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article imageCiting 'economic reasons,' HP halts production in St. Petersburg

By Karen Graham     Jul 29, 2015 in Business
California-based PC giant Hewlett-Packard announced on Tuesday it was pulling up stakes at its Shushary factory near St. Petersburg, Russia.
According to a source close to the company, as reported in, “The factory was closed for economic reasons. The cost of personal computers assembled in Russia, significantly higher than those that are assembled in Asia."
There was a sharp downturn of 44 percent in the Russian computer market during the first quarter of the year, according to Standard Media. But the increasing demand for tablet devices and the struggling Russian economy is also playing a role in HP's departure.
After starting construction of the plant in 2008, HP's St. Petersburg factory was launched in April of 2010 in collaboration with Taiwanese electronics manufacturer Foxconn, to assemble personal computers. Originally, the plant was supposed to hire 100 employees, with growth in the PC market leading to additional employees being hired. HP was expecting to export the products to Eastern Europe, the Baltic States, and Scandinavia.
At first, the Shushary factory only produced desktop computers. In August of 2013, the plant began assembling monoblocks, with the goal of producing up to 480,000 units per year. But an economic downturn was already in the air. By the middle of 2014, production at the Shushary plant was halted and according to news media sources, the company said the "computers were moved from St. Petersburg to the Czech Republic in order to save, and to optimize logistics.”
But the reason for the plant closure is basically a decline in the PC market in Russia. Sanctions and the ongoing strife in Ukraine are all playing a part in the country's economic decline, and the PC market is just a small piece of the pie. Shipments of personal computers in Russia had declined 22.7 percent in 2015, compared to 2013.
More about Hewlett packard, St petersburg, Russia, economic reasons, personal computers
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