American 3M to Expand into Russian Regions

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Mar. 23 – The U.S. industrial conglomerate 3M, formerly known as the Minnesota Mining and Manufacturing Company, plans to build local facilities in Russia’s Tyumen and Samara regions. The total investment is expected to be more than US$15 million, Reza Vaziri, 3M Russia chief said Tuesday to reporters.

The company’s facility in Tyumen will produce an insulation material Thinsulate — a very thin synthetic fiber thermal insulation fabric used in clothing. The other one in Samara will make glass bubbles used as an additive to cement that fortifies oil and gas wells.

“Investment in the facilities — one tentatively in the oil-producing Tyumen region and the other in the automotive industry center Samara — could rise to US$30 million,” said Reza Vaziri, while adding that the construction is part of 3M’s expansion plan through 2015.

“Our activity in Russia was mainly localized around Moscow and St. Petersburg. This year the regional development will become our critical tasks. The Tyumen region, with developed oil and gas industries, is our primary concern. We plan to increase our regional staff there and as well as in Samara,” Vaziri said.

The U.S. company’s first Russian domestic plant in Volokolamsk, Moscow area went into operation in July, 2008. The plant is producing anticorrosive materials for protection of pipelines and face masks for the chemical and mining industries.

According to Vaziri, the company is spending an additional US$8 million this year mainly on increasing capacity at its Volokolamsk plant. 3M’s total investment into its Russian division up to now amounts to US$28 million and includes the construction of the first facility.

Minnesota-based 3M also plans to set up a lab in Volokolamsk that would test the quality of local raw materials and study ways to modify company products to the Russian market, he said.

Quality issues that prohibit the use of domestic raw materials, such as resins, are one of the biggest challenges in localizing production, Vaziri said.

3M is reviewing options for a local acquisition. Companies making home and office products are one segment being investigated, he said.

Tyumen is Russia’s third-largest region in area of 1.4 million square kilometers (8.4 percent of Russia’s total area), which is equivalent to the combined areas of Germany, France, Italy, and Great Britain.

The Tyumen region occupies a large part of the West Siberian Plain and in fact divides Russia into two large territories: a western part consisting of the Urals and European Russia and an eastern, Asiatic part consisting of Siberia and the Far East.

Its administrative center is the city of Tyumen, with over half a million inhabitants.

The Tyumen region ranks first in Russia in industrial output. The oil and gas industry is the foundation of the regional economy. A well-developed oil refining industry supplies light hydrocarbon feedstock to the country’s petrochemical industry.

The oil and gas industry is the foundation of the regional economy, accounting for 87 percent of the region’s industrial output.

In addition to oil and gas, the region produces peat, sapropel, quartz sand, brick and ceramic clays, limestone, and building stone. Livestock farms raise cattle, pigs, sheep, goats, horses, and poultry. More than 84 percent of the region’s agricultural products are produced locally.

According to the Ministry of the Regional Development last year economical and financial data analysis, Tyumen region recognized as one of the most investment attractive Russian region.

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