An Analysis of Manufacturing Industries in North-Western Russia

Transcription

1 An Analysis of Manufacturing Industries in North-Western Russia Ekaterina Myller Lea Hannola Northern Dimension Research Centre (NORDI) Lappeenranta University of Technology Lappeenranta, February 2011

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3 Table of Contents 1 Introduction Northwest Russia Research process Industry analysis Manufacture of food products and beverages Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials Manufacture of machinery and equipment Manufacture of motor vehicles, trailers and semitrailers Summary References... 32

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5 1 Introduction This research report is a part of the ELLO project, the main financier of which is the European Regional Development Fund (ERDF) program for Southern Finland, The main objective of the ELLO project is to enhance the competitiveness of the transportation corridor in Southern Finland, to create a common brand, and to gain more visibility for the Southern Finland transportation corridor. The aim is to produce new information about economic performance, the needs of customer industries and the future business potential, and to develop the security and sustainability of the corridor. An international marketing campaign is created in the project to increase the visibility of the transportation corridor via Finland. (Ryynänen, 2010; Ello, 2009) The present report concerns research carried out in a subproject (WP2) of the ELLO project. The objective of WP2 is to find out long-term customer needs for the logistics industry in Finland through industry analysis of bottlenecks, and to study their influence on the Southern Finland transportation corridor. This subproject is implemented in the Northern Dimension Research Centre (NORDI), which is an institute that coordinates research and operations involving Russia at Lappeenranta University of Technology (LUT). NORDI combines the academic perspective with expertise in business and industry, playing an important role at international, national and regional levels. The objective of this report An Analysis of Manufacturing Industries in North-Western Russia - is to present an industry analysis of north-western Russia. The analysis focuses on industries that are essentially connected to the logistic industry and related services. Thus, this report covers the following industries: 1) manufacture of food products and beverages, 2) manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials, 3) manufacture of machinery and equipment, and 4) manufacture of motor vehicles, trailers and semi-trailers. 5

6 2 Northwest Russia Northwest Russia is one of the seven federal regions in Russia (see Figure 1). Its territory is approximately 1,678 thousand square kilometres, which is 10% of the entire Russian territory. The north-western federal region consists of the Leningrad region, which surrounds the city of St. Petersburg, the Republic of Karelia, the Murmansk, Pskov, Novgorod, Arkhangelsk and Nenets autonomous regions, as well as the Komi Republic and the Kaliningrad region. The administrative centre of the territory is located in St. Petersburg. St. Petersburg and its neighbouring area have represented by far the largest concentration of population, business activity and education and R&D institutions throughout times in the Northwest. Being a centre for military and space technology during the Soviet times shaped the development of related industries in St. Petersburg. St. Petersburg is also the unquestionable leader in shipbuilding, energy technologies and machine building within the entire Russia. (Dudarev et al., 2005) Figure 1. The north-western federal region in Russia (NwRussia, 2011) Figure 2 depicts the population development in the entire region of Northwest Russia. The general trend of population decrease can be observed in Northwest Russia as well, with the decrease of almost 294 thousand inhabitants in five years in The decrease of population in the entire Russia within the same time period was about 1.08 %, which is lower than in the Northwest, where the decrease of population was about 2%. 6

7 Figure 2. Population development in Northwest Russia (Goskomstat, 2010) Figure 3 presents how the total population of Northwest Russia is distributed within the different regions. The figure depicts the shares of populations in the studied regions and Arkhangelsk; the Nenets autonomous regions as well as the Komi Republic and the Kaliningrad region are included in the category Other regions in Northwest Russia. It is obvious that St. Petersburg has the largest population in the regions under focus. Combined with its geographically neighbouring area of the Leningrad region, these two regions had 46% of all inhabitants within the entire Northwest Russia in The rest of the regions, namely Pskov, Novgorod, Murmansk and the Republic of Karelia represented 21% of the inhabitants within the entire Northwest Russia in Figure 3. Regional structure of population in Northwest Russia (Goskomstat, 2010) Pskov Region Novgorod Region Murmansk Region Republic of Karelia Leningrad Region St. Petersburg Other regions in North West Russia 7

8 Figure 4 depicts the distribution of gross domestic product in million roubles within Northwest Russia. It can be observed that throughout the depicted time, St. Petersburg has been the undisputable leader in generating GRP. In 2008, St. Petersburg and the Leningrad region together generated 53% of the total GRP in Northwest Russia. Pskov, Novgorod and the Republic of Karelia all together generated just a little bit more than 15% of the total GRP in Northwest Russia in Figure 4. GRP share per region and GRP of other regions in Northwest Russia in millions of roubles (Goskomstat, 2010) Republic of Karelia Murmansk Region Novgorod Region Pskov Region St. Petersburg Other North West Russia In 2011, the expectations of Russian executives about the economic development are more optimistic in north-western Russia than the year before. The general outlook of the economic situation in north-western Russia within the industrial sector is depicted in Figure 5. The numerical value illustrates the development of the economic situation. It can be observed that though the numerical value depicting the general economic situation increased noticeably in 2010, it still remains negative. (Keskuskauppakamari, 2010) The net revenue is expected to increase in 2011, and especially in St. Petersburg the expectations about the growth of revenue is more positive than in the other parts of north-western Russia and Moscow. In addition, the expectations are more optimistic in trade and industry than in the service sector (Keskuskauppakamari, 2010). The net revenue outlook in the industrial sector is depicted in Figure 6. It can be observed that the actual increase of the net revenue in 2010 compared to 2009 is rather sharp. 8

9 Figure 5. General outlook of the economic situation in Northwest Russia in the industrial sector (Keskuskauppakamari, 2010, p. 14) Balance Realization Estimation Figure 6. Net revenue outlook of Northwest Russian companies in the industrial sector. (Keskuskauppakamari, 2010, p. 14) Balance Realization Estimation 9

10 3 Research process The data for this industry analysis was collected from the Amadeus database. First, the following industry classifications were used: 1) manufacture of food products and beverages, 2) manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials, 3) manufacture of machinery and equipment n.e.c, and 4) manufacture of motor vehicles, trailers and semi-trailers. The industries were selected on the basis of their influence on the logistic corridor of Southern Finland. Thus, the emphasis was on the manufacturing industries. Secondly, the analysis was focused on companies operating in the Northwest federal region, and especially in the Republic of Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions. Thirdly, the industry analysis was made using the data between 2005 and The year 2009 was selected as the latest year of accounts, which means that only companies that were operating in 2009 were included in the sample. If a company started e.g. in 2005 and went under bankruptcy in 2007, it was not included in the sample. However, if the company started operating in 2007 and was still running in 2009, it was included in the sample. Finally, the analyzed companies were categorized into two groups according to size, i.e. very large and large companies, and medium sized and small companies. The criteria for a company to be included in one of the categories are presented in Table 1. Companies were considered to be e.g. very large if they met at least one of the conditions in the table, and companies were considered to be small when they were not included in another category (Amadeus database, 2010). Table 1. Company size categories (Amadeus database, 2010) Very large companies Large companies Medium sized companies Small companies Operating >= 100 million EUR >= 10 million EUR >= 1 million EUR others revenue Total assets >= 200 million EUR >= 20 million EUR >= 2 million EUR others Employees >= >= 150 >= 15 others Listed Not very large Not very large or large 10

11 After the data had been collected from the database, aggregation analysis was launched in global format for five years ( ). In this study, the focus is on reporting and analyzing the financial data of the selected companies in the form of operating revenues, number of employees, and profitability, operational and structure ratios. The definitions of the used key financial parameters are presented in detail in Appendix 1, and the used industry classifications in Appendixes 2-5. The number of companies in the accounts varies from year to year due to the fact that not all accounts included in the selected company group had the same availability. Thus, when viewing and comparing the evolution of a variable through time, it needs to be taken into account that the number of observations varies, and therefore the results may be biased (Amadeus database, 2010). 4 Industry analysis 4.1 Manufacture of food products and beverages The division of manufacturing food products includes the processing of the products of agriculture, forestry and fishing into food for humans or animals, as well as the production of various intermediate products that are not directly food products. This division is organized according to activities dealing with different kinds of products: meat, fish, fruit and vegetables, fats and oils, milk products, grain mill products, animal feed and other food products. In addition, this section includes the manufacture of beverages, such as non-alcoholic beverages and mineral water, manufacture of alcoholic beverages mainly through fermentation, beer and wine, and the manufacture of distilled alcoholic beverages. (European Communities, 2008) According to Tuominen et al. (2009), the Russian food industry has changed considerably during the last three decades. For example, big collective farms, i.e. kolkhoz, have ceased to exist or they have been reorganized, new small food producers have appeared, and the food retail market is experiencing rapid development. During the Russian financial crisis in 1998, the Russian rouble was devalued, making Russian customers unable to purchase foreign goods. As a result, many foreign companies ceased operations as orders diminished and receivables could not be recovered. This gave valuable time to the Russian domestic processing industry to develop and take a larger market share in the food industry (Lorentz, 2009). However, Kinnunen (2006) reports that such issues as market specificity in production capacity, poor production quality, consumer prejudice and 11

12 non-existent production cost-advantage, hinder the establishment of production facilities in Russia. Also Tuominen et al. (2009) point out that systematic knowledge on modern food industry in Russia is still missing. The financial crisis in 2009 had a negative effect also on the Russian food industry, but during 2010 the manufacture of food products and beverages grew. However, the profitability of the food companies was damaged by the hot weather in summer 2010, which caused crop failures, and therefore the prices of raw materials also went up (Karhunen et al., 2010). The number of companies operating in the manufacture of food products and beverages was 7706 in Russia in 2009, and 890 companies (12%) were located in the Northwest federal region. In addition, 590 (66%) of the companies in north-western Russia operate in the selected area, i.e. in the Republic of Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions (Amadeus database, 24/12/2010). Most of the companies (410 companies, i.e. 69%) which manufacture food products and/or beverages are small and medium sized companies (see Tables 2 and 3). There were 180 large or very large companies in this field in 2009, but they represented 93% of the total operating revenue of food products and beverages. Table 2 contains the financial data of large and very large companies in the manufacture of food products and beverages in north-western Russia between 2005 and 2009, especially in Karelia and the Leningrad, Murmansk, Novgorod, Pskov and Saint Petersburg regions. The table indicates that the operating revenue almost doubled from 2.9 billion euros to 5.3 billion euros between 2005 and However, the profit margin diminished from 3.90% in 2006 to its lowest 1.69% in 2008, which indicates that the profitability of the companies did not improve as much as the operating revenue. In addition, the solvency of the companies also weakened; the average of the current ratio was 1.64 in 2005, which can be considered as satisfactory, but in 2009 the current ratio had dropped to 0.96, which can be considered as weak (according to the reference values of Haverila et al., 2005). The solvency ratio also diminished from 42% to 28%. 12

13 Table 2 Manufacture of food products and beverages Large and very large companies in Karelia the Leningrad, Murmansk, Novgorod, and Pskov regions, and in St. Petersburg (modified from Amadeus database, update 24/12/2010) th EUR th EUR th EUR th EUR th EUR Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 10, , , , , Return on capital employed (%) 12, , , , ,54 98 Return on total assets (%) 2, , , , , Profit margin (%) 1, , , , , Gross Margin (%) 21, , , , , EBIT Margin (%) 3, , , , , Operational ratios Net assets turnover (x) 3, , , , , Interest cover (x) 1, , , , , Stock turnover (x) 8, , , , , Collection period (days) Credit period (days) Structure ratios Current ratio (x) 0, , , , , Liquidity ratio (x) 0, , , , , Shareholders liquidity ratio (x) 1, , , , , Solvency ratio (%) 28, , , , , Gearing (%) 108, , , , , Correspondingly, Table 3 presents the financial data of small and medium sized companies in the manufacture of food products and beverages in Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions between 2005 and The table indicates that the operating revenue increased by 267% from 143 million euros to 383 million euros, and the number of employees also more than doubled between 2005 and In addition, the return of shareholder funds increased considerably from 3.97% to 19.38% between 2005 and The profit margins were rather small compared to the very large and large companies. In 2005, the profit margin was even negative, i.e.-1.57%. It is also notable that the credit periods became longer, from 63 days in 2005 to 105 days in 2009, which indicates that the customers of small and medium sized companies extended the time for payments of their purchases. 13

14 Table 3 Manufacture of food products and beverages Small and medium sized companies in Karelia the Leningrad, Murmansk, Novgorod, Pskov regions, and in St. Petersburg (modified from Amadeus database, update 24/12/2010) Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 17, , , , , Return on capital employed (%) 10, , , , ,34 40 Return on total assets (%) 0, , , , , Profit margin (%) 0, , , , , Gross Margin (%) 14, , , , , EBIT Margin (%) 2, , , , , Operational ratios Net assets turnover (x) 3, , , , , Interest cover (x) 0, , , , ,08 50 Stock turnover (x) 6, , , , , Collection period (days) Credit period (days) Structure ratios Current ratio (x) 0, , , , , Liquidity ratio (x) 0, , , , , Shareholders liquidity ratio (x) 0, , , , ,68 70 Solvency ratio (%) 10, , , , , Gearing (%) 128, , , , , th EUR th EUR th EUR th EUR th EUR 4.2 Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials This division includes the manufacture of wood products, such as lumber, plywood, veneers, wood containers, wood flooring, wood trusses, and prefabricated wood buildings. The production processes include sawing, planing, shaping, laminating, and assembling of wood products, starting from logs that are cut into bolts, or lumber that may then be cut further, or shaped by lathes or other shaping tools. The lumber or other transformed wood shapes may also be subsequently planed or smoothed, and assembled into finished products, such as wood containers. With the exception of sawmilling, this division is subdivided mainly according to the specific products manufactured (European Communities, 2008). The chemical forest industry, i.e. pulp and paper industry, is not included. According to Piispa et al. (2006), 22% of the all forests of the world are in Russia, and the share of the Northwest federal region is about 12% of the Russian forests. There is significant potential in increasing the forest utilization in the Russian Federation, although the share of economically accessible timber is limited due to the lack of infrastructure, and the poor quality of the road 14

15 network in particular. The forest sector has not developed very favourably, and the industry still largely relies on the use of old production capacity (Solberg et al., 2010). The forests are legally jointly owned by the federation and the regions. In practice, the role of the federation is usually overwhelming, and the use of forests is leased to specific companies with long-term contracts (Anker et al., 2009). The forest industry in north-western Russia has had substantial problems in raw material acquisition, and especially the sawmill industry has been in trouble because of that. Only 40% of the permissible amount of timber is felled, and the biggest reason is the weak condition of the traffic infrastructure, especially the weak condition of roads. In addition, the extent of value added remains low, because most of the felled timber is exported abroad as crude raw wood. Therefore, the Russian forest industry does not make capital out of processing, which would increase the value of the products. (Piispa et al., 2006) There were 2999 companies in Russia in 2009 operating in the manufacture of wood products and products of wood and cork, and 629 companies (21%) were located in the Northwest federal region. In addition, 420 (67%) of the companies in the Northwest operated in the selected area, i.e. in the Republic of Karelia and the Leningrad, Murmansk, Novgorod, Pskov, and St. Petersburg regions (Amadeus database, 24/12/2010). As depicted in Tables 4 and 5 the number of large and very large companies in the selected area in north-western Russia was between companies, whereas the number of small and medium sized companies grew from 157 in 2005 to 382 in However, the large or very large companies represented 71% of the total operating revenue in Table 4 contains the financial data of large and very large companies in the manufacture of wood products and products of wood and cork in north-western Russia between 2005 and 2009, and especially in Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions. The table shows that the operating revenue increased by 16% from 375 million euros to 434 million euros, and the number of employees also increased by nearly 7000 employees between 2005 and However, all the profitability ratios were negative in 2009, e.g. the return on shareholder funds was -5.09% and the profit margin -9.44%. Thus, in this particular period, the year 2007 was the most profitable for the companies, just before the financial crisis that began in

16 Table 4 Manufacture of wood and products of wood and cork Large and very large companies in Karelia and the Leningrad, Murmansk, Novgorod, and Pskov regions and in St. Petersburg (modified from Amadeus database, update 24/12/2010) th EUR th EUR th EUR th EUR th EUR Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) -5, , , , ,31 27 Return on capital employed (%) -1, , , , ,17 22 Return on total assets (%) -5, , , , ,47 31 Profit margin (%) -9, , , , ,58 29 Gross Margin (%) 9, , , , ,27 29 EBIT Margin (%) -3, , , , ,26 29 Operational ratios Net assets turnover (x) 1, , , , ,91 29 Interest cover (x) -0, , , , ,31 22 Stock turnover (x) 4, , , , ,55 29 Collection period (days) Credit period (days) Structure ratios Current ratio (x) 0, , , , ,89 31 Liquidity ratio (x) 0, , , , ,60 31 Shareholders liquidity ratio (x) 0, , , , ,41 22 Solvency ratio (%) 23, , , , ,88 31 Gearing (%) 111, , , , ,28 27 Correspondingly, Table 5 depicts the financial data of small and medium sized companies in the manufacture of wood and products of wood and cork in Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions between 2005 and The table shows that the operating revenue increased by 262% from 66 million euros to 174 million euros, and the number of employees also more than doubled between 2005 and The profitability ratios did not drop as dramatically as in the case of large and very large companies, e.g. the return on shareholder funds was 11.62% and the profit margin -2.76% in However, the solvency of the companies was weak during the whole period ; the average of the current ratio was between 0.92 and 0.98, when it is considered to be weak between 0 1 (Haverila et al., 2005), and the solvency ratio was under 14%. This indicates that the small and medium sized companies had on average a weak capability for managing their payments in the most economical way and on time. 16

17 Table 5 Manufacture of wood and products of wood and cork Small and medium sized companies in Karelia and the Leningrad, Murmansk, Novgorod, and Pskov regions and in St. Petersburg (modified from Amadeus database, update 24/12/2010) th EUR th EUR th EUR th EUR th EUR Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 11, , , , , Return on capital employed (%) 4, , , , ,29 20 Return on total assets (%) -2, , , , , Profit margin (%) -2, , , , , Gross Margin (%) 10, , , , , EBIT Margin (%) 0, , , , , Operational ratios Net assets turnover (x) 2, , , , , Interest cover (x) -0, , , , ,60 25 Stock turnover (x) 3, , , , , Collection period (days) Credit period (days) Structure ratios Current ratio (x) 0, , , , , Liquidity ratio (x) 0, , , , , Shareholders liquidity ratio (x) -0, , , , ,03 42 Solvency ratio (%) 9, , , , , Gearing (%) 99, , , , , Manufacture of machinery and equipment This division includes the manufacture of machinery and equipment that act independently on material either mechanically or thermally, or perform operations on material (such as handling, spraying, weighing or packing), including their mechanical components that produce or apply force, as well as any specially manufactured primary parts. This includes the manufacture of fixed and mobile or hand held devices, regardless of whether they are designed for industrial, building, civil engineering, agriculture, or home use. The manufacture of special equipment for passenger or freight transport within demarcated premises also belongs to this division. This division excludes the manufacture of metal products for general use, associated control devices, computer equipment, measurement and testing equipment, electricity distribution and control apparatus, as well as general purpose motor vehicles (European Communities, 2008). Machinery and equipment manufactured from metal are included in this division. Sal nikov and Glimov (2006) classify Russian industries according to their competitiveness. In their classification, the manufacture of machinery and equipment is classified as an outsider industry. This classification means that in Russia this industry has low competitiveness, while their 17

18 workforce makes up a fifth of the total workforce involved in industrial production. The outsider industries also generate very low added value, accounting only for 7%. According to Sal nikov and Glimov (2006), the major factors affecting competitiveness are a substantial technological gap, foreign competitors holding strong positions, a governance gap, and shortage of money to master new business management standards from simple sales to end servicing of equipment. A gradual entry of foreign service companies makes it possible for domestic firms to use imported equipment. The rather cynical view of Sal nikov and Glimov (2006) concerning the machinery and equipment industry can be questioned, as the strong development in the ferrous metallurgy would imply renovation of machines in the long term, as the life of machinery in ferrous metallurgy is years, although some enterprises operate fixed assets that are years old (Sal nikov and Glimov, 2006). It has been suggested that opportunities in ferrous metallurgy may emerge from the establishment of vertical metallurgical companies, which would incorporate potentially competitive metal-intensive machine building operations (Sal nikov and Glimov, 2006), which in turn would enhance the development of the machinery and equipment sector. According to Grigorij Dvas, a vice governor of the Leningrad region, in 2009 investors were especially interested in developing the machine building field. In an interview, Dvas stated that investors were interested in the industries that are not dependent on the economic cycles, which the manufacturers of machinery and equipment are (Russian Regional Business Review, 2010). Belousov et al. (2008) suggest that the task for long-term technological development of the machinery and equipment manufacturing industry is to modernize their production assets in particular with a view to tying the development of machine building with the long-term energy industry modernization programs in Russia and its partner countries. In 2009, there were about 905 companies in the territory of Northwest Russia that were classified as manufacturers of machinery and equipment. Of these, 129 companies were categorized as very large or large, 490 companies were categorized as medium sized, and 286 companies were categorized as small ones. The focus region had 736 companies, which were 81% of all the machinery and equipment manufacturers operating in north-western Russia. Of the 736 companies, 103 were categorized as very large or large and 633 small or medium sized companies. 82% of the companies located within the focus region were located in the area of St. Petersburg and the Leningrad region, indicating that the manufacturers of machinery and equipment are concentrated in a relatively limited geographical area. 18

19 Table 6 presents the financial data of large and very large companies manufacturing machinery and equipment situated in St. Petersburg in The table indicates that the operating revenue grew by more than four times within the observed period from 434 million euros in 2005 to 1.93 billion euros in At the same time, the number of operating companies grew only by 17 companies, from 50 in 2005 to 67 in The gross margin was at an acceptable level, between 10% and 25% during the whole studied period, except for the year 2006 when it went down to 7.71% (YTN, 2005). The gross margin developed positively in and was at its highest at 22.63% in The current ratio was mainly above one, except for the year 2008 when it went down to The values of current ratio above one are classified as satisfactory, but those below one are considered to be weak (Haverila et al, 2005). The gearing ratio stayed well below 100% during the studied, time except for the year 2006 when it rose up to % (YTN, 2005). The return on shareholder funds was at its highest in 2009 with the rather high value of 41.92%, and its lowest in 2006 when it went as down as to %. The overall development of the large and very large companies in the St. Petersburg area was positive, except for the year 2006, which was reflected largely in all financial figures. Table 6. Manufacture of machinery and equipment - Large and very large companies in St. Petersburg (modified from Amadeus database, update 24/12/2010) Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 41, , , , ,85 49 Return on capital employed (%) 20, , , , ,36 23 Return on total assets (%) 7, , , , ,60 50 Profit margin (%) 10, , , , ,14 50 Gross Margin (%) 22, , , , ,38 50 EBIT Margin (%) 11, , , , ,21 50 Operational ratios Net assets turnover (x) 3, , , , ,76 49 Interest cover (x) 1, , , , ,24 24 Stock turnover (x) 4, , , , ,18 50 Collection period (days) Credit period (days) Structure ratios th EUR th EUR th EUR th EUR th EUR Current ratio (x) 1, , , , ,43 50 Liquidity ratio (x) 0, , , , ,80 50 Shareholders liquidity ratio (x) 4, , , , ,30 32 Solvency ratio (%) 18, , , , ,90 50 Gearing (%) 43, , , , ,

20 Table 7 includes the financial data of small and medium sized companies manufacturing machinery and equipment located in St. Petersburg in The number of small and medium sized companies operating in St. Petersburg grew gradually and more than doubled during the studied period from 221 in 2005 to 2009 to 472 in The number of employees grew 2.6 times from in 2005 to in The operating revenue grew from 125 million euros in 2005 to 380 million euros in The operating revenue decreased slightly in 2009, and went down to 316 million euros. Despite the relatively large number of small and medium sized companies functioning in the sector, most of the operating revenue was still generated by large and very large companies. In 2009, the small and medium sized companies managed to produce only 14% of the total operating turnover in St. Petersburg. Even though the operational turnover developed, it was not reflected in the profit margin, which was relatively weak already in 2005 with the value of 5.26%, and dropped down to 4.95% in The gross margin was mainly above 12% in , which can be still considered to be acceptable in the manufacturing industry (YTN, 2005), and grew up to % in 2009, indicating good development. The current ratio was above one but lower than two, which is considered to be a satisfactory value (Haverila et al., 2005). The gearing ratio stayed well below 100% during the entire time period, which can be considered as a good result (YTN, 2005), making the sector less vulnerable to downturns in business. The return on shareholder funds in the small and medium sized companies did not differ radically from the value indicated for the large and very large companies operating in this sector, and was around 30% during the studied time period. 20

21 Table 7. Manufacture of machinery and equipment - Medium sized and small companies in St. Petersburg (modified from Amadeus database, update 24/12/2010) Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 29, , , , , Return on capital employed (%) 18, , , , ,59 13 Return on total assets (%) 7, , , , , Profit margin (%) 4, , , , , Gross Margin (%) 16, , , , , EBIT Margin (%) 5, , , , , Operational ratios Net assets turnover (x) 4, , , , , Interest cover (x) 1, , , , ,38 15 Stock turnover (x) 4, , , , , Collection period (days) Credit period (days) Structure ratios Table 8 and table 9 contain financial data of companies that are manufacturers of machinery and equipment and are located outside St. Petersburg. In 2009 these companies, combined small, medium, large and very large ones generated only about 15 % of the total operating turnover in all the studied regions, including St. Petersburg. In 2009, there were 36 large and very large companies operating in the area outside St. Petersburg. Of these companies 9 were located in the Leningrad region, 4 in the Republic of Karelia, 2 in the Murmansk region, 13 in the Novgorod region, 8 in the Pskov region Current ratio (x) 1, , , , , Liquidity ratio (x) 0, , , , , Shareholders liquidity ratio (x) 2, , , , ,17 27 Solvency ratio (%) 25, , , , , Gearing (%) 28, , , , , th EUR th EUR th EUR th EUR th EUR The number of large and very large companies operating in the area grew from 27 in 2005 to 36 in At the same time, the number of employees increased by 1.5 times, from in 2005 to in The operating revenue was growing gradually and was at its highest in 2008 at 425 million euros. In 2009, the operating revenue decreased by 1.5 times down to about 272 million euros. This observation is rather interesting, as in the case of the large and very large companies operating in St. Petersburg, the year 2009 showed positive development in terms of operating revenue. The return on shareholder funds was clearly lower than for the companies operating in St. Petersburg over the studied time, and nearly nonexistent in The gross margin did not change significantly during the studied period, and was within acceptable percentage values (YTN, 2005). The current ratio was at a satisfactory level and fluctuated between 1.3 and 1.5, except for the year 21

22 2005, when it was only The gearing ratio was below one over the whole studied period, indicating an acceptable result (YTN, 2005). Table 8. Manufacture of machinery and equipment - Large and very large companies in Karelia and the Leningrad, Murmansk, Novgorod and Pskov regions (modified from Amadeus database, update 24/12/2010) Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 0, , , , ,91 26 Return on capital employed (%) -1, , , , ,66 12 Return on total assets (%) -0, , , , ,94 27 Profit margin (%) -0, , , , ,79 26 Gross Margin (%) 15, , , , ,98 26 EBIT Margin (%) 4, , , , ,75 26 Operational ratios Net assets turnover (x) 1, , , , ,68 26 Interest cover (x) -0, , , , ,48 12 Stock turnover (x) 2, , , , ,59 26 Collection period (days) Credit period (days) Structure ratios Current ratio (x) 1, , , , ,12 26 Liquidity ratio (x) 0, , , , ,57 26 Shareholders liquidity ratio (x) 4, , , , ,32 18 Solvency ratio (%) 44, , , , ,99 27 Gearing (%) 65, , , , ,49 26 Table 9 contains the financial data of medium sized and small companies operating in the area outside St. Petersburg. In 2009 there were in total 161 companies, of which 55 were located in the Leningrad region, 18 in the Republic of Karelia, 21 in the Murmansk region, 31 in the Novgorod region and 36 in the Pskov region. In 2009, the small and medium sized companies located outside the St. Petersburg area generated about 32% of the operating turnover generated in the studied regions, excluding St. Petersburg. This is somewhat different from the situation in St. Petersburg, where the share of small and medium sized companies in generating operating turnover was only 14%. There were almost three times less small and medium size companies outside St. Petersburg than in St. Petersburg. In terms of operating revenue, this sector enjoyed positive development , when it grew by more than 3 times from 50 million euros in 2005 to almost 158 million euros in The operating revenue dropped to 130 million euro in 2009, regardless of the fact that the number of companies operating in the sector grew by 45, as shown in Table 9. From 2005 to 2008, the gross margin was slightly lower than for the companies located in St. Petersburg, and was above 12% during the studied period, but still below 14%. In 2009 the gross margin grew and reached %, which is less than one per cent lower than the value for the companies located in St. Petersburg. The current ratio was just above one during the studied period, which is satisfactory th EUR th EUR th EUR th EUR th EUR

23 The current ratio was at its highest with the value of 1.34 in 2005 and stayed around 1.1for the rest of the period. The gearing ratio was very much the same as the gearing ratio for the small and medium sized companies located in St. Petersburg. An exception can be noted for the year 2008, when the gearing ratio for companies located outside St. Petersburg was about two times lower with the percentage value of The return on shareholder investments in the small and medium sized companies located outside St. Petersburg was much better than for those located in St. Petersburg. It can be seen in the table that the return on shareholder value was at its highest in 2007 with 41%, and at its lowest in 2005 with 22%. In 2009, when the return on shareholder funds in St. Petersburg was almost non-existent, it was at 28% outside St. Petersburg. Table 9. Manufacture of machinery and equipment - Medium sized and small companies in Karelia and the Leningrad, Murmansk, Novgorod and Pskov regions (modified from Amadeus database, update 24/12/2010) th EUR th EUR th EUR th EUR th EUR Number of companies Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) 28, , , , ,33 76 Return on capital employed (%) 14, , , , ,36 13 Return on total assets (%) 5, , , , ,92 86 Profit margin (%) 4, , , , ,79 83 Gross Margin (%) 16, , , , ,66 83 EBIT Margin (%) 5, , , , ,35 83 Operational ratios Net assets turnover (x) 3, , , , ,80 76 Interest cover (x) 1, , , , ,38 15 Stock turnover (x) 4, , , , ,03 80 Collection period (days) Credit period (days) Structure ratios Current ratio (x) 1, , , , ,34 86 Liquidity ratio (x) 0, , , , ,88 83 Shareholders liquidity ratio (x) 1, , , , ,13 28 Solvency ratio (%) 19, , , , ,14 86 Gearing (%) 65, , , , , Manufacture of motor vehicles, trailers and semitrailers This division includes the manufacture of motor vehicles for transporting passengers and freight. The manufacture of various parts and accessories, as well as the manufacture of trailers and semitrailers, is included here. The maintenance and repair of the vehicles produced in this division are not included here. (European Communities, 2008) 23

24 In 2009, there were about 81 companies in the Northwest federal region of Russia that were classified as manufactures of motor vehicles, trailers and semitrailers. Of these 81 companies, 23 companies were categorized as very large or large, 47 were categorized as medium sized, and 11 companies were categorized as small ones. About 65 of all the manufacturers in the Northwest federal region in Karelia and the Leningrad, Murmansk, Novgorod, Pskov regions and in Saint Petersburg, implying that 80% of all the companies operating in this sector were located within the focus region. In 2009 more than 50% of the manufacturers of motor vehicles, trailers and semitrailers within the focus area were located in St. Petersburg. When the manufacturers of motor vehicles in the Leningrad region are included as well, then over 75% of all the manufacturers within the focus area are located in a relatively small geographical area, implying that the manufacturing in this sector is rather concentrated. The whole manufacturing sector in north-western Russia was affected by the recession, and the largest drop was recorded in the transportation manufacturing sector. Due to the financial recession, a Ford plant located in the Leningrad region was forced to cut its output by 37%. In St. Petersburg, the manufacturing of cars dropped by 58% to cars. Such a noticeable drop in production is a reflection of a decrease in consumer demand. Many potential buyers postponed or freezed their car buying intention due to decreased income, increased unemployment, as well as more expensive and more complicated financing. The decrease in the customer demand is also supported by the fact that the decrease in car manufacturing was recorded to be 59.4%, which means that it dropped to cars. (CEMAT, 2010) In 2009, the total capacity of car assembly plants in St. Petersburg was cars a year. In June 2009, Nissan opened a $ 200 million plant with the capacity of cars a year (CEMAT, 2010). In the first half of 2010, car manufacturing became the main force behind the industrial growth in St. Petersburg. Compared to 2009, the growth in the car manufacturing sector was 2.4 fold, which meant that it was almost at the level of During the first half of 2010, there were three international car manufacturers with car assemblies in St. Petersburg, namely Toyota, Nissan and General Motors, manufacturing cars during the first half of the year, which was 3.5 times higher than for the same time period in At the same time, the total car market in Russia grew only by 3%. The low growth on the car market can be explained by the federal policies focused on shifting the demand from imported cars to ones manufactured or assembled in Russia, and not by a decrease of customer demand for cars (CEMAT, 2010). In September 2010, Hyundai officially opened its manufacturing plant in St. Petersburg, starting mass production in January

25 (Hyundai, 2011). The production of the plant is targeted to be vehicles in the first year, to be increased to vehicles per year in Surprisingly, despite the economic recession, Ford invested $500 million into its car manufacturing business in the Leningrad region in order to respond to the increased demand for its Focus and Mondeo models. During the first half of 2010, the output of Ford grew by 50% compared to same period in (CEMAT, 2010) The financial ratios of the large and very large companies are shown in Table 10. In 2009, 14 out of the total 19 large or very large companies were located in St. Petersburg and 2 in the Leningrad region. The rest were located in the Republic of Karelia and in the Pskov and Novgorod regions, one in each location. The large international companies were all concentrated in one area in St. Petersburg or the Leningrad region. The number of companies operating in the studied period grew steadily from 15 companies in 2005 to 19 in The number of employees in the sector grew with the number of companies from in 2005 to in The operating revenue of the studied companies grew during the years and reached its peak in 2008 at 4.3 billion euros, which was almost 3.4 times higher than the turnover in In 2009, the impact of the recession was reflected in the turnover figures, as they dropped to 1.6 billion euros, which was almost as low as in The drop in the turnover took place regardless the fact that the number of companies operating in the industry was 19, highest in the five last years as was the number of employees in the sector. The gross margin grew from 8% in 2005 to 10% in 2007 and crashed down to % in The gross margins generated by the large and very large companies can be considered rather weak, as the gross margin within the manufacturing sector is considered to be satisfactory when it is between 10 and 25 per cent (YTN, 2005). The low gross margin values also indicate that the growth of the operational turnover did not influence the profitability. The return on shareholder funds showed the same trend as the profitability ratios. It can be seen in Table 10 that it had very strong growth from 2005 to 2007 and grew from minus 13% to 44% in 2007 and stayed relatively high also in 2008 at about 30%. Despite the fact that the return on shareholder funds could be kept at a rather good level in 2008, it crashed drastically in 2009 to more than minus 60%. The gearing ratios shown in Table 10 depict the situation were activities are financed highly by creditors, making the operating companies more vulnerable to downturns in the business cycles. Nevertheless, the current ratio was above one, 25

26 which is satisfactory, except for the year The table shows that the year 2009 was overall very bad financially. Table 10. Manufacture of motor vehicles, trailers and semi-trailers - Large and very large companies in Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions. (modified from Amadeus database, update 24/12/2010) Number of companies Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) -60, , , , ,01 13 Return on capital employed (%) -31, , , , ,97 9 Return on total assets (%) -15, , , , ,37 15 Profit margin (%) -13, , , , ,30 15 Gross Margin (%) -1, , , , ,99 15 EBIT Margin (%) -10, , , , ,02 15 Operational ratios Net assets turnover (x) 2, , , , ,35 14 Interest cover (x) -3, , , , ,58 10 Stock turnover (x) 6, , , , ,07 15 Collection period (days) Credit period (days) Structure ratios th EUR th EUR th EUR th EUR th EUR Current ratio (x) 0, , , , ,21 15 Liquidity ratio (x) 0, , , , ,44 15 Shareholders liquidity ratio (x) 1, , , , ,63 11 Solvency ratio (%) 25, , , , ,41 15 Gearing (%) 154, , , , ,60 13 The financial ratios of small and medium companies are shown in Table 11 for the duration of the five year period. In 2009, 22 out of the total 46 small and medium companies were located in St. Petersburg and 11 in the Leningrad region. The rest 13 companies were located as follows: 7 companies in the Novgorod Region, 5 companies in the Pskov Region, and one company in the Republic of Karelia. As in the case of very large and large companies, the concentration of the companies was in the area of the Leningrad region and St. Petersburg. The number of companies operating in the studied period grew fast and was more than doubled in 5 years, with the number of companies rising from 19 in 2005 to 46 in The number of employees in the sector grew along with the number of companies and was nearly doubled by 2009 compared to the number of employees in The operating revenue of the studied sample grew during the years, as shown in Table 11, reaching its peak in 2009 at 46 million euros, which implies that the manufacture of motor vehicles, trailers and semitrailers in the small and medium sized companies was not affected so drastically by the economic recession as in the case of large and very 26

27 large manufacturers. The gross margin was rather unstable over the years, and was going up and down every year. The gross margin was extremely low most of the time. It varied from 6.71% in 2006 when it was at its highest to -7.31% at its lowest in In 2009, the gross margin grew by more than 9 per cent compared to the ratio of The profit margin stayed well below zero during the whole studied period, indicating very poor profitability in this case. The steady growth of the turnover was not reflected in profitability. The return on shareholder funds also shows very sad figures. During the time period it never reached a positive percentage value, being at its lowest in 2005 with the value of %. The best value was in 2008 at 1.55%. The extremely high gearing ratio in 2005 went down gradually, reaching % in The current ratio was around one but below two all the time, which can be considered to be a satisfactory result. Table 11. Manufacture of motor vehicles, trailers and semi-trailers - Small and medium sized companies in Karelia and the Leningrad, Murmansk, Novgorod, Pskov and St. Petersburg regions. (modified from Amadeus database, update 24/12/2010) Number of companies Balance sheet Number of employees Profit & loss account Operating revenue (Turnover) Profitability ratios Return on shareholder funds (%) -6, , , , ,88 19 Return on capital employed (%) -18, , ,22 9-8, ,60 3 Return on total assets (%) -12, , , , ,38 19 Profit margin (%) -15, , , , ,08 18 Gross Margin (%) 2, , , , ,71 18 EBIT Margin (%) -12, , , , ,44 18 Operational ratios Net assets turnover (x) 1, , , , ,98 18 Interest cover (x) -3, , , ,48 6-1,10 3 Stock turnover (x) 2, , , , ,70 16 Collection period (days) Credit period (days) Structure ratios th EUR th EUR th EUR th EUR th EUR Current ratio (x) 1, , , , ,99 18 Liquidity ratio (x) 0, , , , ,61 16 Shareholders liquidity ratio (x) -0, , ,91 9 1,03 5 0,57 3 Solvency ratio (%) 12, , , , ,49 19 Gearing (%) 33, , , , ,

28 5 Summary The objective of this report An Analysis of Manufacturing Industries in North-Western Russia - was to conduct an industry analysis of north-western Russia. The analysis focused on industries that were essentially connected to the logistic industry and related services. Thus, this report covers the following industries: 1) manufacture of food products and beverages, 2) manufacture of wood and products of wood and cork, except furniture, and manufacture of articles of straw and plaiting materials, 3) manufacture of machinery and equipment, and 4) manufacture of motor vehicles, trailers and semitrailers. Of the companies manufacturing food products and/or beverages, 69% were small and medium sized in However, large or very large companies represented 93% of the total operating revenue of food products and beverages in The study indicated that the operating revenue of large and very large companies almost doubled between 2005 and However, the profit margin diminished, which indicates that the profitability of the companies did not improve as much as the operating revenue. In the case of small and medium sized companies, the study revealed that the operating revenue increased by 267%, and the number of employees also more than doubled between 2005 and In addition, the profit margins were rather small compared to very large and large companies. It is also notable that the credit periods became longer between 2005 and 2009, which indicates that the customers of small and medium sized companies extended the time for payments of their purchases. The financial crisis in 2009 had a negative effect also on the Russian food industry, and during 2010 the manufacture of food products and beverages grew. Of the companies operating in the manufacture of wood products and products of wood and cork, 21% were located in the Northwest federal region. The number of large and very large companies in the selected area in north-western Russia was less than 40 companies, whereas the number of small and medium sized companies more than doubled between 2005 and However, large or very large companies represented 71% of the total operating revenue in The operating revenue of very large and large companies increased by 16%, and the number of employees increased by nearly 7000 employees between 2005 and However, all the profitability ratios were negative in In the case of small and medium sized companies, the operating revenue increased by 262%, and the number of employees also more than doubled between 2005 and The profitability ratios did not drop as dramatically as in the case of large and very large companies. However, the solvency of the companies was weak during the whole period ; this 28

29 indicates that the small and medium sized companies on average had a weak capability for managing their payments in the most economical way and on time. 905 companies located in the Northwest federal region were classified as manufacturers of machinery and equipment. 129 of these companies were categorized as very large or large, 490 companies were categorized as medium sized, and 286 companies were categorized as small ones. The focus region had 736 companies, which were 81% of all machinery and equipment manufacturers that operated in the Northwest federal region. 103 of these 736 companies were categorized as very large or large, and 633 as small or medium companies. Moreover, about 82 % of the companies within the focus region were located in the area of St. Petersburg and the Leningrad region, meaning that the manufacturing sector of machinery and equipment was concentrated in a relatively limited geographical area. The study indicated that the operating revenue for large and very large companies operating in St. Petersburg grew by more than 400%. The cross margin was at an acceptable level during the whole studied period, except for the year The current ratio was mainly above one, except for the year 2008 when it went to The return on shareholder funds was at its highest in 2009 with the rather high value of 41.92%, and its lowest in 2006 when it went down to %. The overall development for the studied time for large and very large companies in the St. Petersburg area was positive, except for the year 2006 which is reflected mainly in the financial figures. The number of large and very large companies operating in the area outside St. Petersburg grew 1.3 -fold in , and was 36 in At the same time, the number of employees increased fold and was in The operating revenue in the sector grew gradually and was at its highest in 2008 at thousand euros. In 2009 the operating revenue decreased 1.5 -fold to thousand euros. This observation is rather interesting, as in the case of large and very large companies operating in St. Petersburg, the year 2009 showed positive development in terms of the operating revenue. The return on shareholder funds was clearly lower than for the companies operating in St. Petersburg over the time, and nearly non-existent in The gross margin did not change noticeably during the studied period and was within acceptable values. The current ratio was also at a satisfactory level and was fluctuating within except in 2005, when it was only The gearing ratio was well below one over the whole studied period, which can be considered as a good result. 29

30 The number of small and medium sized companies operating in the St. Petersburg area doubled in and was 472 in The number of employees grew 2.6 -fold and reached in The operating revenue grew by 300% in and slightly decreased in The small and medium sized companies operating in the sector 9 produced 32 % of the total turnover in The gross margin was at an acceptable level for the manufacturing industry over the studied time. The current ratio was above one but lower than two, which is classified as a satisfactory value. The gearing ratio stayed well below 100% during the studied period, which can be considered as a good result. The return on shareholder funds in the small and medium sized companies did not differ drastically from the value indicated for the large and very large companies operating in this sector, and was about 30% during the studied time period. In 2009 there were 161 small and medium sized companies operating in the sector outside the St. Petersburg area. In 2009 these companies generated about 32% of the total operating revenue within the industry in the studied regions outside St. Petersburg. The operating revenue grew by more than 300% from thousand euros in 2005 to thousand euros in 2009, despite the fact that the number of companies operating in the sector grew by 45. The study showed that the gross margin was quite stable and within an acceptable range over the period and grew only by 1.17%. The current ratio was just above one, which is considered good. The gearing ratio being well above 100% also indicated a good result. The return on shareholder funds fluctuated between 20% and 40% in In 2009, there were about 81 companies in the area of the Northwest federal region classified as manufacturers of motor vehicles, trailers and semitrailers. The area under focus in this study had about 65 companies, meaning that 80% of all the companies operating in this industry were located within the focus region. In 2009, 50% of the manufacturers of motor vehicles, trailers and semitrailers were located in St. Petersburg. When the manufacturers of motor vehicles in the Leningrad region are also considered, then over 75% of the manufacturers of the studied regions were located in a relatively small geographical area, meaning that this branch of manufacturing was rather concentrated. The number of large and very large companies operating in the studied period rose from 15 in 2008 to 19 in The number of employees grew by almost 3000 during the studied period. The operating revenue reached its peak in 2008 when it was more than 3 times higher than in The study showed that the gross margin was rather week over the studied time: it was negative in

31 and only once above 10%. The gearing ratio was above 100% in 3 years out of the five, indicating a not very satisfactory situation. Nevertheless, the current ratio stayed above one during the period, except for the year 2009 when it dropped below 0. The return on shareholder investments dropped drastically down to -60% in The number of small and medium sized companies more than doubled in The number of employees nearly doubled during the studied period. The operating revenue grew all the time and rose 3.7 -fold in However, the positive development of the operational revenue was not reflected in the gross margin, and it indicated rather poor performance as it never reached even 10% during the studied period and was negative in 2008 and The gearing ratio was below 100% in , showing a good result; in 2005 it was 398%, which is a relatively bad result. The current ratio, however, was above one most of the time, which is satisfactory, except for the year 2005 when it was just under one. The return on shareholder funds was negative during the whole studied period. 31

32 References 1. Amadeus Database (2010) A database of comparable financial information for public and private companies across Europe, No. 194, Version 4.02, 2010 Bureau van Dijk. 2. Anker, M., Fjaertoft, D. B., Rautava, J., Simola, H. & Solanko, L. (2009) Russia, Finland and Norway: Economic Essays, Bank of Finland, Institute for Economies in Transition, BOFIT Online, 2009, No Belousov, D., Sal nikov, V., Apokin A. & Frolov, I. (2008) Technological Modernization Trends of Leading Branches of Russian Industry, Studies on Russian Economic Development Vol. 19, No. 6 pp CEMAT, Aalto-yliopiston kauppakorkeakoulu, Kansainvälisten markkinoiden tutkimuskeskus (2010) Pietari vuonna 2009, Talouden puolivuotiskatsaus, Retrieved on from F7698EE00AD2/0/SPb_2010May_fin.pdf. 5. CEMAT, Aalto-yliopiston kauppakorkeakoulu, Kansainvälisten markkinoiden tutkimuskeskus (2010) Leningradin lääni 2009, Talouden puolivuotiskatsaus, Retrieved on from 6. CEMAT, Aalto-yliopiston kauppakorkeakoulu, Kansainvälisten markkinoiden tutkimuskeskus (2010) Pietari vuoden 2010 ensimmäisellä puoliskolla, Retrieved on from F021225FEB36/0/SPb1H2010fin.pdf. 7. CEMAT, Aalto-yliopiston kauppakorkeakoulu, Kansainvälisten markkinoiden tutkimuskeskus (2010) Leningradin lääni vuoden 2010 ensimmäisellä puoliskolla, Retrieved on from A2A8F9953F2A/0/Len1H2010fin.pdf. 8. Dudarev, G., Boltramovich, S., Filippov P. & Hernesniemi H. (2004) Advantage Northwest Russia, New Growth Centre Europe?, Sitra report series 33, Helsinki, ISBN Dvas, G. (2010) Leningradin alue on edelleen houkutteleva sijoittajien silmissä Kymenlaakson Ammattikorkeakoulu, Russian Regional Business Review 1/ European Communities (2008) NACE rev. 2, Statistical classification of economic activities in the European Community, ISBN Retrieved on from EN.PDF. 32

33 11. Goskomstat (2010) Gosudarstvennyi komitet po statistike, the State Committee for Statistics, Retrieved on from database/cbsd/. 12. Haverila, M. J., Uusi-Rauva, E., Kouri, I. & Miettinen, A. (2005) Teollisuustalous, 5th edition, Tammer-paino Oy, Tampere 2005, 510 p. 13. Hyundai, Huyundai New Room, (2011) Hyundai being production at new Russian plant, Retrieved on from Karhunen, P., Parviainen S. & Järvikuona, P. (2010) Venäjän talousnäkymät 2/2010, Aaltoyliopiston kauppakorkeakoulu, Kansainvälisten markkinoiden tutkimuskeskus CEMAT. 15. Keskuskauppakamari (2010) Keskuskauppakamarin Luoteis-Venäjän business-barometri 2011, Syyskuu 2010, Keskuskauppakamari, Helsinki, ISBN Kinnunen, J. (2006) Siirtyykö elintarviketuotantoa Suomesta Venäjälle? Nothern Dimension Research Centre, Publication 32, Lappeenranta University of Technology. 17. Lorentz. H. (2009) Contextual Supply Chain Constraints in Emerging Markets exploring the implications for foreign firms, Series A-6:2009, Turku School of Economics. 18. NwRussia, Map of Northwest Russia, Retrieved on from Piispa, H., Karandassov, B., Pöyhönen, I., Jumpponen, J. and Tiusanen, T. (2006) Luoteis- Venäjän metsävarat ja niiden hyödyntämismahdollisuudet, Lappeenranta University of Lappeenranta, Northern Dimension Research Centre, Publication Sal nikov, V. and Glimov D. (2006) The competitiveness of Russian Industries: Current State and Outlook, Studies on Russian Economic Development Vol. 17, No. 2 pp Tuominen, T., Kitaygorodskaya, N. and Helo, P. (2009) Benchmarking Russian and Finnish food industry supply chains, Benchmarking: An International Journal, Vol. 16, No. 3, pp YTN (2005) Yritystutkimusneuvottelukunta. Yritystutkimuksen tilinpäätösanalyysi. 56 p 67 p. Helsinki, Gaudeamus, ISBN

34 Appendix 1. Definitions of the parameters used in the analysis (Amadeus, User guide, 2010) 34

35 Appendix 2. Specifications of the manufacturers included in the category Manufacture of food products and beverages (European Communities, 2008) 35

36 Appendix 3. Specifications of the manufacturers included in the category Manufacture of wood and products of wood and cork (European Communities, 2008) Appendix 4. Specifications of the manufacturers included in the category Manufacture of machinery and equipment. Note! This group also includes machinery and equipment from metal (except for manufacture of motor vehicles, trailers and semitrailers) as they are not specified elsewhere (European Communities, 2008) 36

37 Appendix. 5. Specifications of the manufacturers included in the category Manufacture of motor vehicles, trailers and semitrailers (European Communities, 2008) 37

38 Logistiikan tutkimuksen edistämisen säätiö 38