NOTHING VENTURED

We believe in developing our business in Russia

Heidelberg Cement has over 3,000 representative offices in over 60 countries all over the world. We sat down to talk with Mihail Polendakov, General Manager of Heidelberg Cement in Russia, about the company’s activities.

Cement has always been and continues to be a hot commodity: not a single construction project can be completed without it. The talented entrepreneur Johann Schifferdecker realized the potential for development in the cement industry and purchased the Bergheim mill back in 1873. The mill was a small cement production factor on the Neckar River in the German city of Baden-Württemberg. This is where the story of Heidelberg Cement started. Since then, the company has come a long way and is not one of the leading manufacturers of cement and concrete. For six years, Heidelberg Cement has been on the list of top German enterprises according to the DAX performance index.

When did Heidelberg Cement come to Russia and why did you make the decision to enter the Russian market? Was there demand for cement and gravel in Russia?

HC had plans and investigates the market situation since 2002. A final decision was made to enter the market in 2005. Certainly there was a demand for cement and gravel of high and permanent quality in Russia. We seriously believe in further positive development of our business here.

What objectives did your company initially set when it entered the Russian market and what kinds of challenges did you encounter in the beginning?

Our aim was to establish a long term operation after a thorough research of the Russian market. To be honest we did not encounter any difficulties unique to Russia. It was a process similar to a market entry in many other countries around the world.

A lot of people would be jealous of Heidelberg Cement’s success in Russia: suffice it to say that the company has three factories here. Tell us about these enterprises: where are they located, what do they make and what are their capacities?

That is for you to judge. So far, our success in Russia is based on the daily work and efforts of our management team and our people. We have cement plants in the Tula region, in Sterlitamak, the Republic of Bashkortostan, and in Slantsy, the Leningrad district. The overall capacity is 4,6 MIO tons.

Aside from these factories and the Moscow office, what else does Heidelberg Cement own in Russia?

We have built terminals in Kaliningrad and Murmansk and we have our administrative, SSC, HR and technical center in Podolsk.

How many employees does Heidelberg Cement have in Russia?

1,481 people as of the end of September of this year.

Obviously, you need highly qualified professionals for your business. Where do you find them?

Our priority is to search from within either all of our operations in Russia or globally within our Group. Our team consists of few expats and predominantly Russian people.

Could you give us an approximation of what Heidelberg Cement’s share is in the overall volume of cement and other construction materials used in Russia?

It depends on the methodology: I can only say that we are one of the small players. Roughly we account for about 5.5-7% of the Russian market and for about 9-11% of the Moscow market. And once again it fully depends on the way you calculate it.

Heidelberg Cement is probably well-represented on the Moscow construction materials market. What facilities and buildings (administrative, economic, cultural and so on) were constructed with materials produced by your company?

We supply major players of the Moscow construction market with high quality cement that they use for different projects. Mostly it’s housing and infrastructure projects such as metro stations, stadiums, road infrastructure etc.

Right now, construction of facilities for the upcoming 2018 FIFA World Cup is underway in Russia. Does your company supply construction materials for the implementation of these projects?

There are some projects which are being built with our products, but we never work directly - we supply the projects’ subcontractors.

Have the economic sanctions against Russia, which remain in place today, affected Heidelberg Cement’s business here?

Not much. We are a local producer. Cement is a local business. We occasionally have some compliance and legal issues to take care of, but I would say it’s the same for all foreign strategic investors.

Considering the current challenging economic climate, do you still think that doing business in Russia is promising?

For sure. Otherwise we would not be planning the long term strategic development of our business in the Russian Federation.

You have been working in Moscow for five years already. Could you talk a little bit about your impressions of the city? Are you comfortable in the Russian capital?

I feel at home in Moscow. My family as well. It’s a booming and cosmopolitan metropolis with an interesting and rich cultural life. I like this city, I hate the traffic. I feel very comfortable in Moscow. The only thing I dislike are the traffic jams.

 

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