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Russia sanctions affects Wallingford drilling company

More serious sanctions against Russia in retaliation for the annexation of Crimea could mean lost business for a Wallingford company that sells industrial drilling equipment.

Martin Cobern, a Cheshire resident and vice president of research and development at APS Technology, said a “moderate percentage” of the company’s business was with Russia but declined to specify how much.

The possibility of sanctions against Russia is a concern to the company, Cobern said.

“We’re taking steps to minimize our losses,” he said.

The company has also been contacting legislators such as U.S. Sen. Chris Murphy and U.S. Rep. Elizabeth Esty, both Democrats.

Murphy told the Record-Journal this week he is “cognizant” of the damage that sanctions could inflict not only on Russian industry but on American companies. He said that may be mitigated by increased trade with Europe, but ultimately sending a message to Russia was more important.

“The bottom line is that Russia cannot get away scot-free with invading another country and changing its borders,” he said. “There are much bigger consequences for the United States if we allow Russia to get away with this.”

APS sells industrial drilling equipment to foreign companies, including Russian firms.

Sportika Exports, based in Berlin, is one of nearly 30 Connecticut companies that does business with Russia, according to the Coalition for U.S.-Russia Trade. Sportika sells American-made sports nutrition products overseas.

The U.S. and some European countries have already sanctioned some high-level Russian officials and are considering sanctions that hit the Russian economy. Federal legislators representing Connecticut have pushed for sanctions against Russia after its annexation of the Ukrainian province of Crimea.

U.S. Rep. Rosa DeLauro has called for further sanctions and an end to contracts with Rosoboronexport Corporation, Russia’s state agency for exports of defense-related products, including helicopters that are sent to Afghanistan.

DeLauro voted in favor of the Ukraine Support Act, which authorized President Barrack Obama to impose new sanctions on Russia.

“I am pleased the House of Representatives today joined in an overwhelmingly bipartisan fashion to support the Ukrainian people and make clear that President Putin’s actions are unacceptable,” DeLauro said in a statement last week. “President Putin has a Cold War mentality that is not appropriate for the 21st century, and there must be consequences to Russia’s violations of international law.”

Murphy also supported the act. He visited Ukraine late last year in the midst of protests against the now-deposed pro-Russian president.

Any further sanctions must include the European Union to be effective, Murphy said, since U.S. trade with Russia is not as significant. He advocated giving diplomatic talks time to work, but said sanctions would be a good option if Russia declined to further negotiate or began sending troops into more provinces of Ukraine. Peter Gioia, an economist with the Connecticut Business and Industry Association, doesn’t think the trade sanctions will adversely impact Connecticut businesses. But he cautions it could if Russia cuts off natural gas supplies to European countries.

“That could hurt Germany and France and they are our trade partners,” Gioia said. “Connecticut sells a lot to Germany and France is our biggest trade partner.”

State manufacturers exported $71 million in products to Russia in 2013, up dramatically from $36 million in 2012, said Anne Evans, director of the U.S. Department of Commerce’s Export Assistance Center in Middletown. She explained the spike is likely due to a few jet engines.

Evans met recently with a Middletown manufacturer with some concerns about an order with a Russian customer. Evans said his concerns center on the potential impact on banking that often follows when trade sanctions are placed on foreign countries.

“Part of his worry about trade sanctions are if they include banking sanctions,” she said. “Maybe the money won’t flow. He expects $1 million to begin the manufacturing, but he wasn’t overly concerned.”

Another consequence for U.S. companies is a halt on new export licenses to Russia. Companies that have licenses may expect more scrutiny at custom gates, she said.

“There is always an effect when a country we do business with has sanctions,” Evans said. “We don’t like it, but it is a reality.” (203)317-2230 Twitter: @JBuchananRJ

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