineration factories? I can say with certainty that not 90% but 97% of all household waste products are dumped. It truly is an ineff ective and dangerous method. I cannot give you the fi gures for Russia as a whole, because this is a question of fi nance (each region has its own resources) and given the current economic crisis, it is diffi cult to plan for the implementation of expensive and complex projects such as an incineration factory. However; I can say that according to the Scheme (Diagram 1), by 2014, Moscow will reduce the volume of buried household waste by six fold.

Those who favour the construction of incineration factories say that this meth-od allows one to solve environmental problems, improve sanitary norms and make this sector a profi table one. What income should we expect from the con-struction of such factories? How soon will they be recouped? Incineration factories are heating plants fueled by waste. Th ey produce electric energy and heat, which serve as an additional source of income. Th ese are technologies that have already been employed by fully functional factories in Moscow; these technologies allow the neutralization of ash and slag waste and their subsequent conversion into various types of construction materi-als, which are an additional source of income. As of today, the money invest-ed into such factories can be recovered within 10 to 12 years. If the energy output of these factories is increased, the period will be reduced by approxi-mately one and a half times.

Is there a correlation between the size of an incineration factory and its economic viability? Th ere defi nitely is a correlation! Th e larger a factory, the shorter the period of time taken to recover the money invest-ed and the lower its operation cost and maintenance and the cost of heat and electricity produced. Th erefore, if we take 3 factories with a capacity output of 300.000 tons and a factory with a

capacity output of one million tons per annum, the latter will be at least 25% cheaper than the former option.

Some say that incinerators do not destroy waste products completely, but only decrease their volume (by 90%) and weight (by 60%). One also hears that ash and emitted gases (dioxins, for example) are pollutants and cause acid rains and a number of diseases. If no gases are emit-ted, do these harmful substances remain in the ash. If so, how can we solve the problem of these residual eff ects of burn-ing? Is there a reasonable and economi-cally justifi ed alternative to burning?Indeed, the volume decreases tenfold and the weight decreases by approxi-mately 4 times, that is, not by 60% but by 75%, waste products are not destroyed completely because they also contain substances that do not burn, for example, stones, sand, metal, etc. Th e ash is neutralized at the fac-tories so that the remaining 25% of the waste product contains just 1% of

ash (the remaining 24% is slag). Th is means that only 1% of the waste prod-uct requires neutralization; all factories without exception not only in Russia, but all over the world have a division, which deals with the neutralization of ash. Th ere exist chemical methods of neutralization (with the help of humic mineral concentrates) and mechanic-chemical methods (which neutralize ash to a degree, defi ned by ecological standards). Regarding the issue of gas emissions, these occur when there are no gas purifi cation systems in place; in all modern factories, a standard gas purifi cation system accounts for half of the factory’s construction cost. Inciner-ation factories all over the world, work in conformity with their corresponding national ecological specifi cations. Th ere seems to be no correlation between emission and human disease. Th e lon-gest life expectancy is in Japan, which has 2,000 of the 4,000 incineration fac-tories in the world; thereby, showing that there is no such correlation.

Diagram 1: Alternatives of municipal waste handling in Moscow. Total volume of wastes: 5,300 thousand TPA

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m


11



As we search for alternatives to waste incineration, one must bear in mind that alternatives must be selected based on the region in question. Each region is unique. For example, St. Petersburg has several nuclear power stations which produce an ample amount of energy, while Moscow buys its energy from other regions. Secondly, St. Petersburg has numerous heavy industry factories, which are capable of processing raw materials (both primary and second-ary materials), as opposed to Moscow where 85% of all industry is high-tech assembly manufacture; virtually all raw materials’ processing facilities have been relocated outside Moscow. Th erefore, as of today, Moscow has no economically justifi ed alternatives to burning, while for St. Petersburg, with its industry and energy capabilities, these do exist.

Are there any waste-free technologies, at least at the experimental stage? Being an engineer I can tell you that there are no waste-free technologies. – At all? Yes. Waste products are pro-cessed, which leads to the production of secondary waste products; these, when processed, lead to the produc-tion of other waste products and it goes on and on. First of all, this process is very expensive. Secondly, there is a relationship between the number of times waste is processed and its toxic-ity – the more, the toxic.

Do incineration factories use energy? What research is being done to deter-mine opportunities for the use of alter-native energy sources in this area? Th e incineration factories do not use any fuel or energy; they are powered by waste. Th e waste/garbage produces as much heat as peat, slates and certain kinds of brown coal. No additional fuel is needed; this is why the number of incineration facilities across the world doubled over the last decade. Th e research on alternative sources of ener-gy in this area focuses on increasing energy effi ciency, in other words, how to better utilize the energy produced by the emitted gases (or how better to use the heat obtained and how to increase the production of useful energy).

A lot of countries follow the “Polluter Pays Principle.” Can this principle be

applied to ecological housing construc-tion? Can a system of installing mini-incinerators in houses and apartments be introduced in Moscow? Or any other system, where the residents sort out the garbage themselves?

Yes, this principle is being applied – the polluter pays! Th e installation of mini-incinerators in houses and apartments is not possible, because it requires the use of fi re within the housing structure, which is a major fi re hazard, forbidden by all fi re rules.

I can explain why introducing the household waste-sorting system is not possible. My students and I conducted a study in which we found out that only 8% of all housing garbage could be recycled. Half of the household garbage can not be reused. After it goes down the refuse shaft, passing all the fl oors of a multi-storied building, into a container, it is loaded onto a garbage truck and delivered to a waste-processing station. At this point, only 8% of the garbage collected is recyclable; all other garbage loses any commodity appeal. In coun-

tries with extensive recycling practices, apartment buildings and houses are low-rise and have no refuse shafts; therefore, the recycling of garbage is economically justifi ed. In cottage apartments, garbage recycling is possible because the garbage does not pass through a refuse shaft; therefore, it can be sorted.

Various departments are involved in recycling and processing of waste prod-ucts (municipal services, transport orga-nizations, and sanitary inspections). They also employ various professionals (engineers, ecologists, chemists, physi-cists). Is there a model (or system) that allows one to eff ectively bring together everyone who is involved in the process of reducing, reusing and recycling? Yes, such a system exists – the city housing and communal services system. Th ere are numerous supervising bodies and organizations engaged in practical activities and I assume that the absence of a crisis similar to that of Naples is a clear indication that this system func-tions well. Th e three R principle (reduce, reuse, recycle) is also in place.



12

The fi nancial and economical cri-sis has hit the Russian economy hard, causing tough times for the government, business sector and

households. Export industries have become a key factor to keep the wheels running in the country, energy being recognized as one of the key elements. Simultaneously the government's plans to liberalize Russia's wholesale energy market have been delayed.

Russian energy companies face sig-nifi cant challenges at the moment, and their in-house approaches seem to be unsuccessful at tackling the situation. Th is article describes how a business planning approach derived from Scena-rio Analysis can be adopted for mapping the uncertain future of energy compa-nies both in the short and long run.

There are major challenges regarding industry reform, investments and demand

A new model and structure for the energy market was introduced in Rus-sia in order to increase the attractive-ness of the industry to strategic inves-tors; to allow replacement of obso-lete generation facilities; to improve competitiveness of the energy industry; to implement new features and new opportunities in energy trading and to rewrite the role of governmental authorities.

As a part of this development, the government decided to develop plans to gradually liberalize Russia's energy market (Diagram 1). Until today, 30 percent of the energy market had been liberalized and this share increased to 50 percent by July 1st, 2009. Th e fol-lowing diagram (Diagram 1) shows the pace of realized and planned tariff de-regulation for industrial customers.

It is widely assumed that power market liberalization will continue at some stage, bringing a lot of uncertain-ties to the market players. Major tur-bulence comes from the development of capacity market regulation. Th e transitional capacity market has been launched for the period that started in July 2008 and will last until December 2010, but it lacks transparency. Th e long-term capacity market model is still unclear, while for strategic investors, investing in generation, the competi-tive capacity market was expected to be an important source for investment return. Th ere are also industry players, who state that the capacity market in Russia is not needed at all, referring to the structure of power markets in the Nordic countries and continental Europe.

In the transitional capacity mar-ket, there are various mechanisms for capacity trade, some of them include obligations to implement an invest-ment program, i.e. new capacity com-missioning or modernization under

the agreed schedule. Some generation companies have to meet these obliga-tions under the contracts for delivery of capacity, and penalties have been set for the delayed commissioning.

Simultaneously, many power gen-eration facilities are technically obso-lete or becoming obsolete. In order to guarantee the security of energy supply and continuity of operations, the companies need to invest in asset refurbishment and replacement. Th e current power tariff s are by far too low to encourage investments. Also, the generating companies are facing a substantial increase in investment costs due to diffi culties in obtaining inexpen-sive fi nancing.

Lack of fi nancing will force the companies to continue with the cur-rent equipment, with only most urgent refurbishments and replacements of obsolete equipment. In Russia, there is good experience regarding power plant operations and maintenance (O&M); however, there is insuffi cient expertise in new investment projects. Th is may lead to non-optimal, even wrong selec-tion of vendors and technical solutions in this pressurized situation.

Regarding strategic investors, the extremely non-favourable develop-ment has been caused by the economic crisis, which has negatively aff ected industrial production and led to a decrease in energy consumption. Th e shrinking employment base combined

CRISIS MANAGEMENT – STRUCTURING CHAOS IN THE

BUSINESS ENVIRONMENT OF ENERGY COMPANIES


Mirja Mutikainen, M.Sc (Tech.), MBA, Director, Poyry Energy Consulting (Helsinki)

WH

OLE

SA

LE

MA

RK

ET

RE

GU

LAT

ION

NCP “Council of the Market”

self-regulation bodyof the wholesale power market

commercial operator ofthe wholesale power market

JSC RAO UES of Russia

Ministry of Industry & Trade

Ministry of Energyfuel & energy complex

PO

WE

R S

EC

TO

R

RE

GU

LAT

ION

Closed/reformed entities

Operational entities

JSC ”Administrator of the Trade System”

Ministry of Industry & Trade

Ministry of Energyfuel & energy complex

Closed/reformed entities

Operational entities

Ministry of Industry & Energy

New lobbying unions & organizations emerged, e.g.,

NCP ”Council of power generation companies”

RosenergoFederal Energy Agency

of the Ministry of Industry & Energy

”NCP ATS”

Legend:

Diagram 1.


13


with price increases is already impact-ing demand projections. Th e electricity consumption for January-April 2009 declined 5.9 percent year-on-year. Th e recession is also causing an increasing amount of consumer non-payments to the power supply companies. Th is may extend to non-payments to the grid companies and generators. Should the projected price increases go into eff ect, consumption will doubtlessly drop further and non-payments increase. However, a gradual price increase is inevitable for achieving the long-term targets of the energy industry.

In case of combined heat and power production (CHP), the business envi-ronment is even more complicated. In many cases, the company running a CHP plant does not run the district heat business, i.e. does not have right to actions for developing the heat econo-my. Th erefore, it can not improve the effi ciency of heat load, which would contribute to the effi ciency of electric-ity generation.

Th e upstream value chain, i.e fuel supply, is not without major problems either. Th e gas market is still heavily monopolized and not at all transparent. Th e solid fuels are subject to transpor-tation tariff s, which are government set and may vary.

Renewable energy plays a negli-gible role in Russia as there is a lack of incentives and investors. In the area of energy effi ciency, there is considerable potential for development; however, this cannot be realized due to a lack of expertise and the governmental sub-sidies policy. Th e nuclear generation assets remain under the government's tight control.

Energy companies suspend planned investments and renew

their strategiesAs a consequence of the present situ-ation, generating companies have to

suspend and reduce their investment programmes. However, investors that have signed the contracts for delivery of capacity have to meet their obli-gations. Th ey attempt to renegotiate the schedules and insist on further regulation development by lobbying respective authorities. Th is eff ort may end with a success for the individual company, but with an industry level failure, as recent changes in authorities have brought in new people with new interests and – in some cases – without a deep understanding of the industry. the Government offi cials at all levels continue to have considerable power in energy industry issues.

All energy companies are analyzing their future business environment and markets from the point of view of the present fi nancial and economical crisis. Th is should lead to a signifi cant adjust-ment of strategic plans for the energy business and asset development; unfor-tunately, in most cases, the companies do not have such plans. In the future, the companies need to clearly defi ne what their core business is.

Th e initiation of changes can be extremely tedious as energy companies have become increasingly bureaucratic and their business processes are very often ineffi cient. Additionally, the Not-Invented-Here (NIH) syndrome is com-mon among many Russian companies: "We know our internal problems better than any outsider". As a consequence, only very few companies have really tried to address the long-term strategic problems by any analytical means.

Some of the key elements of pre-dicting the future in the energy compa-ny are the price models and forecasts. Th e source of price forecasts should be an independent party, with a thorough understanding of the Russian energy business, but without any other busi-ness interests in the market. At the moment, this is often not the case,

making business planning even more diffi cult.

Cost cutting is in most cases a natu-ral solution to keep companies alive, and a majority of Russian companies start by cutting down on labour cost. However, power production is not a labour intensive industry compared with for example, the service sector. Th erefore, cost cutting potential should be searched for in other areas, like gen-eration process effi ciency.

Crisis Management – addressing main problems, focusing on key actions

In order to structure the chaos in the business environment for business planning purposes, we want to intro-duce a concept for Crisis Management. Th e concept is based on scenario analy-sis, i.e. describing "alternative futures", or scenarios, in a meaningful way. Sce-nario analysis can be used either to formulate a strategy or a plan, or to test existing plans against alternative future outcomes.

Th e scenarios are formed based on certain assumptions, identifi able trends and uncertainties. For each scenario, key indicators and triggers will be iden-tifi ed, in order to be able to estimate, as time goes by, which scenario is becom-ing more probable, which less probable, or do we need totally new scenarios. To get some practical value out of these scenarios it is crucial to defi ne a company vision for its business in each scenario. Th e visions will be com-pleted by constructing respective road maps and building decisive fl exibility to action plans.

Scenario thinking and “decisive fl ex-ibility” of action plans can be used both in the short and long term approach to crisis management. In the short-term approach, a few “mini-scenarios” are built in order to capture the most rel-evant short term uncertainties. A set of triggers or indicators will be connected with each scenario – they are evidenc-es, which increase or decrease the prob-ability of that scenario. In the long-term approach to strategic planning, relevant long-term scenarios about the business environment will be constructed, and a set of weak signals and early warn-ing indicators are used to estimate the changes in the probability of a certain scenario.


9590 85

7570

5040

20

00

20

40

60

80

100

1.01-30.06.2007

1.07-31.12.2007

1.01-30.06.2008

1.07-31.12.2008

1.01-30.06.2009

1.07-31.12.2009

1.01-30.06.2010

1.07-31.12.2010

1.01.2011

%

Figure: Maximum share of the power energy traded to industrial consumers at regulated tariff s (%). Source: The RF Government Decree, 30/11/2006.




Th e entire process consists of fi ve main phases, which are illustrated in diagram 2 below.

In the fi rst phase, the scope of the planning will be defi ned, i.e the busi-ness or businesses to be focused on and the time frame for planning. Th e key assumptions about the company and its future business environment will be described and agreed upon as “certain-ties”. In order to defi ne key uncertain-ties, often contradictory trends aff ect-ing the business environment of the company will be identifi ed and listed.

Th e second phase of the process, i.e. Scenario building, is the most impor-tant and time consuming. Th ere is no right or wrong answer to the ques-tion, “What are the main scenarios for our business and how we can describe

them”; broad and deep industry knowl-edge is needed to capture the essen-tials of the business environment and to summarize them as value-adding descriptions of the uncertain future. Th e main activities in phase 2 are

Deriving relevant uncertainties from ■

main trends; Choosing scenario themes (dimen- ■

sions); Building, describing and naming sce- ■

narios.

Pöyry’s global scenarios – four views of the energy world

Pöyry has used the scenario-based approach in the global level for helping clients to evaluate what would be the best way forward. A number of possible near and mid-term scenarios have been outlined that could emerge from current vola-tile and unprecedented conditions in global energy markets. For each scenario, the most probable outcome has been identifi ed, consequences predicted, and for each client case a set of actions have been identifi ed.

Pöyry’s four possible world views emerging from current global market have been named as Slow-motion Shock, Supply Confl agration, Demand Crash and Technology Heaven. As

Demand Crash describes global recession with a signifi cant reduction in consumer and industrial demand and fall in prices; thus, slowing down investments, the Technology Heaven describes the green future in which renewable targets will be increasingly met, new technology will take a sub-stantial role and renewables will take pressure off fossil fuels.

Many of Pöyry’s clients are at the moment very uncertain about what kind investment decisions they should make, if any. Th e scenar-io work has helped companies and governments to develop their energy strategy.

In the Russian energy sector, the key scenario themes for each company or business will vary. However, we will most probably identify themes related to market liberalization, access to cost-eff ective capital and development of demand.

For each scenario, the target vision for the company or the business should be described with the following key characteristics

markets and customers of the com- ■

pany;products and services of the com- ■

pany;operating model; ■

target performance (short term) / ■

strategic objectives (long term).Roadmaps would be planned to

reach target performance individually for each scenario, assuming that this scenario will happen. Some triggers and indicators could be illustrated in the roadmap as decision points. Action plans would be made to a relevant extent, to complement roadmaps and decision trees.

Russian energy companies will benefi t from Pöyry’s Crisis

Management Concept Th e challenges of Russian energy com-panies are tremendous. As Europe's leading management consultancy com-pany specialised in the energy sector, we in Pöyry can support the companies in structuring the chaos and planning for the future. We off er a full range of services covering the entire lifecycle of client investment projects, combining in-depth industry expertise and best practices in management consulting, engineering and site services. We are independent consultants focusing on the changes in the energy market, with our deep insight and understanding from complex interactions between markets, policy and technology.

1.

Scope and assumptions

2.

Scenarios

3.

Target performance

5.

Action plans

4.

Road maps

* Tomi Laamanen, D.(Eng.), Ph.D.(Econ.). Professor Laamanen holds a professorship at the Institute of

Strategy and International Business at the Helsinki University of Technology. Professor Laamanen is

a board member and advisory board member of several Finnish technology-based fi rms and profes-

sional associations. He has acted as a strategic advisor to fi rms operating in the banking; information

and communications; media; metals and machinery; pharmaceutical; and pulp and paper sectors.

According to Professor Laamanen*: ”Scenario planning is an excellent way to help structure and systematize management’s thinking about the future and the diff erent situations that the future might hold. The fact that scenario techniques were fi rst successfully used in the energy industry by Shell during the 1970s oil crisis shows that the methodology is well applicable to the special circumstances of the energy industry. The methodology has, however, since then been extensively used in almost all kinds industries ranging from pulp and paper to metals and from telecommunications to software.”

Diagram2.

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m


15



The current economic crisis has aff ected all of Russia’s industries, including the Machine Build-ing and Engineering sector. Th e

slump in production, rollback of invest-ment programs and a plunge in sales were the major signs of trouble in the Machine Building and Engineering sector. To survive and stay competi-tive, many enterprises turned to radical measures such as slashing payrolls and sending employees off on unpaid vaca-tions (euphemistically called “enforced idle time”).

Trims and cuts regardless, the short-age of highly skilled employees and core professionals remains a key prob-lem plaguing the industry. Recruiting top-class professionals for the country’s leading enterprises is still a formidable challenge. What are the reasons for the shortage of highly skilled professionals? Let’s go over a few of them.

Firstly, the precipitous drop in pro-duction that the Russian industrial enterprises experienced in the early half of the 1990s led to a signifi cant decrease in the number of plants and factories. Confronted with the crisis, many professionals took up completely diff erent career paths, to try their luck in other industries. Th e current crisis notwithstanding, the demand for engi-neers and “shop-fl oor wizards” is still strong, unexpectedly, it turns out that most of the professionals who had quit their jobs at the plants under duress, lost the feel for their professions, many

of them unwilling to retrace their steps to their former employers. Major mul-tinational corporations, particularly, in the auto industry that until recently, had been developing the Russian mar-ket, have discovered that they have a very hard time staffi ng their plants with the kind of professionals they need. One gets an impression that qualifi ed professionals are treading the vicious circle – quitting one company for another, only to switch to a third.

Secondly, the social standing of engineering professions fell dramatical-ly with the collapse of the Soviet Union. Today, young people are mobbing col-leges and universities, pursuing careers in economics, law, management, and similar occupations. It is indeed a rare sight these days to run into youngsters earning a living as engineers. Th e aver-age age of the engineering work force is around 45 years, with top professionals averaging 53, a year and half older than the average age fi ve years ago. Th e key priorities facing the government and business are, therefore, stimulating an infl ux of school graduates into engi-neering professions, changing the shop fl oor workers' image of enigineers and developing a totally new educational system to train a highly needed labor force.

Overhauling the higher engineering education system in Russia is a priority. Most of the technological processes and the curriculum that the universities and colleges rely on to train their stu-dents were adopted more than twenty

years ago. Th ese are out of touch with what the modern business needs today. Th e above can be viewed as the chief defi ciencies of the nation’s higher pro-fessional education system.

Unless this situation is turned around soon, with a helping hand from the government and the business com-munity, the next generation of engi-neering professionals could be lost. Th e engineering educational institutions are virtually unconcerned about their graduates’ professional destinies in the labor market and receive no feedback from them. Th is shortfall can probably be corrected by establishing contacts with leading Russian and multinational employers and allowing undergradu-ates to have the opportunity of practi-cal training at plants and factories well before graduation.

An important point is that training, for example, an engineer at a Russian college or university takes an average of almost fi ve years, a long enough time for technologies that the students are going to use upon graduation to be improved or replaced completely and many times over. Th erefore, it is most critical that the universities address the issue of upgrading their equipment more frequently.

Th e lack of professional top manag-ers with keen understanding in engi-neering does have an impact of the overall situation. More than a few of the top managers, particularly, in elec-trical engineering, have been coming and going much too often in the past

PROFESSIONALS RIDE OUT THE CRISISIrina Kurganova, Senior Key Account Manager, Manpower

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m




15 years, staying in high positions for periods shorter than the length of the investment cycle into the industry. To make matters worse, most top man-agers lack the practical experience in engineering, which is the reason why, with investments almost at a standstill, little attention if any is paid to their enterprises’ engineering and techno-logical problems, even if there is money to move them off .

Also, employers have to deal with problems originating from inadequate reforms in the higher education sys-tems. Although college/ university graduates, with a bachelor’s degree have received a formal education, they lack the skills and in-depth knowledge. Seeing as one can not assign a bachelor to operate a lathe, rather, he is appoint-ed as an engineer, under the justifi ed assumption that he is fully qualifi ed for the position, the overall performance of the establishment is inevitably nega-tively aff ected. Th erefore, no matter how hard they are pressed by labor shortages in the industry, unless educa-tional programs are updated, employ-ers will have to think twice before hir-

ing bachelors fresh out of college. With a break-down of the Soviet Union, the secondary professional engineering educational system became a ghost of what it was once. Many enterprises in the engineering industry have an oversized share of employees, without a trace of professional training. Profes-sionally trained workers may account for up to 63% of the total work force, still a way below the 75% or more of the plant and factory workers in the West who are rated and paid as highly skilled professionals. Still, a more

alarming fact, many instructors at engi-neering schools, high schools, and col-leges teach much as they did years ago, often without a smattering of the new knowledge in the business or industry. A majority of them are in need of deep upgrades of their own practical skills with an eye for modern development trends in business and demand for ade-quately trained and skilled labor.

To sum up, the issues surround-ing the rough corners of the higher and specialized secondary engineering training system and an evident short-age of equipment in educational insti-tutions must be resolved. Th e key reasons for the current shortage of skilled labor in the engineering indus-try include the absence of information exchange between business and educa-tional institutions; the collapse of the Soviet Union that caused plants and factories to close down and as a result, a rapid decline in the prestige of engi-neering professions in Russia.

Th ese problems can most likely be solved by involving the government in setting up a comprehensive system for the education and skill improvement of professionals in the engineering fi eld; a close cooperation between the edu-cational institutions and the business community and by giving undergradu-ates a chance to obtain practical experi-ence by working in plants and factories, while still in college or university.

A notable fact, many companies have built bridges to educational institutions, off ering a variety of programs, intern-ships, and training spells to undergradu-ates and graduates, while enterprises, so far only a few, have opened their own training and skill improvement centers. Yet there’s still a long way to go.

Special events catering, Potel et Chabot organizes private and corporate functions with style, innovation and professionalism

• tailored receptions handled by skilled and responsive event management experts• sumptuous gastronomic creations and pastry collections created by French chefs• exclusive table setup, floral arrangements and decorations• flawless quality

For any event in Moscow, St. Ptersbourgor anywhere else in Russia and the CIS,

please contact us at:

+7 (495) 641.10.24 / 25www.poteletchabot.ru

With a unique 20 years’ track record in Russia, Potel et Chabot has become the country leading catering high-end event management company. From extravagant parties, weddings and corporate events to spontaneous dinners and cocktail parties in the privacy of your venue, Potel et Chabot guarantees:

THE LABEL FOR UPSCALE EVENTS SINCE 1820

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m



17AN OVERVIEW OF RUSSIA'S MACHINE BUILDING & ENGINEERING SECTOR

How would you describe the main concept behind Project Manage-ment (PM) and its role in engineer-ing and construction? What is the role of PM in Your Company?Th e main idea behind Project Management is to control and guide any given project from start to fi nish, ensuring a good result for both the client and our Company.

Th e main role of PM is to keep a clear overview of all aspects of

the project, regularly report back to the client and ensure that all activities lead to the actualisation of the project’s main goal. Th e key tasks are to control time, budget and quality; initialise all needed activities and fi nd the optimal balance between them using a given set of tools.

What are the main diff erences between European and Russian conceptions of PM? What does it mean to work for a European company but carry out projects in ‘Russian reality’? Th e most striking diff erence is that Russian concepts are focused more on meeting the expectations of authorities and experts, rather than meeting the clients’ needs.

In practice this means that in Russia more time is spend on trying to change clients’ minds, rather than trying to con-vince building authorities.. Th ere may of course be sensible reasons for doing so. Deviating from standard solutions often results in additional administrative delays and costs. Th is makes it crucial for Europeans working in Russia to keep their clients informed about a project’s progress. Yet it is equally necessary for them to sit together with their Russian colleagues to identify the risks and opportunities of potential projects.

Please explain the diff erence between Russian and interna-tional construction standards?

How would you describe the main concept behind Project Manage-ment (PM) and its role in engineer-ing and construction? What is the role of PM in Your Company?In our company, there is a set of rules, designed by our ISO certi-fi ed quality system that all PMs must adhere to. But if you want to make it short and straight for-ward, the answer is simple: “not to forget anything”. Standard com-

pany rules aside, the role of any PM in any company is to always do the right thing at the right time.

What are the main diff erences between European and Russian conceptions of PM? What does it mean to work for a European company but carry out projects in ‘Russian reality’? Th ere are some diff erences when it comes to successfully carrying out a project in Russia and in Europe. In Europe and other more mature market economies you usually have reasonable “guidebooks”, which describe the modalities of successfully executing a project in those countries.. In Rus-sia, as in every emerging market, these rules are not fi xed. Th ere are hundreds of success stories, each being unique in its own way. Th at is one of the reasons why a Project Manag-er working in Russia should be able to inject a lot of passion and creativity into his projects. Maybe this is the reason why European PMs, even with extensive experience in their fi eld, are often not as successful in Russia as they have been in their home countries. Th erefore, some of our international clients insist on assigning Russian PMs to their projects. Th ese Russian managers all speak English and are familiar with the necessary European engineering and construction standards they also possess an intimate knowledge of vari-ous local practices and customs. Th is knowledge is the result

Head of Engineering Department (native Dutch)

Head of Department Projects & Construction (native Russian)

PROJECT MANAGEMENT IN RUSSIA –AN INTERVIEW WITH TEBODIN'S TOP MANAGEMENT

Tarkhanova Varia, Business Development Manager,Tebodin Eastern Europe B.V., interviews Mr. Barendregt, Head of engineering department and Mr. Senichev, Head of project management department, Tebodin

At the beginning of May 2009, Tebodin’s top managers were interviewed with the aim of getting an insight into their views on working with the company. Two experienced employees of Tebodin were asked the same questions, the reason – to see if there is a diff erence between the European and Russian approaches to doing construction projects in Russia. I expect that the answers given by of the Heads of the engineering and the project management departments will help elaborate on the key success factors of an international engineering company in Russia.




Th e diff erences in climatic conditions such as snow, wind and frost depth I guess are obvious. Th e construction princi-ples are technically not so diff erent and usually comparable – obviously, since the materials characteristics are the same.

However, some attention has to be paid when trying to get foreign calculations approved in Russia. Th e most signifi cant diff erence between the Russian and the foreign calculations is usually seen in the design factoring, in par-ticular, piling, which has some principle diff erences in the calculation methodology.

In order to get the authorities’ approval, it is important that one provides the Russian version of the calculation.

Another thing to consider is that in Russia, it is highly recommended that potential suppliers of steel and concrete be visited so that issues such as manufacture processes and mode of delivery can be addressed prior to making an exten-sive detail design.

Th e selected materials and or design process can make a big diff erence in price, timing or quality, depending on what local company is used. Th is is especially true for steel.

When importing steel into Russia, close attention must be paid to the certifi cates that are delivered alongside, as these must comply with Russian standards.

In your opinion, what are the main points of a tender proce-dure; does issuing a tender mean that there is a possibility that the selected company may render services that are within the scope of the client company’s requirements?During any tender procedure, Tebodin for example, always holds a small pre-selection procedure with the clients; whereby, we identify and check potential bidders on their capacity, experience, reliability and willingness to render a required set of services.

For orders between the European clients and Russian contractors, it is important to discuss and fi x mutual expec-tations, i.e. what documentation the contractor expected to work with. Sometimes, documents may not be entirely according to the Gost standard and some contractors may have diffi culty accepting these to work with. On the other hand: the client may worry about the quality of detail design to be expected from the contractor and its compliance with the client’s expectations.

Tebodin executes site supervision and Construction Manage-ment. How can you describe the relationships between Tebo-din and the general contractor during the construction phase? I guess one may compare the relationship between the gen-eral contractor and the supervisor during the construction period to the relationship between Russia and Europe. Th ere’s always the healthy dose of cooperation from both sides, when it comes to working together to fi nd the solutions to organiz-ing the site, solving matters that arise in construction, working together in interacting with the site inspectors and authorities. Th is, however, may on occasion be marred by minor disputes in the timing, cost and quality of the work done.

In the end, all parties benefi t from a quick and smooth project and just like in the design phase, mutual coopera-tion, clear communication and understanding is crucial to the success of project.

of the long experience in working in Russian markets that no foreigner can fi nd in the books.

Please explain the diff erence between Russian and interna-tional construction standards?Of course there is some obvious diff erences due to diff erent weather conditions – snow loads, soil conditions, seismic zones in some regions, etc. Th e less obvious diff erence is hid-den in the Russian engineering norms – SNIPs(Construction norms and regulations). Most of them, written and adopted in the Soviet times have since not been revised. At that time, nobody paid much attention to the eff ective usage of resources. Most of the industrial plants built at that time, had more concrete and steel in the structure than we would use nowadays, with more modern materials and technology. However, some of the SNIPs are still unchanged and com-plying with them can lead to overestimated budgets and unnecessary costs. Part of our engineering eff orts is focused on justifying the usage of modern design solutions, which save our clients’ project costs.

In your opinion, what are the main points of a tender proce-dure; does issuing a tender mean that there is a possibility that the selected company may render services that are within the scope of the client company’s requirements?Our procurement department is constantly screening the market, identifying the most successful contractors and new-est materials. Th e question of whether you can rely on the

outcome of a tender, avoiding a change in contractors during the project, depends mostly on the time period when the tender was issued. If you have a piece of land only, and want to go for a Design & Build approach i.e. select one turn-key contractor for the complete pro ject – the tender may probably not give you this certainty. Th is is because the contractors base their off ers on a constantly changing price market; there-by, the running cost may change with time, particularly, in the case of a long term project. An alternative is to asses all the potential risks involved, estimate the fi nancial impli-

TEBODIN RUSSIA - industrial and commercial real estate engineering and consultancy

< Engineering

< Consultancy

< Permitting < Procurement < Project Management < Construction Management < Environmental Consultancy

www.tebodin.ru


19



What advise would you give to companies seeking to invest in Russia?My main advice to companies intending to invest in Russia, although very simple and logical, is so very often under-estimated: plan ahead, investigate, talk and listen! A well planned project in Russia is principally no diff erent from a well planned project in Europe.

Tebodin regularly prepares due diligences for our clients in order to check the actual local situation of any preferred site, information presented and any promises made.

Th e result gives a good impression of any to be expected issues and the time and the money invested into this will pay back at later stages, the fi rst signs can already be seen during land purchase negotiations.

Another well-practiced option is to fi nd a good locally known expert who will work on your behalf, support the permitting process and assist you in interacting with the authorities.

Most importantly, a company should make sure that its top level decision makers interact with the authorities on a regular basis, so that the authorities may be convinced of the company’s seriousness in investing in that particular region. In comparison to a situation whereby, the authorities deal with representatives of a company only, this will go a long way in making the authorities more receptive to any of the requests made by the company.

Also, in doing so, the company is always well-prepared, knows where it stands and what steps it need to take to bring the project to completion while limiting the chances of getting caught in the web of bureaucracy between the authorities, contractors and inspectors.

cations to the project and refl ect on them and their place in the “contingency” line, including the “imaginary risks” in the budget. Our approach is diff erent: we only start tendering when a signifi cant portion of the design is ready – Project or even detail design. At this stage, we are in a position to prepare a detailed Bills of Quantities. Th is leaves the contractor very little room for guessing and gives a reasonable (up to 10%) accuracy of their off ers.

Tebodin executes site supervision and Construction Manage-ment. How can you describe the relationships between Tebo-din and the general contractor during the construction phase? At a construction site, we always represent our clients. It is important to fi nd a way to be fi rm with the contractors while simultaneously, ensuring a healthy working atmo-sphere at the site. Although each contractor has his own source of motivation, in most of the projects, we manage to create a team oriented approach to resolving any of the issues that arise during construction.

What advise would you give to companies seeking to invest in Russia?It is diffi cult to give a unique advice. All projects diff er signifi -cantly; even looking at the Greenfi eld project one can see that there are no two similar cases. Such a prognosis is not limited to Russia alone. However, an advice that concerns all potential investors – pay attention to the project risks before the invest-ment decision is made and money is spent. It is much easier to spend some time at the onset on the technical, legal and environmental assessments of your future project, than to run into unavoidable setbacks once the project commences.

RUSSIA'S RAILWAY TRANSPORT

With its vast territory, Russia has historically given rail transport a key role in its development. With its 85,500 km of tracks,

the country boasts the largest electri-fi ed rail network in the world.

Th e Russian’s national railway oper-ator, RZD, employs a workforce of 1.2 million and carries 1.3 billion passen-gers and 1.3 billion tonnes of freight each year.

Russia's railway sector has embarked on an ambitious modernisation pro-gramme starting now and lasting up until 2030. Th e Russian market poses multiple demands. Th e fi rst involves freight: producers of oil, minerals and coal, which are primarily transported by rail, are facing a signifi cant need for new locomotives (1,000 per year between now and 2030).

But the Russian market, which accounts for 15% to 20% of the world railway market, is also looking at a number of high speed and very high

speed projects. Th e expansion plan for Russia's rail system includes pro-viding services to an additional 21 cities.

Specifi cally, a high speed line between Moscow and St.Petersburg has been announced for the end of 2009. In addition to anticipating a substantial need for double deck pas-senger cars for the regional rail net-work (3,500 between now and 2030), the RZD will need to replace all roll-ing stock that has reached the end of its working life by 2015 and adapt its rail network to accommodate the upcoming Sochi Olympic Games in 2014 (this will be done by renova ting stations, constructing Moscow-Sochi lines, etc.).

Patrick PASCAL, Country President, ALSTOM Russia




LATEST TRENDS IN RUSSIA'S MACHINE BUILDING AND ENGINEERING SECTOR

Dmitry Konyushko, Business Deve-lopment Manager, Russia and CIS

DuPont supplies a wide range of products to the machine building and engineering industry. In Russia, at the moment, the main trend that we see is the increased focus on products dura-bility. Th e purchase of the machinery is always connected with big investments. Nowadays, taking the challenging eco nomic environment into account, plants try to maximize savings. Th is can be achieved with the usage of products that increase durability. For example, the usage of lubricants in decreasing fric-tions between equipment parts; thus, increasing the equipment’s durability. and maintenance intervals. Th is means that equipment operates at maximum capacity for a longer period of time.

Another recent trend in Russia is that plants are starting to increase their focus on industrial safety. Th e reason behind it – the stakes are too high; in the event of a technical mistake, the plant’s fi nancial losses could be immense. In turbulent times, this might be critical factor.

Alexander Breigin, Regional Coordi na-tor, CIS, DuPont Engineering polymersTh e recent trend in equipment pro-duction is that a lot of manufacturers are now switching from metal parts to engineering polymers, which lately, have signifi cantly expanded their area of application to Oil and Gas opera-tions, railways, wires and many more. Th is is due to their competitive advan-

tages over metals: the application of engineering polymers allows a decrease in the products total weight, a decrease in machinery corrosion, as well as an increase in wear resistance. All this prolongs service life. An increase in the service life of equipment allows for a decrease in the amount spent on equipment maintenance; nowadays, a highly welcome advantage.

Tatiana Markina, Marketing Specialist, DuPont Fluoroproducts

Th e tendency for the price of grain to increase at any point in time has led to a demand for a highly eff ective baking process. Th e non – sticking pro per-ty of fl uoroproducts increases baking process effi ciency; thereby, leading to a dramatic improvement in the yield quantity. Since the baking process no longer requires oil, bakeries can save on oil purchase. Th e absence of oil from

the baking process leads to a decrease in the amount of time required to clean the equipment; thus, increasing the cleaning and maintenance intervals. Th e cumulative eff ect of these factors leads to a signifi cant increase in pro-duction. Moreover, the absence of oils from the baking process complies with a fast developing global cause: the pro-motion of healthy food consumption practices, the popularity of which is increasing every year.

Patrick Cazuc, Global Marketing Manager, V-Solutions, DuPont

Performance Elastomers

Th e key drivers in the automotive industry, impacting high performance elastomers are the more stringent envi-ronmental and automotive emission regulations to reduce GHG emissions (CO2, NOx) such as US CARB LEV II, EPA Tier II and PZEV, and European Euro 5. Th is, coupled with the growing usage of biofuels, mixtures of etha-nol/gasoline, diesel/biodiesel (VOME), blends of ethanol and engine oil, has triggered a trend of lower fuel con-sumption. Th ese necessitate a reduc-tion in hydrocarbon losses through gaskets and other engine and fuel sys-tem seals and parts. In addition, the demand for longer vehicle life enforces a greater lifetime on engine parts and materials.

Automotive OEMs seek to improve fuel effi ciency of their engines and

Updates from DuPont's Top Management


21



reduce evaporative emissions. Th e trend is to equip all diesel and gasoline engines with turbo chargers. Having more equipment for engine manage-ment under the bonnet requires addi-tional connectors and seals with high temperature capabilities since a more aggressive environment is created. More aggressive fl uids in the engine and in the engine oils, higher level of blow-by and EGR (Exhaust Gas Recir-culation) condensate in contact with seals require performing elastomeric materials capable of long term resis-tance like Viton® fl uoroelastomers and Vamac® AEM, which off er a unique set of properties for high performance automotive sealing applications, inclu-ding Turbo Charger hoses. Th ey both help keep evaporative emissions low, off er high temperature resistance, and excellent compatibility with biodiesel and biofuels, and support the industry in meeting its tough emission chal-lenges.

Igor Elfi mov, General Director JV DuPont Russian Coatings

Th e main trend in automotive coatings is the change of anodic electrodeposi-tion (AED) method, a standard car body coating technology for ensuring corrosion resistance and physical and mechanical properties of coatings to the modern technology of primary body coating – cathodic electrodeposi-tion method (CED). Th e AED technol-ogy has low penetrating power, insuf-fi cient stone chip resistance, chemical resistance, and other. Th e results of the change are the impeccable appearance, high corrosion resistance and excellent physical and mechanical properties. One of the most popular primer series is AQUA EC 3000 by DuPont. Applica-

tion of this series of materials almost 7 times exceeds statistic values for traditional AED primers at corrosion resistance tests in salt spray chamber. Due to careful treatment of ecology-related parameters, car and component producers don’t have any problems neither with subsequent treatment of produced articles, nor with disposal of consumables, polluted with industrial use of the primer.

Vladimir Yakovlev, Account Manager EE DuPont Chemical Solutions

Enterprise

Th e main trends in the lubricants busi-ness are exceptional lubricant reliability combined with safety concerns under a wide range of conditions. Speaking of safety – conditions at production site are tough and often, the materials used are dangerous or aggressive. It is crucially important for the lubricant to combine high temperature perfor-mance, non-fl ammability and chem-ical inertness, which means it does not react with other materials. Th us, the risk of fi re or equipment failure is signifi cantly decreased. In terms of reliability, lubricants are expected to extend the service life of equipment, and reduce maintenance cost, as with its use, maintenance intervals should increase. Th e right lubricant is directly related to productivity, making it pos-sible to achieve peak equipment per-formance.

Olga Buldakova, Marketing representative, CIS, DuPont High Performance Films and DuPont Performance Coatings Electrical

Insulating SystemsElectrical machines such as motors, generators and transformers often need

a thin electrical insulation, which will have reliable performance with a long life in demanding conditions: exposure to high voltage stresses and chemicals combined with high and low operation temperatures. DuPont™ Kapton® is a range of thin fi lms, which off er perfor-mance properties to meet demands in traction motors, generators, dry type transformers, downhole motors of electrical submersible pumps, stirrer motors working in steel mills. Th e use of our fi lms in electrical machine insu-lation applications helps to signifi cantly increase the service life and power of the equipment while reducing size and weight of the machine and saving maintenance costs.

Th e switch of conventional DC motors to asyncronous AC inverter-fed motors requires improved resis-tance to partial discharge from the windings insulation. Compared to standard wire enamels, DuPont™ Vol-tron® System for insulation of round enameled wires provides excellent corona resistance, high thermal rat-ing, good chemical resistance and fl ex-ibility, which are important in wind generators and inverter-fed motors applications to improve the perfor-mance and prolong the service life of the equipment.

Th e tendency to use in motors, generators and transformers, high tem-perature class insulating systems that can provide high production and pro-cessing safety and eff ectiveness, makes DuPont™ Voltatex® impregnating resins and core sheet varnishes the materials of choice. Due to a decrease in the emis-sions produced and the energy used during the impregnating and curing process, they are most environment-friendly you can fi nd at the market.



22 AEB UPDATES

AEB PARTICIPATION IN THE EU-RUSSIA INDUSTRIALISTS' ROUND TABLE (IRT)

The AEB is now an observer member of the EU-Russia Industrialists’ Round Table (IRT)

Th e IRT was established in 1997 upon the suggestion of the political leaders of both EU and Russia who meet annually at the EU-Russia Summit. Since then, the IRT has provided a platform for business dialogue and has evolved into an organisation that actively fosters discussions on bilateral economic relations. An explicit reference in the 2005 Road-map to the Common Economic Space recognizes the IRT’s advisory function on the development of EU-Russia eco-nomic relations as they evolve. On this basis, the IRT acts as a consultative forum to policy makers in the EU and Russia twice a year on the eve of EU-Russia Summits. Th e associa-tion’s main body is the IRT Council, which gathers up to 20 business leaders for constructive discussions on EU-Russia economic relations.

Each year, the IRT invites business leaders, political deci-sion makers and other stakeholders from the EU and Russia to an annual event, where a wide range of topical business and industrial issues are debated. High level speakers have included H.E. President of the Russian Federation, Dmitry Medvedev; Günter Verheugen, Vice-President of the Euro-pean Commission, responsible for enterprise and industry and Victor Khristenko, Minister for Industry and Trade of the Russian Federation.

In May 2009, the Association of European Businesses was invited by the IRT European Co-Chair, Mr. Andersen, to participate in the IRT as an observer. AEB CEO, Frank Schauff , was designated as the IRT Council Member, rep-resenting the AEB at IRT meetings, with Marie Rondelez, AEB Adviser on European Aff airs, as his Sherpa. On the 4th of June 2009, the AEB participated for the fi rst time in an IRT Council closed meeting that took place in the frame-work of the 13th Saint Petersburg International Economic Forum.

AEB participation in the Saint-Petersburg International Economic Forum, 4th to 6th June, 2009

Th e AEB actively supported and participated in the Saint-Petersburg International Economic Forum, more particular-ly, in the framework of the EU-Russia Industrialists Round Table titled: EU-Russia business dialogue on, “EU-Russia cooperation: protect investments, avoid protectionism” that took place on the 4th of June 2009, as part of the offi cial programme of the Saint-Petersburg Forum.

Th e event was chaired by Anatoly Chubais (Director General of Rosnano) and Nils Andersen (Group CEO, AP Moller-Maersk), moderated by Sergey Karaganov (HSE) and saw the intervention of the following panelists: Elvira Nabiullina (Minister of Economic Development of Russia), Catherine Ashton (European Commissioner for Trade), Tony Hayward (Group CEO, BP p.l.c), Viktor Vekselberg (Chairman of Renova). Reiner Hartmann, Chairman of the AEB Executive Board also intervened during the discussion panel.

Participants actively discussed in an open dialogue the dangers of protectionism in this period of crisis and a way to promote cross-border investments and support economic exchange between the EU and Russia.

Marie Rondelez, Events Director, AEB

Elvira Nabiullina, RF Minister of Economic Development with the two IRT co-chairmen, Anatoly Chubais, Director General of ROSNANO and Nils Andersen, CEO of A.P. Moller-Maersk Reiner Hartmann, Chairman, AEB Executive Board

Key participants at the Forum


23


AEB UPDATES

AEB OPEN EVENT: THE ANTI-CRISIS FORUM

On the 27th of May, 2009, the AEB held its annual conference at the Marriott Royal Aurora, Moscow. Th e conference was held in form

of a forum titled – Th e AEB Anti-Crisis Forum. Th e invited speakers included a cross section of the most brilliant minds – analysts and researchers with govern-ment and business backgrounds, as well as those who work or have worked in offi cial bodies responsible for the deci-sions made with respect to the direc-tions taken on by the Russian economy. Representatives of European businesses were likewise given an opportunity to express their points of view regarding the current situation on the Russian market and mark the plausible vectors for coming out of the current fi nan-cial crisis. Reiner Hartmann, Chairman, AEB Executive Board delivered the opening speech; afterwards, the session was offi cially declared open.

Session 1: Global Crisis – a Flower of Evil or a Regular Phenomenom

Th e session was chaired by Dr. Frank Schauff , AEB CEO. Th e fi rst speak-er, Alexander Dynkin, Academician, Director, IMEMO talked about the cur-rent global fi nancial crisis, its impact on various countries and the implications, with a special focus on Russia. Sergey

Dubinin, Member of Board, VTB Capi-tal in his presentation “Global fi nancial crisis and Russian economy perspec-tives”, gave various perspectives on the world anti-crisis policy and Russia’s anti-crisis policy. Th e third speaker, Eugene Tarzimanov, Vice-President, Moody’s talked about the general state of the banking system, focusing on Rus-sia. Jean-Luis Droz, Deputy General Director, Brainpower presented the results from an international survey on the current economic crisis and its consequences for managers, pointing out that Russia’s managers had the most optimistic attitude regarding the dura-tion and general impact of the crisis.

Session 2Doing Business in Russia under Crisis

Philippe Cohen, Deputy Chairman, AEB Executive Board was the moderator. Dominique Fache, Vice-President, Gen-eral Director for Russia & CIS, ENEL was the fi rst speaker, with a presentation on the impact of the crisis on the energy sector. Martin Jahn, Vice-President, Sales and Marketing, Volkswagen Group Rus talked about the impact of the crisis on the automobile industry, worldwide and in Russia. Nikita Patrakhin, Head of Cor-porate Finance & Investment Banking

Division, Raiff reisenbank Austria ZAO talked about the eff ect of the fi nancial crisis on Russia’s banking sector. Hans-Dieter Zaum, General Director, Droege was the fourth speaker, with a presen-tation titled, “Russia Survey 2009 – Strategies and Prospects of European Companies in Russia”, where he said that Russia’s market still remains very attrac-tive, despite the eff ects of the economic crisis.

Session 3Where to Go and What to Do?

Th e session was moderated by Roger Munnings, Deputy Chairman, AEB Executive Board. Andrey Nechaev, President, Bank “Russian Financial Cor-poration” talked about the main causes of the crisis in Russia, laying emphasis on the high dependence on export of raw materials; low competitiveness of the main sectors, with the exception of the raw materials sector and slow develop-ment of the banking and fi nance sector. Philippe Delpal, President, BNP Paribas Vostok Bank enlightened the audience

on the measures taken by banks when trying to meet the challenges brought on by the crisis. Herald Schedl, Manag-ing Partner Russia, Austria and CEE, Simon-Kucher & Partners rounded up the session and the entire conference, with a presentation titled, "What Crisis are we in and how to survive?".

In all, the Forum was a huge suc-cess, receiving great reviews and evalu-ations from all those present. Th e AEB would like to thank the sponsors of the Anti-Crisis Forum – Telenor (Plati-num Sponsor); Volkswagen Group Rus (Gold Sponsor); Itella (Silver Sponsor) and Spectrum Holding (Silver Spon-sor) for helping make this an exception-ally successful event.

Nina Anigbogu, Publications Manager, AEB

Sergey Dubinin, Member of Board, VTB Capital

Key speakers at the forum's fi rst session

Key speakers at the forum's second session

Dominique Fache, Vice-President, General Director for Russia & CIS, ENEL

Event's participants



24 ON THE SOCIAL SCENE

Some of the key speakers at the event Participants at the Round Table discussions

NETWORKING

AEB Open Event: Regional Investment Forum – The Volgograd regionOn the 18th of June 2008, the AEB held a regional investment forum, dedicated to the Volgograd region. Th e Volgograd region was represented by key decision makers amongst whom were directors of major plants and factories of the Volgograd region. Th e presentation of the Volgograd region was followed by several round table discussions on the investment climate and concrete projects of the Volgograd region.

AEB Open Event: Briefi ng by HE Tomas Bertelman, Ambassador of Sweden to the Russian Federation

On the 6th of July 2009, at the Delegation of the European Commission, the AEB held an open event – a briefi ng by the Swedish Ambassador, H E Tomas Bertelman titled, “Priorities of the Swedish EU Presidency”. Th e Swedish Presidency’s vision is a strong and eff ective Europe,

with a focus on the common responsibility of facing any challenge, including preparedness to manage crises. Th e Ambassador highlighted the main areas that Sweden intends to concentrate on during its tenure.

AEB Open Event: Briefi ng by Igor Shegolev, RF Minister of Telecom & Mass Communications

On the 23rd of June 2009, the AEB held an open event at the Marriott Courtyard Moscow.

Th e event, a briefi ng by Igor Shegolev, RF Minister of Telecom & Mass Communications, focused on the develop-ment trends of the IT-Telecom industry in Russia; this was

followed by a questions and answers session. Th e event was chaired by Reiner Hartmann, Chairman, AEB Executive Board, Frank Schauff , AEB CEO and Natalia Schneider, AEB IT-Telecom Committee Chairwoman and received excellent reviews.

AEB Open Event: World Bank Briefi ngOn the 26th of June 2009, at the British embassy, the AEB organized another, in its series of World Bank briefi ngs. Th e briefi ng – “Current Trends in Russia's Economic Develop-ment”, was based on Russia Economic Report #19. Mr. Klaus

Rohland, Country Director and World Bank’s Resident Rep-resentative for Russia and Mr. Zeljko Bogetic, World Bank’s Lead Economist and Coordinator for the Russian Federation, Europe and Central Asia Region briefed the audience on this latest World Bank report on Russia.

Event's participants

From left to right: Reiner Hartmann, Chairman, AEB Executive Board; Ambassador Marc Franco , Head of the Delegation of the European Commission to the RF; H E Tomas Bertelman, Swedish Ambassador to the RF and Dr. Frank Schauff , AEB CEO

Fron left to right: Dr. Frank Schauff , AEB CEO; Reiner Hartmann, Chairman, AEB Executive Board, Igor Shegolev, RF Minister of Telecom & Mass Communications and Natalia Schneider, AEB IT-Telecom Committee Chairwoman

Igor Shegolev, RF Minister of Telecom & Mass CommunicationsEvent's participants

Marvin Suesse , AEB and Svetlana Guzeeva, AEB Director of Communications


25


ON THE SOCIAL SCENE

AEB Czech Euro ReceptionOn the 15th of April 2009, the AEB was honoured to have the Czech embassy host the AEB Czech Euro Reception. Th e Euro Reception began with welcome speeches given by H.E Miroslav Kostelka, the Czech Ambassador to the Russian Federation and Reiner Hart-

mann, Chairman, AEB Executive Board. Th e evening came to a close with a lottery; winners went home with beautiful prizes. Th e lottery was sponsored by the Czech Airlines; Czech Centre (Чешский центр – Чешский дом Москва); Czech Trade; Czech Republic; Generali PPF Holding (GPH); HAMÉ; Holiday Inn; Home Credit Bank; International Bank for Economic Co-operation; Jablonex Group; PRECIOSA and Swissotel Krasnye Holmy Moscow. Th e evening was sponsored by Skoda Auto. Th e AEB would like to thank the Czech Embassy, Skoda Auto – the evening’s sponsor and the sponsors of the lottery for making the AEB Czech Euro Reception a big success.

AEB Annual General Meeting 2009On the 23rd of April 2009, at the Baltschug Kempinski Moscow Hotel, the AEB held its Annual General Meeting (AGM).

Th e meeting began with a series of presentations and reports given by selected persons from the AEB Execu-tive Board, Council of National Repre-sentatives (CNR) and the AEB.

Th is was followed by a validation of the CNR and Audit Commission elections results. Mr. Paul Vandoren,

Deputy Head of the Delegation of the European Commission to the Russian Federation gave a very informative speech, after which the meeting was offi cially declared closed and everyone was invited to take part in a reception. Th e AEB would like to thank In2Matrix – offi cial sponsors of the grand reception.

AEB Open Event: Briefi ng by Thierry de MontbrialOn the 24th of April 2009, at the French embassy, the AEB held an open event – a briefi ng by Th ierry de Montbrial, Presi-dent of the French Institute of International Relations (IFRI) and member of the Institut de France. Th e briefi ng, titled, “Th e State of the World in Spring 2009”, was followed by a ques-tions and answers session. Th e event was chaired by Dr. Frank Schauff , CEO, Association of European Businesses.

AEB Open Event: Regional Investment Forum and Reception – Ulyanovsk Region

On the 29th of April 2009, at the Moscow Marriott Grand Hotel, the AEB held an AEB Regional Investment Forum. Th e forum focused on the investment cli-mate, opportunities and special economic and port zones in the

Ulyanovsk Region. Speakers at the event included Mr. Dmitry Ryabov, Deputy Chairman of the Ulyanovsk region; Mr. Sergey Vasin, CEO, JSC “Development Corporation”, as well as Repre-sentatives of the Russian and Western companies active in the region – Mars, SABMiller, DALKIA, Fresenius, Quarzwerke. Th e forum was followed by a grand reception.

Members of the AEB Executive Board and the CNR and Dr. Frank Schauff , AEB CEO Event's sponsors: Skoda Auto

From left to right: Dr. Frank Schauff , AEB CEO; Mr. Paul Vandoren, Deputy Head of the EC Delegation to the RF; Svetlana Lomidze, AEB External Relations Director and Thierry de Montbrial, President, IFRI

Exhibits from the Ulyanovsk Region

From left to right: Sidney Bardwell, General Manager, John Deer; Larissa Inozemtseva, Corporate Aff airs Director, Mars, Russia & CIS and Dr. Frank Schauff , AEB CEO

Reiner Hartmann, Chairman, AEB Executive Board and HE Miroslav Kostelka, the Czech Ambassador to the RF

Mr. Paul Vandoren, Deputy Head of the Delegation of the Euro-pean Commission to the Russian Federation

Thierry de Montbrial, President, IFRI




TRENDS & TALENT IN INDUSTRY MANUFACTURING IN CEE COUNTRIES, GREECE AND TURKEY AFTER THE GLOBAL FINANCIAL CRISIS

Since the Iron Curtain fell, job oppor-tunities in the countries in Central and Eastern Europe have grown signifi cantly and keep on doing so,

moving more and more eastwards. New projects continue to grow in size and complexity and companies and public sector organizations use increasingly sophisticated strategies to manage their human capital. Attracting the right peo-ple and having a good insight into the most important parameters and factors in recruiting people, is key to success. Th e so called "war for talents" has started in the CEE countries as well attract-ing, identifying, developing and binding high potentials has therefore, become an increasingly important factor of diff eren-tiation and business success in the CEE.

In the past two decades, the cen-tral and east European economies have done their homework, introducing reforms, bank bail-outs and privatiza-tions. Capital is almost exclusively based on shareholder equity and CEE banks displayed a healthy loan/deposit ratio which led to a high growth rate.

However, there is no doubt that all CEE’s together with Greece & Turkey are suff ering from impact of the fi nancial crisis, which is the sudden decrease in export demand a situation which will worsen if Western Europe falls into a deep and prolonged recession. Th e prob-lem is that these countries do not form a unifi ed block: Poland, the Czech Repub-lic, Slovakia and Slovenia are robust and the crisis is hitting them as an external shock. Th e others are much more vul-nerable, as that external shock arrived at a time when accumulated domestic problems would have forced policymak-ers to take painful decisions anyway.

But how are these shockwaves aff ecting talent itself? Here is an out-look on the business market in terms of Industry & Manufacturing (I&M) and the trend changes in these markets as a result of the fi nancial crisis.

CZECH REPUBLICOf the emerging democracies in cen-tral and Eastern Europe, the Czech Republic has one of the most devel-oped industrialized economies. It is one of the most stable and prosperous post-Communist states of Central and Eastern Europe. Th e principal indus-tries are heavy and general machine-building, iron and steel production, metalworking, chemical production, electronics, transportation equipment, textiles, glass, brewing, china, ceramics, and pharmaceuticals. Its main agricul-tural products are sugar beets, fodder roots, potatoes, wheat, and hops.

Th e leading location for this sphere is especially South Moravia and the City of Brno. For example, Honeywell founded the Global design Centre for Automotive, Automation and Control Solutions and an Aerospace business that should be the biggest one in Europe and they search for qualifi ed staff continuously. Brno is interesting due to the highly qualifi ed

graduates from the famous Technical University. Many companies that are in constant need of employees have estab-lished their Shared Service Centres and Customer Support Centres there.

Th e industries in the country are wide and diff er from the regions. In Bohemia, there are mostly the automo-tive and engineering and also chemical industries; in North Moravia, automo-tive, mining and steel industries and in South Moravia, mainly engineering, automotive industries, although, cur-rently one can also fi nd companies that specialise in electronics and ICT tech-nology.

Unfortunately, the global fi nancial crisis has made an impact on hiring new staff . Th e problems are mostly in hiring the blue collars and the fi rms have also to reduce some staff since production is going down, especially in the manufac-turing industry, in particular, among the US companies. Many of them resolve the problem by fi rst of all, dismissing tempo-rary workers. Subsequently, many adopt the hire freeze approach, with the excep-tions of situations where they have to change managers or hire new ones if the present ones leave. As of now, everyone awaits to see what changes the New Year will bring in order to fi nd ways to adapt to these new changes and by implication, the actual needs of the market.

GREECE Following the implementation of stabi-lization policies in recent years, Greece has managed to achieve a strong econo-my that is growing fast. Greece remains a net importer of industrial and capi-tal goods, foodstuff s, and petroleum. Th e leading exports are manufactured goods, food and beverages, petroleum products, cement, chemicals and phar-maceuticals. Th e people of Greece enjoy a high standard of living, refl ected by the country’s high Human Develop-ment and Quality-of-life indexes.

By Nikita Kazakov, Senior Consultant, Business Training Russia

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m


27



But it is clear that the crisis, which is hurting the global economy and the fi nancial system, leading to a general-ized uncertainty and the inability to forecast the size of the impact on the real economy continues to negatively infl uence consumers and businesses. Amid the global fi nancial crisis, the economic sentiment in Greece sank in October for a seventh consecutive month to an 18-year low (index fell to 72.9 points). Th e growth rate of the Greek economy dropped to 3.1 percent in the third quarter of the year due to a decline in investment, lower con-sumption and stagnation of exports. But, the recession that has hit the euro zone appears to have been avoided. In September, industrial production fell by 3.3 percent, registering a decline for the fi fth month in succession. In August, retail commerce posted a 4.1 loss in terms of sales volume.

Th e European Commission esti-mated that Greece’s growth rate was 3.2 percent last year and is predicted to be 2.5 percent in 2009. However, in comparison to the average 3-4% within the last years, despite the 2.5% growth of the economic sector, according to all sources, Greece’s unemployment rate is expected to increase. Th e fear of what is going on has been instilled and the organizations are, at least for now, very cautious in their planned headcounts. A clear transformation from a candidate driven market to a client driven one is witnessed. Even in situations where recruitment is authorized and candi-dates are successfully approached, there is a signifi cant increase in the possibil-ity of a rejection at the fi nal stage, as most companies are afraid to move in a climate of incertitude and possible mergers.

ROMANIARomania's manufacturing sector is dominated mainly by machine-build-ing, metal, chemicals, and textiles. Although there are a number of impor-tant domestic manufacturers, such as Dacia Logan, Roman Braşov and Igero bus, Romania’s manufacturing industry consists mainly of EU fi rms’ branch plants. Th e branch plants provide mainly blue collar jobs, with research and executive positions confi ned to the EU.

Until 2008, companies had to fi ght for the talent they needed, because tal-ent was becoming much more diffi cult to fi nd. However, the recent fi nancial crisis which has made all the companies tighten their budget to certain extent, even if they have not been aff ected by the crisis, has led HR experts to predict 2009 as the year of the employer.

Now, companies can aff ord to let some employees go and bring in more qualifi ed personnel. Still, the most sought after members of the workforce are 25 to 34-year-olds, who have been with the company between two and fi ve years. Th is is the time for companies and HR departments to shine, by look-ing over the qualities of each employee and if necessary, to downsizing and replacing some of the personnel, with more qualifi ed individuals; although, in Romania, the tendency is to keep the people, as the belief is that this period will pass, there will once again be need for personnel and the cost of hiring will be higher than the cost of maintaining currently employed personnel.

Th e employees’ mind set is changing as well. In the last few years, we have seen a lot of people jumping from com-pany to company or from one industry to another, looking for a better fi nancial package. Today, most will prefer to stay in a place they know, rather than take a risk to move to an unknown future. Also, a high percentage prefers to show loyalty and help the company when times are hard. Although there has been some tightening in the budget, there is no massive downsizing and some companies have retained most of the staff , even though some are on forced holidays. On the other hand, with new companies entering the market, signs of market growth remain.

HUNGARYTh e Hungarian economy is a medium-sized economy, which is part of the EU single market. Like most Eastern Euro-pean economies, it experienced mar-ket liberalization in the early 1990s as part of a transition away from commu-nism. Because of the program’s auster-ity, Hungary’s economy slowed down in 2007. However, due to many large investments, GDP growth did improve to 2.8–4.0 percent in the second half of 2008. In foreign investments, Hungary has seen a shift from lower-value textile and food industry, to investment in luxury vehicle production, renewable energy systems, high-end tourism, and information technology.

Th e labor market in Hungary is two folded. Labor costs due to taxation reasons are one of the highest within the CEE and the activity rate of the inhabitants is 54,9% (total number of inhabitants is 10 mil-lion)- the second worst within the com-munity. On the other hand, in the frame of the subvention system for new invest-ments, the following supports are available for investors: direct subsidy by discrete governmental decision, tax allowance for development, and support for training of the new workforce. It is important to add that while the activity rate is low, investors can fi nd highly skilled and qualifi ed profes-sionals within the country.

Th e leading sphere in I&M in Hun-gary is the machine industry, but the chemical, food and textile industries have had outstanding results as well.

Th e global economic crisis has espe-cially shaken the valetudinarian Hun-garian economy. Th e eff ects of this can be seen within industry and manufac-turing as well, especially – and not sur-prisingly – in the automotive industry, which has contributed 44% to the total

Pro

pe

rty

of

ww

w.d

rea

mst

ime

.co

m




layoff s, in other words, over 4400 lay-off s have been directly linked to the crisis. General Electric (GE) has laid off 500 employees as well. Th e packaging industry, which represents a secondary aff ected sector, also feels its partner’s lay-backs. Generally, it is seen that the fi rst winds of the layoff are carried out by not prolonging due employments and terminating the services off ered by the temporary (outsourced) workforce.

POLANDTh e Polish economy is one of the fast-est growing throughout Europe. Th e main factors infl uencing its growth are new investments, increasing export and industrial production level. A research of the investment climate in Poland showed that the climate has been gradu-ally improving and has been, gener-ally speaking, better assessed by foreign investors than the local companies. Th e biggest improvement was noticed in the fi nancial system’s stability, which is good news bearing in mind the current situa-tion on the fi nancial markets. Th e two other key factors are stable growth of the internal market and well educated, highly qualifi ed and fl exible employees.

Th e labor cost is not as attractive as it was a couple of years ago, so it is setting a favorable direction for new investments’ selection, aimed at acquiring know-how based ventures rather than simple mechanical assembling production sites. Moreover, these days, as most of the indus-tries show indications of slowing down their growth dynamics their recruitment plans for the next months indicate that the biggest attention is drawn to keeping key talents within the organization, rather than acquiring new ones.

Also, the Special Economic Zones that constitute an administratively sepa-

rate part of the Polish territory, allocated to the running of businesses on preferen-tial terms have been allowed to operate in Poland until 2020 (their term was recently extended by 3 years); this is also a positive signal for the investors. An inter-esting thing that can be noticed within the zones is their investors’ approach to off -limits policy regarding employees’ attraction. It used to be a common policy that employees from one company not be contacted by another in the same zone, but most of the companies now admit that they have to break this gentle-man’s agreement due to a growing defi cit of highly skilled professionals.

TURKEYTurkey, advantageously located at the crossroads between Europe and the Middle East, is a rapidly emerging mar-ket and a geo-strategic hub for inter-national business. As it strives to align itself politically and economically with the European Union, Turkey is becom-ing an increasingly popular location for businesses. In 2006, Turkey attracted $18.9 billion in FDI, followed by $11.8 billion in the fi rst six months of 2007.

Turkey has a population of over 71 million, around 70 per cent of which are below the age of 35, and around 65 per cent of which live in cities. With 24.7 million people active in the labor force, the country has the fourth larg-est labor force of the 27 countries of Europe. Th e offi cial language is Turk-ish; however, most business people can speak and do business in English as well as French, German and Russian.

Th e labor costs in Turkey for blue collar jobs and jobs for non foreign lan-guage speakers have remained lower than those in other countries and the competition for these jobs remains high.

But for higher skilled labor or executives with developed language skills, the sal-ary fi gures may rise to Western Euro-pean standards. Foreign investment is encouraged in all kinds of businesses in Turkey, particularly in the manufactu-ring, mining, environment, marine, and power, textiles and water sectors.

But as an eff ect of the global fi nancial crisis is that a rapid loss in the YTL value against the dollar and other so-called hard currencies has taken place, which will certainly spur infl ation and drive up the cost of imports. Th e intensifi cation of this trend is probable under conditions where capital infl ows have stopped and a capital outfl ow is on the agenda.

Recent macroeconomic fi gures reveal that the Turkish economy has been expe-riencing a very serious slowdown and is heading into a recession. Th e growth rate of the Turkish economy already suff ered a signifi cant blow in the second quarter of the year. Th e gross domestic product (GDP) increased by just 1.9 percent in the second quarter of 2008, compared to the same period a year ago. Th is marked a clear slowdown in the country's econom-ic performance and the lowest quarterly fi gure since the fi rst quarter of 2002. Fac-tory after factory is halting production, both temporarily and permanently. It was announced that in comparison with the same month in 2007, industrial produc-tion fell 5.5 percent in September. In some sectors, the picture looks even grimmer. Manufacturing output fell by 6.3 percent in September, compared to a 5.8 percent decline in August 2008. Mining output declined by 4.3 percent, reversing an 8.5 percent growth in August 2009. Produc-tion of utilities slowed down signifi cantly, increasing by only 1.6 percent compared to a 3.6 percent growth in the preceding month.

As the impact of the global eco-nomic and fi nancial crisis spreads, it can be predicted that the second quarter of the year will witness a negative growth as well. Many com-mentators are now saying that the recession in 2009 may be deeper than expected and last throughout the year. Th is means that produc-tion may contract to quasi-depres-sion levels. Given the accumulated vulnerabilities of the economy, the possibility of a full-fl edged depres-sion cannot be ruled out.

ACCOUNTING OUTSOURCING


29


AEB UPDATES

Health and Pharmaceuticals Committee

Meeting with Timofey Nizhegorodtsev

On the 3rd of April 2009, members of the committee met with Mr. Timofey Nizhegorodtsev, Head of the Department for Control over Social Sphere and Trade of the Federal Antimonopoly Service (FAS) of the Russian Federation. Mr. Novgorodtsev and Ms. Nadejda Shavrova, Deputy Head of the Healthcare section of the Department, elaborated on the current policy of the FAS, aimed at maintaining fair competition on the pharmaceutical market and protecting the consumers’ rights to accessible, high quality and eff ec-tive medicines. At the meeting, an understanding regarding further cooperation and joint activities was likewise reached between the committee and the FAS.

HR Committee

Committee event – “Temporary Personnel as a Means of Tackling Unemployment”

In April 2009, the AEB HR Committee organized a mee-ting – “Temporary Personnel as a Means of Tackling Unem-ployment”. “Legalization of temporary staffi ng in Russia is the urgent demand of major international and Russian busi-nesses, employment agencies and the unemployed in our country” said Olga Bantsekina (Chairperson of the recruit-ment subcommittee, Coleman Services), who moderated the meeting.

From 1998, personnel secondment, outstaffi ng and outsourcing services have been provided on the Russian market. Nowadays, many major multinational and Russian companies are using diff erent forms of these services. In the downturn, temporary personnel, outstaffi ng and outsourc-ing schemes are becoming one of the most applicable ways of business processes and HR costs optimization. For the unemployed, it is often the only possibility to survive during the diffi cult times. Being employed by the agencies, they are able to apply their skills at diff erent enterprises and earn a living. Dmitry Bulavinov from Russian Machines stated that provided the legal possibility existed, at his enterprise, he

could have reduced the number of personnel made redun-dant by 10,000 people, outstaffi ng them to an agency and using their labor in a fl oating mode instead of fi ring them. Statistics show that in Europe, the adoption of temporary personnel schemes has helped decrease unemployment. Th e necessity to develop the legal basis for these types of employment is urged nowadays by the rising activi-ties of the agencies providing their services based on illegal schemes, “saving taxes” for their clients.Alexander Leonov (State Duma Labour and Social Policy Committee) underlined that there is still no political will of Russia’s legislative authorities to undertake any eff orts towards the legalization of outsourcing and temporary per-sonnel services.

Participants of the panel discussion expressed their will to further promote the idea of clarifi cation in the Russian labour law and other related elements of the Russian legisla-tion regarding this type of work arrangement.

AEB HR Conference – “Current realities and opportunities for the future”

On May 20th, 2009, a traditional AEB HR conference was held at the Grand Marriott Hotel; this year’s theme – “Cur-rent realities and opportunities for the future”. Th is was the sixth annual conference and as usual, it brought together the leading HR specialists on the Russian market. Over 140 people attended the event, and the AEB feedback forms showed that the conference was highly appreciated by the attendees. As usual, the conference was an open event, with a general introduction by Tim Carty, chairman of the HR committee, Ernst and Young partner. Afterwards, the audience was split into three sessions: Recruitment; Assess-ment, Training and Development and Compensation and Benefi ts. All three sessions had extremely interesting speak-ers, and in a number of cases it was most diffi cult to choose the speaker that enjoyed the widest audience. Th e list of speakers included such presenters as Stephen Quick, PwC; Natalia Karelina, American Express; Anouk de Bliek, Cit-ibank; Anna Laykom, HSBC; Raisa Polyakova, Johnson and Johnson; Cathy Hackett, PwC; Fiona Hathaway, Mircrosoft; Olga Knysh, Oracle; Mark Phillips, JTI; Natalia Turkulets, Wimm Bill Dann and many others.

Th e AEB would like to express its deepest gratitude to the chairpersons of the three subcommittees, who mod-erated the sessions: Olga Bantsekina, Coleman Services, Chairman of the Recruitment subcommittee; Anne Ram-say, Cushman&Wakefi eld, Stiles&Riabokobylko, Chairman of Compensation and Benefi ts subcommittee and Mirka Straathof, Hay Group, Chairman of the Assessment, Train-ing and Development subcommittee. For Mirka it was the last conference, as after her six years in Russia, Mirka is mov-ing back to her native country – Holland. Her excellent job, enthusiasm and creativity were highly appreciated by her clients in Russia and by the HR committee members. We wish Mirka good luck with her new endeavors.

AEB COMMITTEE UPDATES

Event's key speakers


For more information on ISTC, contact:Albert Gozal, ISTC EU Promotion Manager

32-34 Krasnoproletarskaya ulitsa, 127473, Moscow, Russian FederationTel: +7 (495) 982-3281. E-mail: [email protected]

R&D PARTNERING FOR EU BUSINESS

AND RESEARCH COMMUNITY

INNOVATE IN RUSSIA, COMMONWEALTH OF INDEPENDENT STATES AND GEORGIA

The International Science and Technology Center (ISTC) is an intergovernmental organization dedicated to international

scientific cooperation.

Founded on the basis of an international agreement signed by the European Union, Japan, Russian Federation, and

the United States of America in 1994, and in 2004 by Canada, ISTC coordinates the efforts of numerous governments,

international organizations and private sector organizations, providing scientists from Russia, Georgia and other countries of

the Commonwealth of Independent States (CIS) opportunities to use their talents for EU partners.

Objectives■ Support the transition to market-based economies■ Contribute to solving national and global technological problems■ Encourage the integration of Russian, Georgian and CIS scientists into the international scientific community■ Provide Russian, Georgian and CIS scientists opportunities to use their talents to peaceful activities■ Support basic and applied research

The International Science and Technology Center (ISTC) based in Moscow, works with both governmental and commercial organizations to source highly skilled scientists and research project teams and promotes high-tech innovation developments. ISTC also offers full project management services that take forward R&D projects and partnerships.

EU private companies, government agencies and nongovernmental organizations can access the services of ISTC by applying to become an ISTC Partner through a no-cost application procedure. This is possible because the EU is an ISTC Funding Party and Governing Board Member.

EU’S ROLE IN THE ISTCEU is one of the main contributors to the ISTC since its establishment.EU directly supports the operation of the Moscow-based ISTC Secretariat, including EU staff.Since 1994, EU has contributed over $ 238.5 million to support scientists through the ISTC and has funded over 965 projects involving more than 41570 scientists with a number of private organizations, institutions and individuals acting as non-funding collaborators.Moreover, EU has over 55 private and governmental Partners at the ISTC which funded 115 R&D projects managed by ISTC in Moscow for an amount of $40.9 million.

WHAT ISTC OFFERS TO EU BUSINESSCost-Free Technology Searches – With a network of over 900 prestigious institutes and more than70,000 expert scientists, ISTC provides a cost-free service to assist EU business and research community to identify appropriate research teams and potential R&D partners in Russia, Georgia and CIS

Specialist Project Teams – ISTC can assemble expert project teams to identify and develop near-to market technologies of interest to EU business and research community.

Introduction and Travel Support – ISTC, can support scientists travel to meet potential EU business and research community partners in order to develop Partner Projects, provides bilingual staff to assist Partners with meeting arrangements, visa support and access to specialist research institutes as appropriate. On request ISTC can organize match-making meetings, thematic workshops and seminars.

Professional Project Management – ISTC offers full in-country project management services for R&D projects at 5% of total project cost (0% up to end 2010) and low-cost R&D incentives

Up to 30,000 Project Funding Support – EU Partners of the ISTC can apply for funding of up to 50 per cent (to a maximum of 30,000) towards a first-time R&D Partner Project. This is a new initiative supported by the EU, via ISTC

Further Benefits include – Customs and duty-free imports of equipment used in projects, direct and tax-free payments of grants to scientists working on EU partner projects, full on-site project monitoring by ISTC professional staff and the ISTC Partner has complete control of all project funds

Ad

vert

isin

g


31


AEB UPDATES

Th e next conference will take place in May 2010, and we hope very much that the topic of the next conference will be “HR Managing Growth”…

Legal Committee

Meeting with a representative of the RF Ministry of Natural Resources

On 14th May, 2009, the AEB Legal Committee in coopera-tion with the AEB Energy Committee had a meeting with a representative of the RF Ministry of Natural Resources (MNR).

Th e participants discussed changes to the Federal Law “On Subsoil” #2395-1 dated 21st February, 1992 (Subsoil Law), introduced by the Federal Law #58-FZ of 29th April, 2008 “On Amending Certain Legislative Acts of the Rus-sian Federation and Declaring Invalid Certain Provisions of Legislative Acts of the Russian Federation Pursuant to the Adoption of the Federal Law “On the Procedure of Foreign Investment into Business Entities Having Strategic Sig-nifi cance for National Defense and State Security”, and other acts adopted in connection with foreign investment in Rus-sian companies working in the natural resources industry.

Th e AEB proposed to establish a working group in cooperation with the Federal Antimonopoly Service (FAS) and the MNR to discuss the changes/amendments to the RF legislation mentioned above, on a regular basis.

According to the AEB’s agreement with the MNR repre-sentative, Legal committee experts prepared the proposals regarding amendments to the Subsoil Law, to be discussed during the working group’s fi rst meeting.

IP Sub- Committee

IP annual conference

Th e AEB Th ird annual Conference – “Recent developments in the sphere of intellectual property: court practice, prob-lems and solutions”, organised by the AEB IP sub-committee, was held on June 5th, 2009, at the premises of the Delegation of the European Commission to Russia.

Marc Franco, Head of the EC Delegation to Russia, opened the Conference with a welcome speech.

Mr. Mikhailichenko, Executive Expert Council on inno-vations and intellectual property, Head of intellectual prop-erty committee in the “Delovaya Rossiya” gave an over-view of the recent amendments to the Russian legislation concerning intellectual property protection, including the changes to the law on pharmaceuticals, which is currently under consideration by the RF Government.

Th e fi rst part of the Conference was devoted to parallel import issues, where Mr. Mikhailichenko stated that the RF State Duma has not made any changes to Civil Code and Legislators will not change the national principle of trade mark rights exhaustion to the international principle as they are convinced that if this happens, it will open the “doors” to the importation of counterfeit products; the State Duma supported the idea of ex-offi cio.

Th e issue of parallel import was followed by a pre-sentation made by a Partner at Baker&McKenzie, Denis

Habarov. He gave a clear view of the legal and practical con-sequences of parallel import legalising; the Federal Customs Service likewise expressed their position on this matter. Th e discussion continued with the active participation of Rospatent representatives, who gave a report on the practice of the Chamber of Patent Disputes of the Federal Service for Intellectual Property, Patents and Trade Marks (Rospatent).

Th e second part of the Conference was aimed at high-lighting the most important developments in the recent court practice and in the changes made to the Russian IP legislation: pledge of rights to intellectual property, legal protection of software and databases, etc.

Machine Building and Engineering Committee

AEB Open Event: "Incineration? Landfi ll? Or to be buried under waste? Ecological technologies in domestic and industrial

waste utilization in Moscow"

An open event – “Incineration? Landfi ll? Or to be buried under waste? Ecological technologies in domestic & indus-trial waste utilization in Moscow”, took place on April 3rd, 2009. Th e event was chaired by Peter Kraemer, the com-mittee’s chairman. Very well attended and organized, this was a fascinating meeting with fascinating speakers! Adam Gonopolsky, Deputy General Director, SUE “EKOTECH-PROM”, one of the leading experts in this fi eld spoke about the possibilities of developing a waste purifi cation system in Moscow. Walter Lex, General Director of Incineration Plant №3 and Adrien Durazzini, Director, EIDV, presented the results of their eff orts and spoke about the strategy of reconstruction projects. Konstantin Smorochinsky, Direc-tor of the Innovation Projects Department (EMAlliance) spoke on proposals made by his company for the construc-tion and implementation of new Incineration Plants (IPs) in Moscow and Rostov Regions.

Transport and Customs Committee

Meeting with the Federal Customs Service (FCS)

Th e Transport and Customs committee organized a meet-ing with the Federal Customs Service (FCS) on April 23rd, 2009, for AEB members. Th e arranged meeting was in line with the general agreement with the FCS to arrange quarterly meetings with the Russian customs authorities, to tackle the issues raised by AEB members and was super-vised by Deputy Head of FCS, Konstantin Chaika. Th e top-ics discussed on April 23rd related to the implementation of the concept of transfer of customs clearance points to the Russian Federation border; the creation of a customs union with Belorussia and Kazakhstan and other practical issues. Representatives from the Airlines industry raised the issue of detained luggage treatment at the airports’ customs points; currently, Russia is the only country where the pro-cedure for claiming lost luggage is too diffi cult to be imple-mented. A special meeting will be held in May to follow up on the issue and AEB members hope that it will be solved in the near future.




The ability to meet new tendencies in the industry allowed EMAl-liance to become one of the lead-ers of the power machine-building

industry in Russia, as well as to be a serious player on the world market.

Th e innovation approach in the company is considered to be the most important factor and interaction at all levels – a mandatory condition of suc-cess in innovations.

Mr. Shevchenko, to what extent is it fea-sible today to move forward in business along the innovative way? In the power machine-building indus-try, innovation projects are of primary importance to receive an order both on the domestic and world market. Customers want to receive more ener-gy effi cient and environmentally safe equipment – companies off er some-thing new all the time.

Our history shows that EMAlliance companies have never manufactured even two identical boilers – the con-struction of each subsequent boiler was improved, taking into account innovations.

What are the most signifi cant achieve-ments of the Company? We have seriously modernized and optimized our technological processes

of the manufacturing procedure. We assembled equipment, purchased a license of one of the world’s leaders in HRSG equipment – NOOTER/ERIK-SEN and we received the fi rst HRSG contracts.

We should not forget that com-bined cycle power generation consti-tutes 70% of the Russian market. In the near years, the tendency will remain.

We built relations with the world’s largest power machine-building com-panies and now, many are ready to take us as their authorized strategic manufacturer.

Whilst expressing his evaluation on the interaction with foreign compa-nies, Ivan Shevchenko emphasized that under today’s conditions, it is especial-ly important to interact actively with European companies to extend a range of potential customers and partners.

“By combining best practice and knowledge of EMAlliance, with the potential of European companies, we will be able to off er our customers optimal and up-to-date technological solutions, as well as make the com-pany’s authority higher on the world markets” – he added.

Besides, we developed the EPC con-cept, when only a year ago, we didn’t have engineering subsidiaries. Now it

is Podolsk, Taganrog, Barnaul, Ivanovo. Two years ago, we started the TEC-26 project in partnership with Alstom. It was a new experience to us but we learnt a lot and now we can take any project.

In the near future we will become experienced in the commissioning of power plants. In Russia, apart from Atom-stroyexport and Tekhnopromexport, no other company has commissioned large-scale projects so far. Next year, we plan on commissioning a large project that will make us very experienced in EPC competence development.

You say that innovations are related to the improvement of equipment environ-mental parameters. To what extent do you think that the two are related? We think that the best manufacturing technology means the cleanest tech-nology; therefore, it is clear that envi-ronmental regulation shall create posi-tive economic incentives. Th e company tries actively to take advantage of the positive experience of the European companies in this area.

We believe that the steps aimed at stiff ening environmental requirements are an additional ground to develop innovations in the power machine-building industry.

"INNOVATIONS – A MANDATORY CONDITION OF SUCCESSFUL BUSINESS DEVELOPMENT IN THE POWER MACHINE-BUILDING INDUSTRY" – THINKS IVAN SHEVCHENKO, FIRST VICE-PRESIDENT, EMALLIANCE

Interview by Alexander Rabotnov, Advisor to the Vice President, EMAlliance

Ivan Shevchenko, First Vice-President, EMAlliance

Pro

pe

rty

of

EM

All

ian

ce



For further details, please contact Olga Silnitskaya,

Project manager for market researches and statistics

Tel.: +7 (495) 234 2764, ext. 120

Mob.: +7 (906) 057 3317

[email protected]



34

58%. At the same time the percentage of businesses reducing headcount has dropped from 58% at the beginning of the year to 44% now. Over 4,200 companies from 32 countries took part in the survey including over 400 companies oper-ating in Russia, both local and multinational.

BNP Paribas

BNP Paribas launches Retail Banking in Rostov-on-Don BNP Paribas Retail Banking (CB “BNP Paribas Vostok” LLC) continued to expand its branch network in Russia, launching operations in Rostov-on-Don which became its 4th region of presence. Rostov branch will provide banking services for Individuals, Small businesses and Corporate clients. Since February 2008, the bank opened 22 branches in Moscow, St. Petersburg, Nizhny Novgorod and Rostov-on-Don.

Coleman Services

Coleman Services signed an agreement with MGIMO for an academic partnershipOn the 21st and 23rd of April 2009, Coleman Services consultants delivered a lecture and held a workshop for MGIMO graduate and post-graduate students. Th e class was held in the frames of a special course on career consult-ing, organized by MGIMO Career Center, AEB, Coleman Services and SHL.

In the 1st term of 2009/2010 Coleman Services consul-tants delivered a series of lectures and workshops within the “HR management: international practice” course. Cole-man Services’ part of the course is named, “Recruitment techniques and technologies – professionals’ secrets” and consists of 4 lectures and 2 workshops. Coleman Services and MGIMO plan to develop and strengthen partnership through joint academic and research programmes.

DuPont

DuPont presents its durable and energy effi cient construction solutions at MOSBUILD 2009 exhibitionA partner of choice for the building, construction & interior design industry, DuPont presented innovative building & construction solutions at MOSBUILD 2009, the largest building & interiors exhibition in Russia & CIS. As an inno-vative company, DuPont spends over $1.3 billion in research and development every year to create new materials with unique properties and versatile applicability, also in the con-struction industry.

ALRUD

ALRUD rated as one of the best law fi rms in RussiaALRUD holds the top places in international law fi rm rank-ings prepared by both major legal directories and special-ized professional issues. PLC Which Lawyer? Yearbook 2009, Th e Legal 500 2009 and Chambers Global 2009 recommend ALRUD in Corporate/M&A, Competition/Antitrust, Restructuring and Insolvency, Dispute Resolu-tion, Banking and Finance, Labour and Employment, Real Estate and Tax appreciating fi rm’s client-orientation, inno-vativeness, commitment, mobility and versatility.

ALRUD is recognized as M&A Law Firm of the Year 2008 in Russia by ACQ Finance Magazine and holds the absolutely leading position with respect to the amount of completed transactions in the rating of legal advisers on M&A transactions of M&A Magazine.

The establishment of the Association of Lawyers and Economists “Competition Support in The CIS” On June, 17th 2009, in Bishkek (Kyrgyz Republic), the Non-commercial partnership, “Competition support in the CIS” held a meeting. Th e meeting was held within the frame of the Inter-state Council on Antimonopoly Policy’s (ICAP) regular 29th meeting. Th e aim of the Non-commercial part-nership is to elaborate on the effi cient supranational anti-trust policy and practice, as well as the state policy on com-petition support and development within the CIS countries, in collaboration with the state’s antitrust authorities.

ALSTOM

An alliance of two railway giantsTransmashholding, Russia's leading rail manufacturer pro-viding almost 90% of the rolling stock for the CIS countries, and the French rail manufacturer Alstom Transport are join-ing forces to modernise the biggest railway network in the world. A strategic agreement, signed between them on 31st of March 2009, backed up by Alstom’s acquisition of a hold-ing in the share capital of TMH (25%+1 share), will enable the two partners to unite their strengths – namely superior technological expertise and unparalleled knowledge of the Russian market – to best meet RZD's needs, aid in the rapid modernisation of Russia's rail network and jointly assume the leading position in the country's market.

Projects in the transport sector as well as achievements in the energy sector (turnkey power plant projects, power services and especially environmental control systems) are imaging Alstom in the Russian market.

Antal Russia

More companies in Russia are hiring at professional and managerial levels according to Antal’s surveyTh e quarterly global survey of hiring and fi ring trends, con-ducted by Antal Recruitment Company, shows that the per-centage of businesses in Russia currently hiring profession-als and managers has actually risen noticeably, from 42% to

MEMBER NEWS

AEB MEMBER NEWS

DuPont's staff at the exhibition



35AEB MEMBER NEWS

Jones Lang LaSalle

Jones Lang LaSalle voted Consultant of the Year at Commercial Real Estate Awards 2009 in St. PetersburgJones Lang LaSalle was named “Consultant of the Year” at the St. Petersburg’s annual Commercial Real Estate Awards ceremony, held on June, 19th 2009.

Earlier this year, Jones Lang LaSalle was named Con-sultant of the Year at the Moscow Ceremony for the fourth year running and the fi fth time since 2004, when the Awards ceremony was held for the fi rst time.

Jones Lang LaSalle Named to 2009’s “World’s Most Ethical Companies” List by the Ethisphere InstituteJones Lang LaSalle Incorporated (NYSE: JLL) was been named to Th e Ethisphere Institute’s World’s Most Ethical Companies list for 2009. Th e list recognizes 99 companies from around the world in 35 diff erent industries for their commitment to ethical business practices. Jones Lang LaSalle has been named to the list for the second year in a row and is the only fi rm from the real estate industry to be included.

Magisters

Spetsstal Association and Magisters Protect Interests of the Suppliers and Consumers of Special Steel and AlloysSpetsstal Association and international law fi rm Magisters will join forces to participate in the anti-dumping investigation initiated by the Ministry of Industry and Trade of the Russian Federation regarding the import of fl at rolled nickel-containing stainless steel (Order No. 189 dated March 25, 2009).

On April 6th, 2009 the Russian-based Spetsstal Associa-tion announced the establishment of the Coalition Against the Anti-Dumping Investigation. Th e Coalition will unite suppliers and consumers of special steel with the aim of protecting their interests jeopardized by the current anti-dumping investigation. Th e investigation is carried out in respect of the import of fl at rolled nickel-containing stainless steel from Federal Republic of Brazil, the People’s Republic of China (including Taiwan), the Republic of Korea and the Republic of South Africa to the Russian Federation.

Marriott International

The Marriott Moscow Royal Aurora hotel kicks off the summer season in style by opening its revamped summer terrace caféIt is not Italy, but the Mediterranean feeling is here. Th e hotel’s summer terrace, overlooking the upmarket pedestrian Stoleshniki lane, has a brand new look to go with its new name. Th e alfresco Vicolo on the side of the hotel bar evokes a relax-ing feeling of the south without leaving the north and has already become one of the most popular terraces in town. You wouldn’t dream of being anywhere else on a sunny Moscow day but on the deck of the Vicolo. It was meticulously rede-signed for this summer season; framed with multiple fl ower-beds, canopy-covered to protect from a sudden shower, bright and cheerful crisp-white table cloths, multicolored cushions and brand new uniforms for the smiling staff . Bag a coveted table and delve into the new stylishly designed menu off ering a mix of modern European and fusion dishes from Executive Chef Th omas Koessler. Alternatively, just sip a refreshing cock-tail and enjoy the oasis in the city.

During MOSBUILD exhibition, DuPont will showcased its full construction industry portfolio: Corian®, Montelli® and Zodiaq® surfaces, decorative SentryGlas® Expressions safety glass, high-performance Typar® geotextiles applied in construction, Zonyl® fl uoroadditives, Capstone® short-chain repellents and surfactants, Bynel® adhesive resins, as well as Plantex® and Greenvista® landscaping layers.

ITE LLC

ITE partners with Deutsche Messe to stage industrial trade fairs in Moscow 2010ITE Group plc is pleased to announce a partnership with Deutsche Messe Hannover to launch four new industrial tradeshows in Moscow in the Autumn of 2010.

Th e events, MDA RUSSIA, Industrial Automation RUS-SIA, Surface RUSSIA and CeMAT RUSSIA will be held under the parent brand ‘Industrial Trade Fair Moscow’ and will run from 28th September to 1st October 2010 at the All-Russian Exhibition Centre VVC.

ITE Moscow’s Director General, Alexander Shtalenkov said, “I am very pleased to be partnering with Deutsche Messe in the organisation of the new Industrial Trade Fair Moscow. Our combined expertise and shared vision for the event gives me enormous confi dence that it will be a great success”.

Deutsche Messe Board Member, Dr. Andreas Gruchow said, “Despite the current global economic crisis, Russia is and will remain a key market for the global export sector. Our four new industrial tradeshows cover all the themes of core importance for the modernisation of Russia’s industrial sector. We are confi dent that a recovery is just around the corner and that the Russian market will once again be in expansion mode. We have therefore made a carefully con-sidered decision to invest now in what is a growth region of pivotal importance”.

Russia remains fully committed to its program of indus-trial, public sector and infrastructure modernisation. It has a long and proud history in the machine-building and mechanical engineering sector but the country’s need for modernisation is colossal, a fact that provides huge busi-ness opportunities for domestic and international industrial plant and machinery manufacturers.

The offi cial signing of the partnership



36 AEB MEMBER NEWS

Marriott Grand Hotel opens its summer Grand Alexander Terrace on the second fl oor of the hotel Do you want to take a short break from the buzz of a busy city center and to fi nd a shelter under a cozy umbrella on a quiet and welcoming open deck cut from the outside world? Th en head straight to the second fl oor of the fi ve-star Marriott Moscow Grand hotel to a small terrace café, enclosed by the hotel’s walls. Th e Grand Alexander Terrace is a nice alfresco complement to the evening restaurant under the same name

and you can bag a table there to enjoy a long Moscow sum-mer evening. Th e terrace can sit some 20 guests at its six tables, placed in a way to provide maximum privacy. Mod-ern furniture, rattan-style chairs, wide white umbrellas are designed to create a relaxing atmosphere. A barbecue grill adds to the casual feeling and it is but natural that barbecue-style food is high on the terrace menu agenda. Th e guests are welcome to order popular shashlicks or mini-steaks and to compliment them with fresh summer vegetables from a salad-bar. Every Th ursday guests, summoned by the slogan “All-You-Can-Eat” can have an unlimited feast of BBQ and salad bar choices at the price of 990 RUB per person.

Mercedes-Benz Russia

Mercedes-Benz Russia Enhances Performance in the Russian Market and Invests 30 million Euro in RussiaMercedes-Benz Russia SAO has been constructing a new versatile Sales and Service Center for used passenger cars and new commercial vehicles at the intersection of Altu-fi evskoe highway and Moscow Ring Highway, in close prox-imity to an existing After-Sales Center in Veshki settlement. Th e Center’s construction is a part of the Mercedes-Benz Russia SAO strategy on own retail development, targeting on strengthening company positions in the Russian market.

As supplementary to the existing facilities of Training and Logistics Centers, the total area of the future center will amount to approximately 13 000 sq.m.

Mercedes-Benz Russia SAO opened its fi rst dealer outlet – Mercedes-Benz Center in 2005. Th e further deve-lopment of own retail strategy will result in the opening of a second dealer outlet in Moscow in the near future. Th e new four-storey building will comprise a show room, repair shops for passenger cars and trucks and a big 45 stations’ paint-and-varnish and body repair center. Th e new center will create over 280 new jobs. Foundation works have been currently underway. Th e commissioning of the building is scheduled for the fi rst quarter of 2010.

Dr. Frank Reintjes, Head of Daimler AG, After Sales Department made a site visit in the course of his business trip: “Daimler AG has repeatedly ranked Russian market among the most signifi cant emerging markets of the world, this being in line with our practical steps. Th e new Center will allow us to provide a new level of servicing for our clients".

Morgan Hunt

Best of the Best: Morgan Hunt Recruitment Is Biggest Winner at Annual Recruiter AwardsWith some stiff competition at the annual Recruiter Awards in London, Morgan Hunt Recruitment has scooped three prestigious awards including the overall Gold Grand Prix award – beating 90 other agencies shortlisted. Other awards included; Best Public Sector Recruitment Agency and Best Corporate Social Responsibility Strategy.

Th e Recruiter Awards are the industry’s ultimate rec-ognition of excellence in recruitment practice and are independently judged by a cross-section of directors and senior management from organisations such as: BDO Stoy Hayward, Recruitment Industry Benchmarking, Employ-ment Relations Directorate and Saff rey Champness. Th e judges represent signifi cant depth in expertise across the recruitment industry, human resources, resourcing, corpo-rate fi nance, government policy, HR academia and research, and market intelligence.

New Contacts in MoscowMorgan Hunt Selection is delighted to announce its move to a new offi ce. Since 15th June Morgan Hunt Selection is located: 3/8 Ilyinka str., bld. 5, offi ce 201, Moscow 109012 Russia. Telephone: + 7 (495) 921 2110. Center-located, just one-minute work from the Kremlin, the Morgan Hunt Selection offi ce welcomes guests – clients, candidates and partners – to discuss business or career opportunities.

Morgan Hunt Selection is now located together with Morgan Hunt Executive Search that makes it easier and more convenient for clients and partners to deal with two businesses of Morgan Hunt Group.

PricewaterhouseCoopers

PricewaterhouseCoopers Russia was recognised as 'Transfer Pricing Firm of the Year' On the 19th of May 2009, the International Tax Review presented its annual European Tax Awards in London, cel-

A glimpse of what the Grand Alexander Terrace has to off er

Offi cial launching of the new site



37AEB MEMBER NEWS

ebrating the most innovative tax transactional, structuring, litigation and transfer-pricing work done in Europe between February 2008 and February 2009. PricewaterhouseCoopers in Russia was recognised as 'Transfer Pricing Firm of the Year'.

PwC leadership in this fi eld also was supported at the global awards: PricewaterhouseCoopers was named 'Euro-pean Transfer Pricing Firm of the Year' and won 'National Transfer Pricing Firm of the Year' for fi ve countries in total, including Austria, Germany, Poland, Portugal and the UK. Th e awards didn't stop there. Th e UK fi rm also won the award for 'Best Use of the Internet', and Switzerland was recognised as 'National Tax Firm of the Year'. In total, PwC won nine awards — more than any other Big-4 fi rm in Europe.

To decide the winners, International Tax Review’s edi-torial staff undertake detailed research from a variety of sources: submissions from fi rms, feedback from CFOs and the results of European market research for the directory World Tax 2008.

RUSSIA CONSULTING

RUSSIA CONSUTLING now off ers several additional offi ce premises for sublease in best city center locations:RUSSIA CONSUTLING as of now can off er you several additional offi ce premises for sublease in the best city center locations:

At ul. Petrovka 27, right at the boulevard ring and within fi ve minutes’ walking distance to Pushkin square, as well as right at Paveletskiy train station (with its Aeroexpress train to Domodedovo airport), at the inner side of the Garden ring.

Especially in times of crisis, simply structured, all-inclu-sive packages without long-term durations, including com-plete equipment are of interest.

Included in our packages are all offi ce equipment; all variable costs; all costs for IT infrastructure and offi ce com-munication, including consumables; costs for telephone and internet, including traffi c and international calls; usage of the common kitchen; secretary and reception service as well as cleaning service; security systems and guard services.

For a customized off er according to your company’s needs our head of administration, Ms. Desirée Leinenbach, [email protected], will be at your disposal.

“Yust” Law Firm

Law fi rm “YUST” has been included in the “Chambers Europe” Guide in 2009In 2009, “Yust” Law Firm was entered into the “Chambers Europe” Guide. Chambers – an authoritative international reference material publishes the names of leading law fi rms and lawyers on an annual basis. Th e rating of companies and individuals is based on an objective independent overview and is predicated upon information received by Chambers’ analysts during the research process carried out in the form of explicated interviews with clients and other market players.

According to researches of Chambers, for the region coverage of Europe, Russian companies prefer the “YUST” Law fi rm for work on dominant position disputes, including competition and antitrust disputes.

APPOINTMENTSAllen & Overy

Allen & Overy Moscow has strengthened its Corporate and Banking Practices in Russia and the CIS

Allen & Overy is pleased to announce the promotion of Anton Konnov and Elena Tchoubykina to the partnership in Moscow, which took eff ect from the 1st of May 2009.Anton Konnov is a Corporate Partner in the Moscow offi ce of Allen & Overy. He concentrates on corporate transac-tions, including cross-border mergers and acquisitions. Elena Tchoubykina becomes a Banking Partner in the Moscow offi ce of Allen & Overy. She has acquired substan-tial banking and capital markets experience.

Ernst & Young

New partner at Ernst & Young

Ernst & Young is pleased to announce that Sergey Stefanishin, Director of the Legal Group in the Tax and Legal practice at the Moscow offi ce, has been admitted to the partnership. Sergey has a strong legal back-ground in corporate (M&A), commercial

and labor law with 12 years of extensive and progressively responsible post-qualifi cation experience in international and domestic law fi rms.

Sergey has been advising multinational clients in a wide range of sectors, including, among others FMCG, telecom-munications, machinery and energy sectors on a number of investment and high-profi le M&A projects, acquisition of stakes in Russian companies, and other issues within the general corporate and commercial legal spheres.

Marriott International

Nicolas Kipper was appointed General Manager of the Moscow Marriott Grand Hotel

Nicolas Kipper brings to his new position his vast experience. Prior to this appointment, he worked for two years as the General Manager of the Marriott Tverskaya hotel. Under his supervision, the hotel’s public areas and con-ference facilities were totally renovated, intro-

ducing a more refreshing style – modern, with a choice of colours, more adapted to today’s ever changing tastes.

He is not new to the Marriott Grand hotel, prior to his tenure at the Marriott Tverskaya, Nicolas held the position of Director of Operations at the Marriott Grand Hotel from February 2004. During this time, Nicolas used to great benefi t his extensive experience in hotel operations, playing a signifi cant role not only in the hotel's commercial performance, but also quality and service achievements demonstrated by the hotels Brand Audit and GSS results during the period.



38

Mercedes-Benz Russia

Mercedes-Benz Russia: New appointments

Within the last months, there have been a number of new appointments at Mercedes-Benz Russia SAO, as a result of a reorganization of the company’s structure.

Since the end of 2008, Boris Billich has been the new Vice-President of Commercial Vehicle Sales. Boris Billich began his career in 1990 at the former Mercedes-Benz AG. For the last fi ve years, Boris Billich has worked as a Sales Direc-tor for the Sales and Marketing Commercial

Vehicles department at Mercedes-Benz Czech Republic.Eff ective January, 2009, Dr. Klaus-Peter Arnold was appointed Vice-President, Finance and Controlling, Mercedes-Benz Russia SAO. Dr. Klaus-Peter Arnold started his career at Daimler-Benz AG in 1986. Prior to joining Mercedes-Benz Russia, he headed

the Daimler AG Financial Accounting department in Stutt-gart from 2006 until the end of 2008.

Starting February, 2009 Jan Witt was appointed Vice-President, After Sales, Mer-cedes-Benz Russia SAO. He started his career at Daimler-Benz AG in 1995, within the tal-ent management program for sales organiza-tion Mercedes-Benz Cars. Since 2005 and

until his appointment in Russia, Jan Witt headed the Service and Management commercial vehicles department, Daim-ler AG in Berlin. Jan Witt took over from Harald Reuter, who headed the After Sales Department from March, 2007.

According to company strategy on own retail development, targeting on strengthening company positions in the Russian market, Harald Reuter was appointed Vice-Presi-dent Own Retail.

Morgan HuntAppointments

Morgan Hunt Selection is pleased to appoint Natalia Shkulova as its new Head of Pharmaceutical and Medicine Practice and Natalia Skiruta as a Senior Consultant at Banking Practice.

Troika Relocations

Appointments

Troika Relocations, Russia’s leading provid-er of bespoke, corporate relocation services, is delighted to announce that Gethin Jones has been appointed as Business Develop-ment Director with the company. Gethin will be responsible for increasing the number of

the company’s corporate clients as well as managing the provision of high-level services to client companies and their international assignees.

Gethin, a long-term expatriate and Board Member of the British Business Club in Russia, brings with him four years’ experience in the Russian real estate sector during which he

was responsible for the provision of real estate services to a range of blue chip multinationals based in Russia.

Rödl & Partner

Rödl & Partner strengthens real estate department in Russia

Sergei Verschinin was appointed the new head of the real estate and construction law department of Rödl & Partner in Russia.

Mr. Verschinin has broad experience in con-sulting, with particular focus on real estate and construction law. Previously, Mr. Verschinin had

worked with a big Russian law company as Head of the Depart-ment for foreign investors’ support, as well as with a Swiss law offi ce in Moscow, accompanying real estate projects and deals.

AEB MEMBER NEWS

AIG Insurance and Reinsurance Company ZAO "AIG Insurance and reinsurance company" is a wholly owned subsidiary of AIG Europe, S. A. ZAO «AIG Insur-ance and Reinsurance Company» is fully capitalized and licensed by the Federal Service of Insurance Supervision. Licenses C № 3947 77, П № 3947 77 for insurance and rein-surance activity in Russia were granted on December 29, 2006. Th e Company has offi ces and agencies in Moscow, branch in St. Petersburg and representatives in Kaliningrad, Rostov-on-Don and Yekaterinburg. AIG Insurance and Reinsurance Company is focused on property and casu-alty insurance for corporate and individual clients. Principal product lines include property, diff erent types of liability insurance, oil and gas petrochemical, marine cargo insur-ance, auto, homeowners, accidents & health, corporate travel insurance and reinsurance.

Avenir Group Avenir Group serves international clients

who invest and conduct business operations in Russia. We provide Accounting and Audit services as well as Manage-ment services. Hellevig Klein & Usov is an integral part of Avenir Group – which provides litigation services and practical legal solutions to corporate and individual clients in all major areas of business law. In Russia, we are one of the leading specialists in tax, corporate and labor law.

For more information please visit our website: www.aveniraccounting.com.

BAUER technologieBAUER Technologie, a full subsidary of BAUER Spezialtiefbau GmbH in Russia. BAUER has been operating since 1986 in Russia, when it

became one of the fi rst foreign deep foundation companies to enter the Russian market. Today BAUER Technologie is one of the leading specialists for special deep foundation in the country. BAUER has participated in numerous highlight

NEW MEMBERS



39NEW MEMBERS

projects such as Hotel Metropol, Hotel Moscow, Bolshoi Th eatre and Moscow City. For more information please visit our website: www.rusbauer.ru.

Capital Legal Services Capital Legal Services is a full-

service law fi rm with 25 attorneys in Moscow and St. Peters-burg, providing full range of legal services to major interna-tional and Russian clients with business interests in Russia and CIS. CLS is member of the International Bar Associa-tion and foreign associate of the American Bar Association Section on International Law and Practice.

In Russia we are member of the Russo-British and Ameri-can Chambers of Commerce, St. Petersburg International Busi-ness Association and Russian Council of Shopping Centers.

In our practice we focus on:Practical business approach to legal issues; ■

Effi cient communication system; ■

Operational and cost effi ciency; ■

Strict compliance with ethical standards. ■

For more information please visit our website: http://www.cls.ru.

Chadbourne & Parke LLC Founded in 1902, Chadbourne

has grown into an international law fi rm with over 420 attorneys in 12 offi ces worldwide. We provide practical business solutions to leading international and U.S. corpora-tions, fi nancial institutions, trade associations and founda-tions, start-up businesses, partnerships and individuals in areas such as: mergers and acquisitions, securities, project fi nance, corporate fi nance, energy, telecommunications, commercial and products liability litigation, securities litiga-tion and regulatory enforcement, special investigations and government enforcement, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and fi nancial restruc-turing, employment law and ERISA, trusts and estates, and government contract matters.

DO IT Evolution Do It Evolution is the only company in Russia completely dedicated to coaching. We coach

individual CEO, GM and top executive who want to achieve higher goals, we also coach their team by creating a team spir-it, integrating cultural diff erences, implementing change…

Coaching is a complete set of tools and techniques help-ing people achieving their goals quicker and in a more com-fortable way. Coaching is multicultural as well as our team, we coach in Russian, English and French.

For more information please visit our website: www.do-it-evolution.ru.

Eberspächer Exhaust Systems RUSTh e company founded in 1865 with headquar-ters in Esslingen am Neckar is independent of any group and concentrates on two core com-

petences: exhaust technology (catalytic converters, particu-late fi lters, silencers) as well as pre-heaters and add-heaters

for passenger cars, transporters, trucks, busses, building vehicles and boats. In exhaust technology we are numbered among the four largest suppliers worldwide. And also in the vehicle heater sector Eberspächer belongs to the lead-ing companies on the world market. Eberspächer employs more than 5,500 employees in 19 countries. We design carefully tuned complete exhaust systems from the cylinder outlet to the tailpipe in close cooperation with OEMs. Pre-cisely adapted to the relevant vehicle design and the engine specifi cation. For more information please visit our website: www.rus-eesr.ru.

EC Harris Rus LLCEC Harris is a leading international built asset consultancy, active in Russia since

1997 with a fully established offi ce in 2007. We help clients to get the most from built assets, working with them to plan and then execute strategies that optimise the construction, opera-tion, use and ownership of built assets. We generate positive outcomes for our clients with innovative solutions across multiple sectors: property – commercial, retail, hotel, residen-tial and investment consultancy; energy & manufacturing; transport; oil & gas; and utilities. Our built asset consultancy combines varied services through the asset life cycle, from strategic planning to implementation and optimization.

Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria (GBC) GBC is a coalition of more than 220 com-panies united to keep the fi ght against HIV/

AIDS, tuberculosis, and malaria a global priority. Th e Coali-tion’s members share learnings from the front lines of the fi ght, and GBC provides tailored support so that companies can take an active role in defeating the pandemics. GBC also organizes collective actions among companies, and links the public and private sectors in ways that pool talents and resources. GBC represents the private sector delega-tion to the Global Fund. In Russia and Ukraine, GBC raises awareness and builds political will; provides high-quality policy research and analysis; strengthens civil society; forges innovative global partnerships; and, supports policymakers, business executives, and media leaders in their eff orts to stem the growing tide of HIV/AIDS and tuberculosis in the region. For more information please visit our website: www.gbcimpact.ru.

HILL International Russland GmbH Make your personnel search, selection and positioning more effi cient, discover the full potential of your present and

future employees! As your Human Resources partner, we combine a scientifi c-founded and innovative approach with the specifi c needs of your company. Network of 40 offi ces in more than 20 countries guarantee successful assignments’ realization in 18 languages. Being pioneers of the Russian HR-consulting market since 1989, HILL helps you to incre-ase your organizational eff ectiveness through replenishment and full realization of your HR capital. For more information please visit our website: http://www.hill-international.ru.



40 NEW MEMBERS

MANNESMANN INSTRUMENT LLC

MANNESMANN INSTRUMENT LLC was founded in August 2008 as a daughter company of Brüder Mannes-mann AG with the target to present production of member companies of the concern on the territory of the Russian Federation. Moreover the company represents interests of Brüder Mannesmann AG in the fi eld of innovation develop-ment and investment activities in Russia.

Main business activity – wholesale with tools and pipe-line connection systems. Mannesmann Instrument LLC presents one producer of tools and 4 valve producers.

For more information please visit our website: www.mannesmann.su

Merloni Progetti SpA established in 1973, merloni progetti is a leading italian epc contractor with a track

record of more than 100 industrial production sites carried out in 26 countries worldwide. the company is specialized in the design, supply, installation and start-up, including per-sonnel training, of industrial plants, built on the basis of pro-prietary patents or exclusive licenses, providing its clients with innovative solutions in the fi elds of electromechanical engineering and bioenergy technologies, agriculture and food industry and waste processing. moreover, the company supports its clients during the fund raising process both on the equity and bank borrowing side. For more information please visit our website: www.merloniprogetti.ru

Nomura Nomura is a leading fi nancial services

group and the preeminent Asian-based investment bank with worldwide reach. Nomura provides a broad range of innovative solutions tailored to the specifi c requirements of individual, institutional, corporate and government clients through an international network in over 30 countries. Based in Tokyo and with regional headquarters in Hong Kong, Lon-don, Moscow and New York, Nomura employs about 26,000 staff worldwide. Nomura’s unique understanding of Asia enables the company to make a diff erence for clients through fi ve business divisions: investment banking, global markets, retail, merchant banking, and asset management. For more information please visit our website: www.nomura.com

Software AG Software AG is the world’s largest

independent provider of Business Infrastructure Software. Software AG has almost 40 years of global IT experience. Our 4,000 global enterprise customers achieve business results faster by modernizing, integrating and automating their IT systems and processes. As a result, they rapidly build measurable business value and meet changing busi-ness demands. Software AG operates in Russia/CIS as the representative offi ce and SAG Systems RUS LLC (100% subsidiary of Software AG), concentrating on government, banking, insurance, aircraft and engine construction sectors.

Th e company is strong in Russia, supplying technologies and helping to carry out projects for a number of organiza-tions including Federal Protective Service of the Russian Federation (IT support of the President’s administration of the Russian Federation), Ministry of defense of the Russian Federation, Gazprom, Russian railways, Road police of the Russian Federation, Public Health Ministry of the Republic of Tatarstan, BTA bank, Interfax News Agency, etc. For more information please visit our website: www.softwareag.com

Spectrum Holding Founded in 1998, SPECTRUM Group

is now one of the major players in the Russian real estate market.Th e SPECTRUM portfolio consists of more than 300 proj-

ects in the Offi ce, Retail, Warehouse, Public Recreation, and Industrial sectors of the commercial real estate industry in dif-ferent regions of Russia. Problems on fi nancial markets urged most investors to change their business strategies. Both inves-tors and buyers place particular importance on purchasing real estate assets that are innovative in terms of environmental protection, energy effi ciency, and profi tability. Th e quality of SPECTRUM’s services corresponds to these modern trends and challenges. Raising a company’s fi nancial effi ciency is not an end in itself; rather, it is the result of sound management that focuses on sustainability and quality of service. Our solutions are always elegant and practical. Th ey meet all client require-ments and legal norms, are safe and easily carried out, and are brought in on budget and on time. Our services: Project Management, Design, Obtaining Offi cial Permits and Approv-als, Construction Management / Management Contracting, Property and Facility Management, and Consulting. For more information please visit our website: www.spectrum-group.ru

Volnaya KubanA newspaper agency based in Krasnodar. For more information please visit our

website: www.gazetavk.ru.

AEB Membership Benefi tsEff ective Lobbying

Advocating members' interests to public offi cials, legislators and business decision-makers in Russia and the EU. Cooperating with the Russian autho-

rities to solve business issues and eff ective interaction with lawmakers.

Quality Business InformationPublications: AEB Business Quarterly, Membership Directory, Position Paper,

Real Estate Monitor, How to Invest in Russia, monthly AEB News.Regional presentations and business development missions to the regions.

More than 20 sector and issue-based committees and working groups in Moscow, St. Petersburg, Krasnodar and Yekaterinburg.

Valuable NetworkingOrganising open meetings, conferences, political briefi ngs and other

high-profi le events with prominent government and business leaders. Regular social events, including embassy EuroReceptions Government

and business contact information in Moscow and the regions. Online access to Member Database.

Marketing Opportunities and VisibilityInternet links and banners. Advertising opportunities in AEB publications.

Sponsorship opportunities during AEB events.


Danya Cebus Rus LLC Subsidiary of Danya Cebus Ltd

Smart Construction

Contacts: 11/10 bld. 4, Letnikovskaya street, Moscow, Russia, 115114, Tel.: +7 (495) 796 9983, Fax: (495) 796 9984

Danya Cebus Rus LLC has been working • in Russia since 2001.

The Company is the subsidiary of interna� onal • Israeli Construc� on Company “Danya Cebus Ltd.” (www.danya-cebus.co.il).

Danya Cebus Rus executes all types of • construc� on projects of any complexity.

The scope of Company’s ac� vity bases on • implementa� on of projects such as hotels, trade and offi ce centers, roads, schools, kindergartens, residen� al construc� on.

Quality, safety and customer service are • the basic principles that guide the Company through its day to day business.

Business Quarterly

Sum

mer

200

9

Quality Information • Effective Lobbying • Valuable Networking

AEBA s s o c i a t i o n o f E u r o p e a n B u s i n e s s e s

MOVING FORWARD: New Technologies and FrontiersAn Overview of Russia’s Machine Building & Engineering Sector:

Adv

ertis

ing

The Crisis Management Toolkit • Project Management in Russia A Survey of the Labour Market • AEB Member News

AEB Business Quarterly 07.2009

Documents

Transcript of AEB Business Quarterly 07.2009