Neste Chemicals, a branch of Finland's Neste Oy petrochemicals conglomerate, is extending its reach into northwest Russia with the launch of an expandable polystyrene insulation board production line in St. Petersburg.
The newly named Neste Penoplast unit is scheduled to begin production this month, and will have an annual production capacity of more than 3.5 million cubic feet. It will produce insulation board for the growing Russian housing market.
``St. Petersburg always has been a good market for Neste,'' said Leslie Petersen, a spokeswoman for Neste Chemicals. ``Demand for insulation board is growing all the time.''
Neste already produces EPS insulation board at five other plants — three in Finland and one each in Sweden and Denmark.
``The markets in Western Europe are fairly saturated, and Russia and the rest of Eastern Europe are looking for quality products and quality service,'' Petersen said. ``It's kind of natural that we move to the east.''
The Neste name already is familiar around St. Petersburg. The company sells branded gasoline and other automotive products at a number of service stations in the area that it co-owns with a Russian company. The St. Petersburg area has a population of 7 million to 8 million.
``That is a huge market for Neste,'' Petersen said, adding that Neste's home market of Finland only has 5.5 million people.
Although Neste has had extensive trade dealings with Russia, Neste Penoplast is the company's first investment in a production facility in the country.
``This was the simplest thing to start producing there,'' Petersen said. ``The investment itself wasn't that big, and we produce the raw material in Finland and ship it to the plant in Russia.''
Neste's involvement in Russia dates back to when the company was formed by the Finnish government in 1948. At that time Neste bartered Soviet oil for its refined products — a practice that continued through the end of the Soviet era.
Neste also has been involved in Russia's transition to a market economy. The company has several joint ventures with Russian firms.
But even Neste remains cautious in its approach to the former Soviet states.
``There are problems there,'' Petersen said. ``We're lucky because we've had such good relations in Russia. We're fairly established already, and our officials know all the Russian government officials. As long as you use common sense and take precautions, you should be all right.''
Other Westerners certainly are trying their hand in Russia.
When Neste published Russian-language brochures announcing its new products, the company received many requests for English-language versions, according to Petersen.
``Many decision makers for the construction companies were not Russian,'' she said.