Private Eye


Manufacturing has become an engine for employment and a significant part of the country's private sector-driven diversification efforts.

While Azerbaijani industry is still dominated by the extraction segment, manufacturing represents almost 15% of the country’s total industrial output, a number that appears to have fallen over recent years only due to the expansion of the oil and gas sector. The largest output within this category is petrochemicals, which represents just over half—or 7.4%—of Azerbaijan’s total manufacturing output, down from 12.4% in 2006 as production grows in more diverse areas of the country’s industrial base. The government is also keen to see petrochemical production increase. Construction on the Sumgait Chemical Industrial Park began in 2012 and the authorities hope to attract companies to the zone through soft loans and other assistance.

Other growth areas include food and beverages, a sector that grew 7.8% in 2012, automobiles, the manufacture of which expanded by 12.3% over the first 10 months of the same year, furniture, which has also grown rapidly due to private-sector investment, and metallurgy, including a restart of large-scale aluminum production in late 2011.

Investment in the manufacturing sector could be indicative of the growth to come, with AZN847.9 million flowing into the sector in 2011, a sharp increase from AZN510.2 million in 2010 and AZN354.2 million in 2009—total investment in 2011 was AZN5.37 billion, also up from AZN4.28 billion in 2010 and AZN3.23 billion in 2009.


According to figures released by Azstat, the metallurgy industry grew by 17.6% between January and November 2012, with a larger growth of 60.4% seen in the finished metal segment. The total value of production came in at AZN409.8 million.

Following a halt in aluminum output in 2010, the most significant development in recent months was the reboot of production in 2012 thanks to the opening of a 50,000-ton capacity plant run by Det.Al. Plans are now underway to boost capacity to 100,000 tons in Phase II, with construction expected to begin at end-2012, according to Sarkhan Babayev, General Director of Det.Al Holding. Within the next five years, the company is also planning on developing a factory to produce alumina. The factory has been designed with a capacity of 450,000 tons and will help keep costs down as “we will not need to transport the raw material from abroad,” said Babayev. The company currently exports 4,500 tons of aluminum per year, with between 400 and 500 tons destined for the local market.

The production of iron ore, which stood at 578,000 tons in 2010, is also expected to grow in coming years as Det.Al looks to develop capacity for 2 million tons of steel concentrate per year. Plans include an iron ore factory, a concentrate factory, a 46-kilometer pipeline from Dashkesan—the location of large alunite reserves—to Ganja with a capacity for 3.5 million tons of iron ore concentrate, a pelletization factory, a hot briquetted iron (HBI) and direct reduced iron (DRI) factory, and a steel factory. “The capacity of our steel project will be 2 million tons of concentrate, 1.2 million tons of pellets, nearly 1 million tons of HBI/DRI, and approximately 0.8 million tons of various steel products,” concluded Babayev. Currently, cable and wiring are Azerbaijan’s largest finished steel products, with 498,800 tons produced in 2011, up from 401,700 in 2010. In the same year, AZN294.3 million was invested in the production of fabricated metal products, an increase of almost 100% over the previous year.


Despite representing only 0.14% of the country’s total industrial output, the furniture sector is anything but nascent and is trending toward exports. There are 77 furniture producers in the country, 75 of which are private. Investment in 2011 totaled AZN14.7 million, up from only AZN2.6 million in 2009. In the same year, office furniture represented the largest sub-sector, with 62,845 sets produced. This was followed by wooden beds, with 20,829 units and mattresses with metallic springs, with 13,523 units.

The sector is seen as significant to the “Made in Azerbaijan” trademark by industry leaders, with Elshad Abbasov, General Director of Embawood, a leading local furniture producer, bullish about the export market. “We represent not only our furniture in foreign markets, but also the philosophy and modern lifestyle of Azerbaijani families,” he said. The company currently exports 20% of its products with plans to increase the ratio in future. Tajaddin Mustafayev, Founding Director of Saloglu, another leading local furniture producer, sings a similar song. “25%-30% of our goods are exported,” he said, emphasizing that goals include “entry into new areas of furniture production, increased exports, and a strengthened position in the domestic market.” He also remains positive regarding the manufacturing sector’s place in economic diversification efforts, concluding that “the positive results of the reforms carried out in Azerbaijan in recent years are apparent in manufacturing.”


Food and beverages represent 10.5% and 3.5% of total manufacturing output, respectively. There were 396 enterprises operating in the sector at end-2011, with 380 run privately. Investment in food and beverages has also shown a sharp increase in recent years, with AZN46.5 million invested in food manufacturing and AZN41.5 million in the production of beverages in 2011, compared to AZN27.1 million and AZN12.1 million in 2010, respectively. Investment in food manufacturing totaled 0.87% of total investment made in the industry sector in 2011, whereas investment in the production of beverages equaled 0.77%.

Increases in the production of various categories of food products were seen over 2011, with the production of cheese and curd representing the largest output at 44,293 tons, up from 43,340 tons in 2010. Other major categories of production include butter and margarine, at 21,093 tons and 21,764 tons, respectively, iodized salt, at 17,808 tons, tea, at 10,950 tons, and pasta, at 10,722 tons. The production of beverages also increased over 2012, up 7.8% on the previous year. The value of beverage goods produced in 2011 was AZN169 million and the segment comprises 0.5% of the total goods produced in the country, employing 3.2% of the workforce. Exports also grew over 2012, totaling $21.3 million, up 34.7% from $15.7 million the previous year. In the alcoholic beverages sub-segment, beer production grew 27.5% over 2012 to reach 4.9 million deciliters. Wine saw the largest growth in production, however, with 47.1% more produced in 2012 over 2011, at 917,800 deciliters. Wine production is currently increasing by over 178,000 deciliters annually.

The beverages sector is also supported by a strong local glass industry. Inter Glass has a capacity for 80 million-85 million units of glass a year and has produced 70 types of bottles. “In the future, we will be able to fully meet the needs of domestic customers in this segment,” said Fariz Muradov, Director of Inter Glass.


The production of cars, trucks, and tractors totaled $196.5 million in value over the first 10 months of 2012. The production of cars grew 12.3% in the year, with 542 units manufactured over the same 10-month period. There are six companies involved in the production of motor vehicles and trailers, five of which are private. The three largest production plants include Ganja Automobile Plant, Nakhchivan Automobile Plant (NAP), and Az Samand. Ganja Automobile Plant currently has the capacity to produce 1,000 trucks and 2,000 tractors per year, as well as various specialist equipment including cranes, excavators, and agricultural equipment. NAP was opened by Chinese producer Lifan following an agreement between Azerbaijan and China, and could produce up to 5,000 vehicles per year. Az Samand, which is owned by Iran Khodro, has the potential to produce 6,000 units annually. Foreign cooperation seems to be the aim of the game, with Ganja Automobile Plant also having signed deals with BelAgroMash, DorElecktroMash, and AMKODOR of Belarus to boost production, including the manufacture of snow removal and forest utility vehicles, as well as road construction equipment and other machinery.


The production of defense goods grew by 12% in 2012, with the variety of items on offer reflected in the country’s strong showing at the 2012 Indo Defense exhibition. Azerbaijan exhibited 125 items in Jakarta, up from the 27 items showcased in 2009. Items being displayed for the first time included night-vision devices, bulletproof helmets, flak jackets, and transparent magazines for small arms, as well as the usual ammunition, scopes, and engineering equipment that Azerbaijan has exhibited before.

Over 2012, sites for the production of small arms, gas masks, and various types of ammunition were put into operation, according to the Ministry of Defense, in line with steadily increasing defense spending that reached $1.9 billion in the 2013 budget, up 0.9% on 2012. In 2013, the country is also expected to begin producing warships at a newly built shipyard in Alat.

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