This sustained growth rate may be the domestic market's main competitive edge in the race for a new production facility in the region, reads the April 24 edition of Business Construct monthly.
"There are plans to build a new production facility in the region and Romania is highly likely to be chosen as a future target for this investment, particularly owing to the growth rate of the domestic market, which is unmatched by any other market in the region," says Petru Avram, general manager with Pipelife Romania, the domestic subsidiary of Pipelife group, a joint venture between Wienerberger (Austria) and Solvay (Belgium). Until 2005, Pipelife Romania was held by Pannonpipe; a joint venture between Pannonplast of Hungary and Pipelife.
Avram says he expects the market to increase by around 15-20% this year, after a record year in 2007, when the market advanced by 30-35%. He also says the domestic market stands every chance of maintaining a growth rate of around 10% by 2015, mainly sustained by major infrastructure projects, as well as by the development of the real estate market.
"This is our competitive edge, but competition will be quite tight given that Bulgaria, for instance, does not have any such production facility. This is their edge," explains Avram, who did not provide any details on the cost or capacity of such an investment. Avram says the announcement will be made in several months and construction works may last for around 2-3 years.
The company already has a production facility domestically, in Miercurea Ciuc, with a theoretical production capacity of 10,000 tonnes. Last year, the plant's production amounted to 8,100 tonnes of products, which drove Pipelife Romania's turnover up by 50% against 2006.
The company's sales are mainly operated through construction firms that require Pipelife products. These firms generate over 50% of the company's turnover.
Avram says turnover will rise by around 20% this year to 17m euros, with the slowdown also coming amid weaker market growth, 20% at the most, compared with the 35% rate posted in 2007.
On long term, the company wants to be one of the top two players on the market. The main step toward meeting this objective will be to boost the number of warehouses. "By 2011, we plan to reach 10-12 warehouses located in and outside Bucharest, an increase from the current 3," says Avram. The company will hire another 9 individuals this year, which will supplement the 80 already existing employees.
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