White Goods Makers To Manufacture Locally

The European Stinol and Evro Nova firms are set to launch local production of their washing machines, company officials announced this week.

Representatives from Evro Nova, an official dealer for Austria's Eudora GmbH, said their company intends to locally manufacture 200,000 washing machines a year.

Stinol likewise said it was shifting to local production, but could not yet comment on specific volumes.

The back-to-back announcements spurred fears among other washing-machine importers and manufacturers, who immediately began to express concern that they would lose their market share.

"If Evro Nova starts putting out such large volumes, it will become a serious market player, and one of the three leaders [in the sector]," said Kakha Kobakhidze, director of CIS activities for Italian company Merloni Elettrodomestici S.P.A.

Merloni Elettrodomestici imports account for nearly 40 percent of Russia's washing-machine market, which importers and producers estimate at 600,000 to 1 million machines per year.

Evro Nova general director Mikhail Yarin said the company will sell the domestically produced machines for less than $200 in order to make them available to as many buyers as possible.

According to Yarin, Evro Nova controls about 2 percent of the country's washing-machine market.

During its five years in Russia, Evro Nova has had two failed partnerships with local producers, but the company's director said this time Evro Nova has found a strong potential partner in a military-industrial complex manufacturer in the Urals. He declined to name the plant.

"If we invest $1 million this year, revenues will reach $7 million next year," he said.

Evro Nova has ordered a $13,000 market survey from the GfK marketing firm to determine the best name and price for its Russian-made machines.

As for the name, Yarin added that the company's European label is inappropriate for the Russian market.

"You don't need to invent a Mercedes, you just have to make a good Volga," he said.

Yarin also said the company plans to spend another $35,000 on research and development plans.

"The worst thing is that our country has no engineers who know how to make washing machines," Yarin said.

In 1998, Evro Nova formed a partnership with the Nizhny Novgorod region's Sverdlov plant to produce Oka washing machines. It also once produced Ural washing machines with its Nizhny Tagil partner, the High Mountain Mechanical Plant.

Yarin said his company supplied the plants with parts and provided training for personnel in Austria. However, Evro Nova broke off its partnership with Sverdlov in 1999 when the plant raised prices on its machines from 4,800 rubles ($167) to 7,200 rubles.

"Naturally, demand for them fell off immediately," Yarin said.