June 2008

Formation of the Cluster of Automotive Components Formation of the Cluster of Automotive Components in Saintin Saint--PetersburgPetersburg

Slide 2

«About 80% of cars

sold in Russia

have to be produced

on our territory»

V.V.Putin,

The Prime Minister of Russia

Forecast of production of foreign brand passenger Forecast of production of foreign brand passenger cars in Saintcars in Saint--Petersburg regionPetersburg region 20072007--2012, 2012, piecespieces..

Factories 2007 2008 2009 2010 2011 2012Ford Motor Company 72 000 110 000 125 000 175000 200 000 220 000

Toyota Company Manufacturing 300 16 000 40 000 80 000 130 000 150 000

GM 4 000 10 000 25 000 80 000 100 000 130 000

Nissan - - 20 000 60 000 80 000 100 000

Hyundai Motor - - 10 000 80 000 100 000 140 000

Suzuki Motor - - - 26 000 50 000 100 000

TOTAL 76 300 136 000 220 000 501 000 660 000 840 000

Slide 3

Dynamics of the fraction of cost of automotive Dynamics of the fraction of cost of automotive components in the total cost of an automobilecomponents in the total cost of an automobile

1990 2006

Main trends:

Increase of specific rates of cost of high-technology packages and assemblies requiring special research and development in the final cost of an automobile

Car assembly factories transfer production of a greater part of units and components to outsourcing

Slide 4

Capacity of the market of automotive components in Capacity of the market of automotive components in SaintSaint--PetersburgPetersburg

Slide 5

Capacity of the market of new passenger cars in Saint-Petersburg by 2012 will be about 10 billion Euros annually

Capacity of the market of automotive components in Saint-Petersburg by 2012 – 3-4 млрд евро в год

Forming of conditions for arrival of automotive components manufacturers

in Saint-Petersburg

Obligatory condition for autocomponent production localization - 30-40%

Main problems of the cluster formingMain problems of the cluster forming

Need in a strategic Russian partner obtaining experience in Need in a strategic Russian partner obtaining experience in cooperation with local authorities and knowing Russian specific cooperation with local authorities and knowing Russian specific characteristics of the developing process in industrial characteristics of the developing process in industrial premisespremises;;

Lack of own funds for investments into engineering preparation Lack of own funds for investments into engineering preparation of an industrial area and construction of a new factory (it is of an industrial area and construction of a new factory (it is particullarlly specific for small and medium companiesparticullarlly specific for small and medium companies;;

Absence of the required number of industrial plots and parks Absence of the required number of industrial plots and parks with prepared engineering infrastructure in Saintwith prepared engineering infrastructure in Saint--Petersburg Petersburg regionregion..

Slide 6

RFGovernment

Federaldepartments

Committees

profiled other

City services

Saint-Petersburg association of producers of

autocomponents(SPbAPAC)

Рабочаягруппа *

Coordinated decisions

Saint-Petersburg association of producers of autocomponents

Slide 7

A MODEL OF COORDINATION OF THE CITY PROGRAMFOR DEVELOPMENT OF AUTOMOTIVE COMPONENT

PRODUCTION

Subsidiariesof foreign automobile

companies

Russianautomobile companies

WorkingGroup*

St. PetersburgGovernment

Vice Governorof St. Petersburg

* - Working Group for elaboration and implementation of measures aimed at establishing a cluster of manufacturers (suppliers) of components for the needs of motor industry, established by the Committee for economic development, industrial policy and trade at the St. Petersburg Government

St. PetersburgAssociation

of producers of automotive

components(SPbAPAC)

СП СП СП

Saint-Petersburg association of producers of autocomponents

Slide 8

A MODEL OF ESTABLISHMENT OF THE CLUSTER OF AUTOMOTIVE COMPONENT MANUFACTURERS

IN ST. PETERSBURGForeign states

Foreignautomobilecompanies

automotivecomponents

Foreignautomotivecomponent

manufacturers Share in assets, technologies, equipment,licenses, documentation

Russian Federation

Russianautomobilecompanies

Subsidiaries of foreign automobile companies

automotive components

A cluster of automotive component manufacturers being established in St. Petersburg

JV Newproductions

Existingproductions

technopark(s)

Investment Fund for supporting projects in the

sphere of automotive component production

RFGovernment

St. PetersburgGovernment

Location of cluster main premisesLocation of cluster main premises

Distance to main OEMs in St. Petersburg Region:

Shushary (GM, Toyota, Suzuki) – 20 km over RH

Vsevolozhsk (Ford Motor) – 15 km over RH or directly

Kamenka (Nissan, Hyundai) –35 km over RH

Slide 9

PACM location

Ring Highway (RH)

SaintSaint--

PetersburgPetersburg

Zones of possible location of satellite parks

Slide 10

OEM 1

CENTRALINDUSTRIAL

PARK

S1 S2 S3

OEM 2

S4 S5 S6

OEM 3

S7 S8 S9

OEM 4

S10 S11 S12

OEM 5

S13 S14 S15OEM SatelliteIndustrial Park

OEM SatelliteIndustrial Park

Saint-Petersburg association of producers of autocomponents

Saint Petersburg cluster of automotive component manufacturers:general integration

National and international suppliersof Level 2 andLevel 3

Lay out of the Central park territoryLay out of the Central park territory

Slide 11

ZONES OF PLANNED PLACEMENT OF CAPITAL CONSTRUCTION OBJECTS

RED LINESROAD POLESTERRITORIES OFGREEN PLANTATIONPAVING TILEENGINEERING AND TECHNICAL FACILITIESMANUFACTURING PURPOSESPRODUCTION AND STORAGE PURPOSESSOCIAL AND BUSINESS PURPOSESOBJECTS OF ENGINEERING AND TRANSPORT INFRASTRUCTUREOBJECTS OF RAILWAY TRANSPORTMAIN RAILWAY ROADSACCESS RAILWAY ROADS BEING DESIGNEDSTREETS AND PASSAGES WITH ASPHALT COAT

SAINT-PETERSBURGVILLAGE KOLTUSHI

RING HIGHWAY

RING HIGHWAY

MGA

TRANSPORT INFRASTRUCTURETRANSPORT INFRASTRUCTURE

Slide 12

TRANSPORT INFRASTRUCTURE LAYOUT

MAIN RAILWAY ROADS

MAIN AUTOROADSRING HIGHWAY (RH)

ROAD FLYOVERS

OVERPASSES

BRIDGES

METRO STATIONS

FINLAND

ENGINEERING SUPPLYENGINEERING SUPPLY

Slide 13

water supply

water-supply pipeline networks

sewerage systemsewage-purification facilities

pressurized sewerage systems

power supplycable line 110kV

electric power substation (110/10 kV)gas supplygas distribution network of high pressure

gas control point

Lay out of the territory engineering supply

Murmansk Highway

RH

draft

Saint-Petersburg association of producers of autocomponents

Slide 14

Saint Petersburg cluster of automotive component manufacturers: territorial parameters and production areas

CENTRAL INDUSTRIAL PARKCurrent needs: 80 hectares for the central park

375 thousand sq.m of production areasPossible expansions: 20 – 30 hectares for the central park

Parks being satellitesof automobile assembly 15 – 20 hectares for each satellite park,plants it is expected to arrange 4 satellite parks

Total needs: 180 hectares on 5 different sites600 thousand sq.m of production areas

Seite 15Slide 15

Saint-Petersburg association of producers of autocomponents

St. Petersburg cluster of automotive component manufacturers:main investment parameters

By calculations: INDUSTRIAL PARK Satellite Industrial Park(each)

Size Price/sq.m Total Size TotalBuildings: 375 000 sq.m €1000-1250/sq.m €375-470 mln 18 500 sq.m €18,5- 23,1 mln

Infrastructure: 500 000 sq.m €100-125/sq.m €50,0-62,5 mln 18 500 sq.m €1,9-2,3 mlnEquipment: the cluster participant comes with its own equipment;

Total volume of investment in equipment: €620 - 740 mln

Total volume of investment in the project: €1125 -1375 mln

СП

Saint-Petersburg association of producers of autocomponents

Slide 16

St. Petersburg Association of producers of automotive components

Members of Association

Recipients of the Fund (as a part of the cluster of automotive

component manufacturers being formed)

investments (contributions from the

Fund to charter capitals, loans, etc.)

Investment Fund for supporting projects in

the sphere of automotive component production

at SPbAPAC(Joint activity agreement)

FundManagingCompany

Investors of the Fund

Recipients’projects

(investment resources (contributions to the Fund))

Fund’sExpertCouncil

opinions on recipients’ projects

Information materials, statistical

data, etc.

СПIntegral

Association’sdatabase

Association’s servicesassessment of project

elements, issue of analytical

reference statements, opinions, etc.

Calendar schedule of the project (pilot calculationsCalendar schedule of the project (pilot calculations

Slide 17

2008 2009 2010

I II III IV I II III IV I II III IV

Project documentation approvement

Master-planning and zoning

Main utilities reservation and projecting

External engineering communications construction

Intrapark engineering infrastructure planning and construction, built-to-suit projecting for the residents of PACM

Built-to suit construction for the residents of PACM

Signing of lease or rent contracts with the residents of PACM

Projects of automotive component manufacturers Projects of automotive component manufacturers being realized in St. Petersburg clusterbeing realized in St. Petersburg cluster

Tenneco – exhaust system producing factory

Stadco – body producing factory

Johnson Controls – seat producing factory

Magna International – constructing an automotive component factory in the industrial zone «Shushary»

Toyota Boshoku – constructing a seat producing factory

AD Plastik Luga – factory producing plastic automotive components

Nokian Tyres – tyre producing factory

Magnitogorsk Metallurgical Plant (Intercos-IV) – a factory producing stampings

Russian Soda Company – a factory producing automobile glass

Slide 18

Location of automotive component productions of Location of automotive component productions of St.PetersburgSt.Petersburg clustercluster

Acting ОЕМs:FordToyota

Acting manufacturers of automotive components:

Autocomponents and Equipment (AD Plastic Luga)

MMP (Intercos-4)Johnson ControlsTenneco

OEMs under construction:GMSuzukiNissanHyundai

Components productions being developed and constructed:

MAGNAStadcoToyota BoshokuRussian Soda Company

Slide 19

St. PetersburgSt. Petersburg

AUTOCOMPONENTS AND EQUIPMENT