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. Last Updated: 07/27/2016

3M Lets Rostov Firm Make Reflective Strips

The Darus factory in Rostov-on-Don on the lower Volga this month will begin to use technology from U.S. corporation 3M to produce reflective strips for road signs and for instructions on equipment.

It is the first time 3M has entrusted an outside enterprise to produce such materials.

3M, which is also known as Minnesota Mining & Manufacturing Co., does business in a total of 63 countries. The 1999 turnover of the company, which makes a diverse line of products, was $16.66 billion while net profits came to $1.7 billion.

A cooperation agreement between the U.S. corporation and the Darus factory — the local monopoly for reflective strips and road marking materials — was signed Monday.

The conditions of the agreement were not disclosed, but Andrei Chichagov, 3M's director for developing reflective materials with Russia, said that legally it is not a joint venture.

Negotiations with the factory have been held over the past three years.

Under the agreement the U.S. company will provide Darus with technical equipment worth $500,000 and instruct local personnel on its use.

All necessary raw materials for manufacturing reflective strips will be supplied by 3M and the U.S. company will be responsible for sales.

"In the future other elements of the production cycle may be transferred to Rostov," said Hans Vervoort, general director of 3M Russia.

The Darus plant was established almost 30 years ago and is capable of producing 1.5 million square meters of strips per year. However, the plant is dilapidated.

Oleg Ruchimsky, 3M's director for communications with state institutions, said strips produced by Darus last a maximum of only one year. The new strips that are to be produced with 3M's help will last at least 10 years, he said.

Until now the reflective materials for road signs produced by 3M were supplied by the corporation's sole enterprise in Europe located near D?sseldorf, Germany.

Beginning next year Russian consumers will be able to buy two types of reflective strips from Rostov. The equipment fitted in Rostov is capable of coping with the reflective-strip needs of the federal road networks assessed at 600,000 square meters per year.

"At first the production cost of the strips manufactured in Rostov will not be significantly lower than in Europe, but with time this difference will increase," Chichagov said.

Depending on their characteristics the average price of such strips in Russia varies between $6 to $14 per square meter.

Roar Nyborg, 3M's business leader for traffic-control materials in Eastern Europe, said the world volume of sales for road safety is more than $1 billion per year. One-third of this comes from the European market.

3M has an 80 percent hold on the sale of reflective materials worldwide.

In second place is the Japanese company Kuwa, which controls about 12 percent of the world's market.

"The company has set itself the same goal in Russia — to conquer 80 percent of the market of reflective materials," Nyborg said.