House construction in Arkhangelsk: searching for sales outlets

In October 2009 the first issue of Arkhangelsk trade magazine Terem was presented at the 11th International Specialized Exhibition Wooden House Building/Holzhaus in Moscow. Due to this the local manufacturers unspoiled by the attention of other regions, were able to enter the Russian market outlets, and demand for local products exceeded supply.

Timber industry complex of Arkhangelsk Region is one of the largest in the country. The annual felling and conversion volume exceeds 14 million cubic meters. Moreover, Arkhangelsk timber is considered to be one of the best building materials in the world, its being bought by the Scandinavian builders, Europeans, Americans, Koreans and Chinese. The region features a plethora of medium and small companies engaged in modern and traditional technologies of house production, as well as the manufacture components supplying the house construction needs.

2009 was a test of survival for the local timber industry. The crisis shook the ground under the feet of forest enterprises which were unstable even without that. The export-oriented suppliers of timber lost sales in the traditional European and Asian markets. The house-builders faced non-payment and reduce of consumer demand in the region. The loggers who had taken the forest in lease failed to sell the resources to the extent which had been expected initially.

In such circumstances the only way to keep business is to enter the domestic markets of the country and make up demand for their products. The first and most effective step in this direction was taken in October 2009, when the homebuilding and wood processing companies of Arkhangelsk Region were represented at the stand of Arkhangelsk Region during the Holzhaus exhibition.

The trade magazine Terem by the Business Media publishing house was presented to the visitors of the show. The exhibition of such high level is attended by technical visitors and experts, the private individuals planning to build their own houses, representatives of the companies engaged in complex residential house construction, domestic and foreign businessmen interested in lumber purchase. The stand visitors were told about the house-building technologies applied in the north and the northern companies eager to deliver high quality and affordable log and lumber. The customers from the capital city were really surprised with the region’s opportunities and favorable price offers.

The problem is that very few local companies are known by the rest of the country. Perhaps, only the large market players have their own web-sites and other modern marketing tools. Arkhangelsk manufacturers are working in conditions of severe competition with the companies from neighboring regions. And competition is not always fair: for instance, unique properties of Arkhangelsk lumber are often used to promote the products which were never produced in Arkhangelsk.

This situation - when a region having the unique resource potential cannot promote in the national market - is effectively used by numerous intermediaries involved in resale of lumber or manufacture of log houses at inflated prices. Participants were shocked to discover the prices for timber from local suppliers and a huge amount of competitive bids from the Terem magazine.

The outcome of the stand work and the industrial magazine presentation at Holzhaus resulted in dozens of new clients contacting the Archangelsk companies for the past two months. The entrepreneurs operating in different parts of the area received calls coming not only from the capital, but also from St. Petersburg, Yaroslavl, Penza, Tver, near and far abroad countries. Some companies got over 100 contacts of potential customers and about 30 of them turned into the supply contracts to various regions of the country.

The Business Media publishers is thoroughly preparing for the next Holzhaus show. We are confident that the Arkhangelsk builders and suppliers of lumber can effectively compete with the largest and most famous players in this market from other regions. We’ve got the unique quality resource and the everlasting traditions of house building in our asset. You need only to make a statement of our capability across Russia.

[Wednesday, February 03, 2010]