Arc International is considering acquiring a majority interest in Vassielievski Steklo Zavod, a glassware company based near Kazan, the capital of the Republic of Tatarstan, the French tableware manuf…
Arc International is considering acquiring a majority interest in Vassielievski Steklo Zavod, a glassware company based near Kazan, the capital of the Republic of Tatarstan, the French tableware manufacturer announced on 5 December 2006. The partnership would lead to a new production unit. International development is one of Arc International“s main growth factors; its industrial and sales activities in China are now profitable, and its industrial position in the United Arab Emirates has allowed it to consolidate and develop its always substantial sales activity in the Middle East. Arc sees the development opportunity in Russia as logically part of the group“s regionalization strategy which consists of carrying out production closer to its markets and possessing balanced industrial facilities. Russia and the Commonwealth of Independent States (CIS) represent a market of 286 million inhabitants where average economic growth has been over 6% since 2000. It is a fast expanding retail market where the gradual emergence of a middle class is a sign of a very promising trend in consumer spending. Arc International is currently a leader on the Russian tableware market which is expected to record 10% or higher growth over the next five years. However, in spite of strong competition with international players that have set up locally, Russian glass factories and products from countries where labour is cheap, there is still market share to be won, particularly in the low-end items segment where Arc is not competitive due to its high production costs in Western Europe. Vassielievski Steklo Zavod“s principal activities are the manual fabrication of glass items for use in the pharmaceutical sector and the automated production of items for the large-scale distribution market (coffeepots, casserole dishes, etc.). Located 800km east of Moscow, the glassworks has two borosilicate furnaces and employs 340 people. According to the terms of the project, the Russian site will accommodate a new factory with a soda lime glass furnace (clear glass) with a production capacity of 35,000 tons a year. Production will focus on low-end items such as tumblers, in order to preserve and develop ARC International“s presence on the Russian market and regain the markets lost in Europe over the past few years by selling loss-leader products. These products are very well regarded by consumers but their production is no longer viable in Western Europe for cost reasons. The group still endeavours to ensure the competitivity of its historical site in France and has been conducting a productivity plan for several years which has already shown significant results. However, in 2007, the productivity efforts being pursued will be affected by rises in pay, expenses and energy costs.