The Novgorod regional administration expects that Swedish furniture giant IKEA, which has signed an agreement with the German company Pfleiderer to acquire a plant near Veliky Novgorod, will start a full production cycle at this enterprise to manufacture finished products, Deputy Governor Arnold Shalmuyev said Thursday.

Founded in Germany in 1894, Pfleiderer AG is one of the world's major suppliers of the furniture chipboard. The concern operates through more than 20 factories located in Europe and the United States. Pfleiderer AG launched its first chipboard-manufacturing plant in Russia in the village of Podberezye outside Veliky Novgorod in September 2006.

Pfleiderer now processes lumber at the plant that previously had been considered waste.

In late October, IKEAsigned a purchase agreement with Pfleiderer to buy the Veliky Novgorod plant.

“We want IKEA to close the production cycle. We have lumber and chipboard in place already. Now, we would like to manufacture the end product,” Shalmuyev said.

According to Shalmuev, the cooperation between the authorities and IKEA will be discussed at a meeting scheduled for the end of October.

The sides will discuss whether IKEA will finish the second phase of Pfleiderer’s construction project for the plant, which, according to Shalmuev, is very important to the regional administration.

“There is already a plot of land available, a road, the infrastructure, gas and energy supply lines. Now everything depends on IKEA, whether its management considers the project profitable,” he said.

“If IKEA goes ahead and starts building a new plant, the company will most likely receive regional tax incentives,” Shalmuyev said, adding that “the administration is ready to provide assistance to IKEA, just as it would to any other serious investor.”