Several factors contribute to this success – geographical location, a rich scientific base, which has been established over many years and, without doubt, the progressive policy of the region’s administration, aimed at all-round support and continuous assistance to companies which invest in the territory. It is clear the helpful attitude of local authorities stimulates investors, among which are several international brands. Investments, in their turn, push technological modernization, development of local business, especially infrastructure. The region offers investors land plots and links to highways and railways.
Among the international companies already working in Kaluga region are South African Beweries, which has a joint venture in “Kaluga Brewery”; Stora Enso, the integrated forest products company with a corrugated packaging mill operating at Balabanovo since 1998; Siemens automotive electronics plant ; Nestle’s Purina Pet Care unit is planning an expansion of its $20 million pet food plant and Samsung Electronics which has started construction of a factory which will produces 2.2 million plasma and liquid-crystal television sets a year by 2010.
Recently it has become clear that one of the most promising growth sectors is automobile production. Volkswagen launched a 1 Bn plan in October 2006 which will assemble six popular models. Volvo trucks division is investing $138 million in another plan while the most recent entrant to the burgeoning auto production market is Peugeot-Citroen which announce decision to build in Kaluga at the end of last year.
The foundation stone for Volkswagen's factory was laid by Bernd Pischetsrieder, chairman of the company's board of directors, and then Russian Trade and Economic Development Minister German Gref. Volkswagen's factory occupies half the 800 hectares it has reserved, and 400 hectares for its partners in the automobile parts industry. The Kaluga technopark is the largest project in the history of the post-Soviet automobile manufacturing industry.
Another technopark, Kaluga-Yug (Kaluga-South), is being built in the vicinity of Kaluga. The Kaluga-Yug park will have an area of 130 hectares. "The Grabtsevo technopark, where the VW factory is located, was built for suppliers whom VW is bringing to the are, and in parallel we are attracting others auto parts manufacturers and automobile assembly plants ot our region," said Mr. Nikolai Lyubimov, the minister of economic development for Kaluga oblast. He predicts that the Kaluga-Yug technopark will ultimately include no fewer than ten auto parts enterprises with a total investment volume of up to 300 million euros.
Volvo Trucks spokesman Oleg Vasilchenko told BSR, "We've chosen Kaluga due to several factors, significant for our company. First of all, the current supplier (body builder) is already working in the region. Secondly, the region boasts profitable geographical position and relative closeness to key sales markets. Thirdly, Kaluga Region is open for mutually advantageous collaboration and investments, which is proved by the fact that many auto-groups and manufacturers of electronics choose Kaluga to establish presence," he summarized.
"Kaluga is developing actively and dynamically: infrastructure of bridges and roads are built and become operations."
"The authorities have announced plans to increas the region's population. They are really impressing - during a comparatively short period of time it will actually double!" he said, impressed.
"A new residential community Pravgorod is being constructed to attract new residents. The region creates conditions, which help attract qualified workers to our new plant. I'd like to emphasize once again that we have chosen Kaluga after we thought everything through in depth. We analyzed all the pros and cons thoroughly and in the end made an integrated decision - "yes!" he concluded.
Similar reasons were cited behind PSA Peugeot-Citroen to build in Kaluga.
"We chose Kaluga Region due to several reasons," a spokesman told BSR. "First of all, the advantageous position of the region from the point of view of logistics. Secondly, the region's dynamic development and thirdly, the highly-competent administration of the region, which today vigorously support us. We believe that our further collaboration is bound to be successful and cooperation between our teams shall be mutually beneficial."
Mr. Vasilchenko of Volvo also praises the regional administration's support, telling BSR, "The level of relations with the region's authorities is absolutely positive. The administration do their best to help with operational problems connected with construction of the plant and its infrastructure. When the President's envoy to the Central Federal Region G. Poltavchenko and Kaluga administration officials visited the company early February this year, we discussed a whole spectrum of questions, in particular, entrance of car spare-parts producers into the region, which would allow Volvo Group increase the localization level up to 30% in the nearest future and create new working places in the region. We are sure that our cooperation with the regional authorities is mutually advantageous - at all stages of the working process we feel that the region is interested in us and the governor A.D. Artamonov and his team are always ready to help. It allows us to develop at an unprecedented rate," he said admiringly.
Official from PAS Peugeot-Citroen also highlighted the clustev or auto manufacturers being created in the region, as a reason for being there.
Foreign business observers echo Mr. Vasilchenko's expectations that the next wave on investors will be auto component manufacturer. Mr. Artamonov has said that the agreements have already been reached with three automobile parts manufacturers to open plants in Kaluga to produce exhaust systems, gearboxes, and steering mechanisms.
As they bid to rival St. Petersburg, Kaliningrad, Nizhny Novgorod and Tolyiatti as auto manufacturing centre, who knows if Kaluga shall become referred to as "Russia's Detroit" in the near future as Kommersant predicted in 2006?
