The return of the resident

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Возвращение резидента

Industrial enterprises of St. Petersburg are not averse to turn into industrial parks, inviting into their territory small business. This will allow them to attract additional funds by renting space to rent and get help from the state. To compete for the hand and heart of residents Industrialists have with the developers, who develop industrial parks in the North-West.

<blockquote>From the editors
Park the industrial period
Last week first Deputy Central Bank Chairman Ksenia Yudaeva noted the statement that, if the government will not undertake structural reform and will not create incentives for growth, the Russian economy will be doomed to eternal stagnation. A specific package of necessary measures yet developed was not, but on structural reforms and diversification in recent years not say just lazy. Whatever line transformation in the end, neither was selected at the head of it you must put the needs of the business, and that it will become a guide for future reforms.
Stimulating the emergence of new points of growth, our government is often keen on campaigning. This was particularly true for pre-crisis period, when budget funds were still allowed to live in Grand style. So in terms of industrial infrastructure, namely industrial and technology parks, all together stepped on the same rake. Since under the slogan “We need new, modern industrial sites” many regions in the race rushed to build them, sometimes not sparing budget money. However, these run somehow suddenly it became clear that about the manufacturing sector, for whom all this was created, almost forgotten. In the end it turned out that commissioned the industrial area, which were often billions, was not very important to residents. Rather, the current residents – to small and medium businesses trying to survive in a crisis (by the way, not in words, but actually trying something is substituted) need other formats of industrial parks. And now, to get idle power, the government will have to revise their approaches to state aid, giving subsidies is not only (and, probably, not so much) to developers of industrial parks, many of them residents.
Partly there is a fault in the incident and the business itself, which behaves rather passively. On the one hand, operators of industrial parks of Saint-Petersburg and Leningrad region prefer to rely on government subsidization of rents, on the other – are not accustomed to bother to rationale for why the state should help them. It is significant that this year the development of industrial parks with a budget of 4.3 billion rubles, but applications for grants from the North-West regions in Minpromtorg has not yet been reported.
All of these conflicts could have been avoided if the authorities once and for all determined clear criteria which must be met for the project, and provided a transparent process for their selection. This approach would allow the state to move from diffuse measures of support of development of industrial infrastructure to the point to stimulate specific points of growth.</blockquote>

Fashion for the construction from scratch of industrial parks in Saint-Petersburg and the adjacent territories of Leningrad region is gradually eroding. If five years ago, in the implementation stage was about 16 industrial parks, to date information about new projects, almost did not meet. Of the previously announced projects took place not all, but even commissioned sites cannot find a sufficient number of residents.

On the Russian market of industrial parks also offer exceeds demand. In the country there are 78 industrial parks, however, according to the latest data of the Association of industrial parks, half of the space is empty. Despite this, public support remains focused on creating industrial infrastructure. To stimulate new projects by the Ministry of industry and trade provides for the reimbursement of expenses the management company on loans for the creation of industrial parks, as well as compensation of expenses of regions on creation of industrial infrastructure. According to target indicators of the state program of industry development by 2020, must have 120 existing industrial parks.

Project Manager of the industrial Park “Marino” Vladimir Vishnevsky, said the government’s approach obsolete. According to him, in recent years the state support the consumer managed to change. “Existing industrial parks, we have quite a lot, but they are filled not 100%. Therefore, we need to support those who create infrastructure and those who will be in it to stay and work”, – the expert believes.

In Minpromtorge do not agree that government support of the market is only to support the construction of new industrial sites. Deputy Minister of industry Dmitry Ovsyannikov considers the mechanisms of residents support instruments such as compensation of costs of implementation of investment projects in priority industries, special investment contracts, preferential loans provided by the industry development Fund. The tools are there – residents of industrial parks should take an interest in their use,” he stresses.

The low occupancy rate of industrial parks official ties with a long cycle of creation, occupying seven years. “The peak of construction of industrial parks occurred in recent years. Today, these projects are at different stages of development. As a result, the commissioning of new production areas still exceeds their fill. But in the foreseeable future the situation will change diametrically opposite way: the pace of construction will decrease, and the number of residents will continue to grow,” expects Dmitry Ovsyannikov.

Meanwhile, the authorities of St.-Petersburg, apparently, does not see the need for new industrial sites type greenf shield. Instead, they propose to organize industrial parks on the basis of existing enterprises in brownfield model. The logic of such a decision is clear. In the Northern capital is not so much a huge of Greenfield land, ready to accept industrial production in large quantity. But there is no shortage of industrial lands, which occupy 19 hectares, or 13.6%

of the total area of the city.

On behalf of the Governor of Northern capital George Poltavchenko before October 1, will be prepared the draft decree of the government, which will prescribe the principles for the implementation of such projects and measures to support them. Interest in the initiative Smolny shows the number of St. Petersburg enterprises, including JSC “lenpoligrafmash”, JSC “Kirovskiy Zavod”, JSC “Svetlana”, JSC “Positron” NPO for plastics processing them. “Komsomolskaya Pravda”.

Star industrial size

Not to say that the idea of transformation of the enterprises of St.-Petersburg in the industrial parks for the city is something fundamentally new. In fact some industrial enterprises have long been industrial parks, as they give your production plant and factory space for rent for small Industrialists. Further in this direction moved the plant “Zvezda”, which a few years ago, has allocated 30 hectares of its territory for the industrial Park and began to take long term rent production building. During this time in the area of the plant settled fairly wide range of residents, many of whom are not directly connected with the activities of “Stars”. So, along with a Metalworking company “North Park” in the shops of the plant home manufacturer of fitness equipment “foreman products”, supplier of automotive components “Trev-Ergon, manufacturers of Windows and doors (LLC “Skala”), of furniture (of Atika, OOO). Resident services engineering maintenance, asset management, bookkeeping, cleaning, provides legal support. The main difference from the industrial Park shanaynay hire – provision of recruitment services, said the head of industrial Park “Star” Valentina Artamonova.

To adopt the experience of the enterprise is going to “Kirovskiy Zavod”. “The main thing that made “Star” – isolated the site for an industrial Park. We have not yet done, but plan to do. We’ve got the facilities that we use and rent out, but it happens quite randomly. In our territory there are tenants that are included in the chain, and there are non-core tenants from different areas. Presented even the food industry”, – commented on the plans of the company Director of assets management, JSC “Kirovskiy Zavod” Boris Seliverstov.

The weak point of the project “Stars” Industrialists call it narrow functionality, which almost does not go beyond the cutting of the earth and its subsequent delivery to the lessor. According to Executive Director of JSC “Center” Zahara Kondrashov, it is important that the projects of industrial parks rental and outsourcing businesses) was complemented with set of services associated with the birth of a new product (research and development, output for export), as well as industrial cooperation. Help major businesses in marketing products and promotion them for export is of paramount importance to small Industrialists, agrees Vice-President of Saint-Petersburg Union of businessmen, the Chairman of the Board of Directors of the company “Spetstehnomash” Leonid Aronov. “In the absence of these services the impression that the big companies just want at public expense to remodel their area,” he laments.

As reported by Valentina Artamonova, the company plans to more actively engage on the territory of the industrial Park is specialized tenants. “This will give synergy between the resident and the owner,” she concluded. According to her, now “Star” is in talks with potential resident, representing the metal industry. Overall she considers the experiment a good plant. According to her, the surrender of territory in the lease provided the company with additional cash flow, allowed the upgrade of capital construction facilities to prepare workplaces for a possible expansion of the plant.

<blockquote>the Dual challenges of Russia</blockquote>

<blockquote>Возвращение резидентаDmitry Ovsyannikov, the Deputy Minister of industry: – Development of industrial parks began in the world with the leading States of Europe and the United States, which since the end of XVIII century it took several waves of industrialization. Accordingly, the emergence of industrial parks in these countries was preceded by the creation of a strong industrial BA se. T o they are characterized by equal representation of both forms of the implementation of Park projects – b rownfield and greenfield. In the first case, it reflects a desire for efficient use of available production space. And the second to the creation of industrial infrastructure that provides the greatest opportunity for growth in industries with lower costs for investors and manufacturers. In developing countries, where industrialization began relatively recently, the situation looks different. The original orientation of the industry mainly on large businesses, import substitution and technology transfer identified as the main form of the localization industry industrial parks greenfield. Russia, as a country with a huge and requiring reconstruction of the Soviet industrial heritage, faces challenges both types of countries. The result of greenfield parks act we have provided on the consolidation of the most advanced, high-tech industries, and brownfield parks take on the role of preservation of existing industrial infrastructure, support and development of small and medium businesses at the local level.</blockquote>

<blockquote>the synergy for a new round of developmentВозвращение резидента</blockquote>

<blockquote>Andrey Ivanov, head of Department on work with investors of the branch of JSC “Special economic zones” in St. Petersburg: On the territory of St. Petersburg operates a special economic zone (SEZ) of technical innovation type. In contrast to industrial parks it is intended for business innovation, not pure production. Since renting office space is always more expensive than production, enterprises that require storage of raw materials and components in warehouses, you will not find advantages when placed in our SEZ. A more appropriate format for a manufacturing business are SEZ of industrial type. Within the SEZ receive such incentives and benefits the company is obliged to follow a specific business plan and to implement the project without a variance. In light of the unstable economic situation not every company is willing to tie their hands this way, so the Park is more free and convenient for investors format. At the same time, according to our observations, during the recession of interest of investors and decrease of GDP, industrial parks are losing huge market share to potential investors, while the SEZ feel a constant demand from the business. Since the SEZ of industrial type at the moment are the most successful areas on the territory of Russia, we can assume that if we add to the capabilities of industrial parks preferential conditions of conducting business of the SEZ, it parks will get a new round of development.</blockquote>

Troublesome moving

Inhabitants of industrial parks on the basis of existing enterprises is usually small and medium businesses for which lack of industrial premises and equipment – long headache. Settling in a vacant industrial plant gives the opportunity for smaller enterprises to optimize costs, reduce the cost of the final product, and sometimes be involved in the production chain of large enterprises. Have with such a move and the back side is offer business facilities often are in poor condition and not always convenient from the point of view of the implementation of production logistics.

But the thing that is stopping small businesses to leave their homes, yet the lack of state support, without which the benefits of relocation were less evident. Small and medium businesses first and foremost need to be subsidised government rent, benefits on land and property, says a representative of the Commissioner for the rights of entrepreneurs in St. Petersburg Anna Anisimova , citing a sociological study.

Leonid Aronov sees no reason for small businesses to change the position in the current situation. According to him, the current rates in industrial parks with enterprises comply with the citywide rates. Boris Seliverstov considers the possible decline in interest rates, subject to the availability of budgetary subsidies for the modernization of the leased premises and tax exemptions for the land.

Support measures, which says the business still do not exist in municipal law. “Today in Saint Petersburg there are no measures for support and development of industrial parks while in the city law on industrial policy is not the definition of an industrial Park,” – says Anna Anisimova.

Возвращение резидента

Competition for attention

For the attention of small and medium business manufacturers have to compete with the industrial Park created from scratch for the greenfield model. Since the investor of such projects carries enormous costs for laying of engineering communications, the prices here are significantly higher. According to the assessment of E&Y, sozdanie industrial Park requires full cost in the amount of from 5 to 25 million rubles per 1 ha. Residents of such projects, respectively, became large business that could afford the purchase of land and subsequent construction on this new production.

As has shown the further course of events, based on the involvement in the industrial parks of major players has not justified itself in full. The crisis has forced businesses to reduce investment activity, which is not the best way affected the population of existing industrial sites. Developers involved in such a capital-intensive business with long payback periods, had to change strategy, switching to the residents search among the small and medium business. Vladimir Vishnevsky considers that industrial sites can compete with the balance for engaging small businesses, but only if there is government support.

The construction of industrial parks from scratch can not provide an acceptable rate for small and medium businesses without government subsidy, admits Vladimir Vishnevsky. “The minimum profitability of private capital delivers the rental rate 500 per sq m, while the small and medium business maximum can pay 350 rubles,” he says.

The coordinator of the club of leaders in St.-Petersburg and Leningrad region, Vice-President of CJSC “Banking house “St.-Petersburg” Vyacheslav Traktovenko believes that subsidizing the rent carries great risks. “Subsidies today and tomorrow they are not. If subsidies cease to flow, then the resident cannot pay the rental rate, and the operator of the industrial Park may go bankrupt,” expresses fears Vyacheslav Traktovenko. “The concept of market rates should not require subsidies. Any subsidy granted for the period of the investment cycle and is no longer required when entering the turnover inherent in the business plan”, – the expert adds.

It seems that the move to the new site, whether it is built from the ground up industrial Park or factory floor, yet does not promise small businesses the obvious advantages. To entrepreneurs have changed their minds, they need a “carrot” in the form of state support mechanisms that meet with their aspirations, and the range of services that contribute to the creation and promotion of new products.

<blockquote>While the majority of industrial parks of Saint-Petersburg are well – established industrial area</blockquote>

<blockquote>
Возвращение резидентаElena Rogova, Dean of the St. Petersburg school of Economics and management at HSE St Petersburg:
– Industrial parks are an important tool for economic development. They solve important tasks of the organization of industrial production, attracting investment, creating jobs. In the most General sense of the industrial Park is an object of industrial purpose, deposited by owner in a rental managed by professional management company and developed under the same concept. The concept of the industrial Park consists in choosing the size and layout of production areas and facilities for specific target groups of tenants, as well as in the specialization of individual object parts or in whole under any industry. In accordance with the introduced in 2014 the national standard “Industrial parks. Requirements”, the area of the industrial Park shall not be less than 8 hectares, with the presence of electricity with a maximum capacity of 2 MW (but not less than 0.15 MW on every available hectare of usable area), the conditions for gas supply and water supply. That is quite a big investment and the question of their effectiveness is very important.
Based on international experience, the payback period of the average industrial Park in Europe is 12-14 years, in the US is 8-10 years. That is, investments of a strategic nature. To increase the investment attractiveness of purely production capacity is often complemented by logistics infrastructure – warehouses, container platforms, clearance points, etc. All exist in Russia, but often an obstacle to development of industrial parks contradictory acts of the Russian Federal and regional (municipal) legislation, the abundance of bureaucratic procedures.
The analysis of the placement of industrial parks in Saint-Petersburg shows that the vast majority of key projects within the industrial zones, and this trend will continue in the future. Also a lot of industrial parks exists and is created in the Leningrad region, in the areas adjacent to St. Petersburg, where legislation is more favorable for investors. More than half of the total number of industrial parks operating in the northwestern Federal district. From this point of view, we can say that industrial parks as its placement emphasize the reality of the existence of the Saint Petersburg agglomeration.
Although the task of bringing the production on-site in industrial parks for businesses associated with significant costs and risks – not only investment, but also logistics, and also requires the involvement of financial resources, almost not compensated by the state (a single mechanism is not established, benefits for investors are only possible in the case of finding a new site in the special economic zone, and for St. Petersburg it is a zone of technical innovation of nature that excludes the possibility of transferring “cleaner production”, without research centers), it is possible to note the growth of interest and state and private companies to this element of infrastructure. In 2015 in St.-Petersburg has opened four industrial Park. Market and logistics dictate the investors ‘ interest in St. Petersburg and the Leningrad region. On average, SPb and LO, the occupancy rate of industrial parks is about 50% (slightly higher in brownfield, just below greenfield). To ensure a higher occupancy rate in modern conditions was impeded by financial limitations – credits for projects of this level, banks are reluctant to give various programs of state support is inconsistent, to receive such support takes a lot of time, so the company usually solve the problem at their own expense. In addition, in St. Petersburg not so many sites where you can place the production capacity to bring them out of the city centre, as well as create new ones. Remains the problem of redevelopment of former industrial sites. It is solved in different ways- to create business centers, industrial parks, infrastructure facilities are smaller scale, but financial resources and developers, and tenants are also limited, resulting in the implementation of such projects is rather slow.
Interesting projects implemented in the Leningrad region with the participation of foreign investors. Among them, the industrial Park Greenstate, fully funded by Finnish company YIT. For them it is the path to the Russian market. However, it should be understood that in the conditions of crisis and economic sanctions the participation of foreign investors, at least in the near future, freeze or reduced, and rely on the increased investment is not necessary.
Nevertheless, it seems that industrial parks in the near future will develop, and this development would be a predominantly extensive type – will be developed on new sites with average or even low occupancy rates available. For increase of efficiency of functioning necessary to eliminate gaps in legislation and to coordinate the efforts of the authorities to support both investors and industrial Park residents.</blockquote>

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