Trade of industrial machinery in Europe : can we do without Russia?

RussiaRussia, with about 143 million inhabitants, has been in recent weeks very present in the medias. If the annexation of the Crimea made ​​the headlines and therefore questioned the trade in goods with Russia (especially since its exclusion from the G8), the industrial machinery sector remains a sensitive topic. Can we or can we not do without Russian machines is the question we will try to provide an answer.

A privileged sector

Construction machinery in Russia is the third most active industrial sector after those of the oil and gas industry, which are closely linked to industrial production in general, since the gas, and especially shale gas, is used to supply a large number of factories. The market share of machine building corresponds to 20% of the Russian total industrial production, making it a key sector of the Russian economy. Machines produced in Russia are related to all sectors of production, although the automotive industry, military machines (Russia is the second largest supplier of arms and military machines in the world) and machine tool sectors remain privileged. In addition, a large number of production parks were developed over recent years , which allowed a significant increase of the production. However, small problem: after a great decline in profits from exports, also driven by the fall of the ruble exchange rate, there is a slackening of the machinery building, which could dramatically affect the 26,000 Russian companies who dedicate to this sector.

The place of Russia in the european trade

Machinery buildingHowever, the Russian machines are doing quite well. If tRussian infrastructure were a few years ago by far the oldest one in Europe, being replaced only every 20-30 years, it is no longer the case today. Therefore, lifespan of Russian machinery is one of the longest, what makes of these machines ideal candidates for the second-hand market. The machine-building plants were modernized thanks to a number of investments that have been made in this industry (mainly from major automakers), and thus boosted trade, for instance with countries such as Germany. Russia also imports a lot of machinery, including used machinery from Germany, which corresponds to 25 % of the trade between the two countries. On another hand , if we take the example of machine tools, their production corresponds to € 1.257 billion and ranks Russia among the 10 largest manufacturing countries for this type of machine. The country exports mainly to Italy, Germany and the United States, where the demand is high, and therefore stands as an important partner in Europe.

To sum up, machinery building is a key sector of the Russian economy, and holds a special place in European machines trade. However, recent events have called into question the economic partnerships already established, and as Russia is the largest supplier of oil and gas in Europe, to set  Russia aside remains dangerous for Europe.

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