Portland heavy-machinery dealers are forging farther into the Russian Far East, a rugged region that has crushed many a U.S. enterprise. The Portland arm of Modern Machinery Co. Inc., a Montana company with branches across the Northwest, will support a new sales office in Yuzhno-Sakhalinsk -- on Sakhalin island north of Japan. Modern Machinery has long sold giant Komatsu dozers, wheel loaders and other products to miners from its office farther north in Magadan, Russia, as a gold rush rages there.

"Komatsu had a dealer in Yuzhno that was doing nothing, and they saw how well we were doing in Magadan," said Bob Robinson, Modern Machinery's Portland-based Russian-operations director. "They asked if we'd buy them out, so we did."

Plenty of Northwest companies have tried their luck in the Russian Far East, a vast region this side of Siberia, since capitalism broke out in the former Soviet Union. Some ventures have succeeded, but many have foundered in a sea of corruption, bureaucracy, thievery and extortion.

Take the Global Forestry Management Group. In 1994, the group of family-owned Northwest sawmills, eager for logs from one of the world's last great forests, launched a $9 million joint venture in the Russian Far East.

Never mind that Weyerhaeuser Corp., the Federal Way, Wash.,-based wood-products giant, had tried the region earlier only to run into the buzz saw of the Russian timber mafia.

Global Forestry managed to ship logs to Asian nations and to upgrade a Russian port. But now its aptly named Terminal Inc., gutted by corporate raiders linked to a Russian oligarch, and is fighting expropriation or abandonment as Oregon managers try to salvage value for investors.

By contrast Modern Machinery, to hear Robinson tell it, has found a solid niche on Russia's frontier. The Missoula-based company has operated since 1995 in Magadan, mainly serving the mining industry.

Modern Machinery has 51 employees in Magadan selling products such as excavator buckets and their teeth made by Portland-based Esco Corp. "It's a lot bigger gold rush than Alaska ever saw," Robinson said.

Delivery can be challenging. In 2004 a convoy of 18 Modern machines led by a Komatsu D375 dozer chugged more than 1,000 miles through minus-40-degree temperatures to a gold mine in the Chukotka area. The trip to the Kupol mine, 800 miles beyond the end of the road, took 41 days.

Modern Machinery is expanding to Yuzhno-Sakhalinsk for broader markets. The area has multi-billion-dollar liquified-natural-gas operations, with more planned. But the once-busy oil town awaits the next boom.

"Right now it's in the middle of a bust," Robinson said. "They're just laying in wait for the big projects."

Robinson will start small, with five employees in the new branch. The office will offer machinery for mining, forestry, drilling and other industries.

The Russian Far East's pace and style of development concerns another Portlander, Guido Rahr, president and chief executive of the Wild Salmon Center, an international conservation organization working to protect wild salmon.

Rahr says fish that teem in the seas around Sakhalin, targeted for mineral, oil and gas development, together contain more protein than any other area of the world. In the Russian Far East, organized gangs of poachers work almost every river, stripping salmon for their roe.

"It's a disaster over there," Rahr said. "The piles of dead salmon are so big you can see them from the air."

The Wild Salmon center has helped increase enforcement, create salmon refuges and certify ocean fishermen. "It's just a really complicated place to work," Rahr said.

Farther west, on the mainland, is Khabarovsk, Portland's sister city and a place Robinson eyes for expansion someday. There, Daniel Werner, a Portland-based businessman who once headed the sister-city association, operates a thriving software-development company.

Elena Engineering Co. -- named for Werner's wife, Elena, a former Reed College professor -- employs 19 in Khabarovsk, producing software for customers including big U.S. corporations.

Werner illustrates the importance of flexibility in Russia. He exported food there until Moscow devalued the ruble, making his products too expensive.

Werner quickly turned the new exchange rate to his advantage, hiring some of his traders who held degrees from Russia's outstanding software schools. Instead of following the Indian model and outsourcing to independent companies, Werner owns both his Russian and U.S. operations.

Werner says he walks through Khabarovsk with an "imaginary Yellow Pages" in his head for all the businesses that don't yet exist.

"Russia still represents a gigantic business opportunity if you have the stomach for cultural difference," Werner said, "because they do things differently."

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