"New Deal" instead of "New Normal"
In his annual Address, President Vladimir Putin referred to the experience of recent economic success related to the development of the agro-industrial and defense-industrial complexes. With all the differences between the AIC and the DIC, both sectors of the economy in recent years have become zones of active industrial policy of the state.
Support for sales and investments in fixed assets, subsidized loans, large-scale government orders, restriction of imports to protect the domestic market - the use of these and similar measures has always met with resistance from the liberal economic community in the government and the expert environment. Nonetheless, it was they who ensured growth rates that were significantly higher than the average for the economy, launching the process of rebuilding (and somewhere creating from scratch) entire industries, and increasing export potential. And all this under rather difficult starting conditions - the general imperfection of our institutions and the unenviable initial condition of the sectors themselves.
If the agro-industrial complex was considered to be the most problematic area of government in the Soviet period, the defense-industrial complex became such later. Therefore, the position of the “defense” vice-premier, which Dmitry Rogozin came to five years ago, was not called “shooting” unless due to the inconsistency of this epithet of the well-known humanity of the political mores of modern Russia.
Let us recall the main characteristics of the political situation that has developed around the military-industrial complex as of 2011 year.
Turned into a tradition of disruption of the HPV and GOZ. The first two post-Soviet state weapons programs (up to 2005 and up to 2010) were almost completely failed.
The outlined transition to import of VVST is no longer elements and components, but final products. Deals on Mistrals, Iveco armored personnel carriers, Austrian sniper arms, Israeli drones looked like trial balloons of a new model of relationship between the customer and the contractor, when the buyer, feeling like a welcome guest in the global arms supermarket, was already preparing to abdicate responsibility for the future of the Russian industry.
Expectations of a landslide reduction in arms exports due to a reduction in available MTC markets (as the largest buyers - China and India - switch to their own or at best joint projects), the Soviet Union’s obsolescence, problems with financial and credit support of transactions and after-sales service.
Chronic price and financial conflicts between the customer and the contractor, paralyzing the performance of the state defense order not only at the contracting stage, but also at all stages of execution. Their resolution, as we remember, was often transferred to a higher political level.
To the above, it is worth adding the well-known structural imbalances in the defense industry that have accumulated throughout the post-Soviet period: outdated fixed assets and oversized assets, personnel aging and washing out of qualified personnel, low or negative profitability, loss of a number of previously mastered technologies, gaps in the lower levels of cooperation, etc. It is not surprising that at the time of the launch of the LG-2011 – 2020 there was a widespread belief that the industry simply could not cope with the sharply increased, mobilization the essence of the state order. This was one of the main Kudrinsky arguments against increasing defense spending.
From the height of 2016, we can say that the worst fears were not confirmed. It is enough to compare the volume of industrial production of industrial complex in the 2011-m with the expected data for 2016-m. Increase - in 2,6 times. And the matter is not only in the increased state defense order, but also in increasing exports. According to a report by the Stockholm International Peace Research Institute (SIPRI), published in 2016, "Russian arms exports have increased by 28 percent over the past five years compared to the previous five year period."
As for the state defense order itself, the key point was that the industry was able to meet the increase in the volume of execution discipline. In financially successful 2011, performance of the GOZ on 80 percent was perceived as a great success. In 2014, the GOZ was performed on 95 percent, in 2015, on 97 percent. The data on 2016 is not provided yet, but at the end of September at the Military-Industrial Conference in St. Petersburg, representatives of the Ministry of Defense talked about a certain excess of the schedule for the implementation of the state defense order compared to the same period last year. No less important, as the president noted in his Address, that the increase in volumes is accompanied by a significant increase in labor productivity (expected by the end of 2016 of the year - 9,8 percent).
These achievements became possible not only due to the notorious “manual mode” of control, but also as a result of solving a number of system problems in the military-industrial complex. Of course, the decision in this case does not mean the final result, but rather - a process with positive dynamics in each of the most complex areas. We list some of them.
Contracting system
The contradictions in this area, which were mentioned above, were largely dictated by the imperfection of the legislative framework. An important step in its reform was the adoption in December of the 2012 federal law “On State Defense Order”. He made the contracting system more flexible - allowing different pricing models; more complex - focused on the entire procurement cycle, including planning, placement, execution of the contract; more balanced in terms of regulation of minimum and maximum profitability. In many ways, precisely because of this, the discipline of the execution of the GOZ has been strengthened.
After the adoption of the law, the share of long-term contracts in the GOZ (2012 year - 33 percent, 2013 year - already 48 percent) significantly increased, which is very important from the point of view of economy of scale, investment planning, reduction of the cost of borrowed funds.
The next wave of reforming the rules of contracting was intended to increase the financial discipline of the state defense contractor. Since September 1, the package of amendments developed by the Department of Defense has come into force. The new requirements tightened the rules for banking support for the state defense order (separate accounts for each contract, stringent requirements for spending money, a limited number of authorized banks) and were very wary of industry representatives. Conversations about the inevitable disruption of the state defense order sounded on their part, albeit informally, but very insistently. Some of the new rules really looked ill-conceived. However, after a year and a half it can be fixed that in this case the worst fears did not come true. Largely due to the work on the mutual adaptation of the new requirements of the law and the realities of the defense industry, which was conducted during these one and a half years by the board of the Military Industrial Commission and the Ministry of Defense (at the moment the output is already the second package of corrective amendments designed to make the new rules of the game more thoughtful and executable).
Disputes over the new regime of banking support for the state defense order continue. However, an important result is already evident today: this regime qualitatively raises the level of state awareness of what is happening in the GOZ system, and allows at least partly to control the increase in costs. But it is important that in itself it does not create market incentives to reduce them.
Therefore, today the key issue in terms of increasing the cost-effectiveness of the state defense order is the pricing system. In its current form, it stimulates enterprises to overestimate costs. Increased costs in the application of a fixed standard of profitability allows the company to increase profits in absolute terms. And vice versa, cost reduction is unprofitable, since in subsequent periods all savings are withdrawn by the customer. Methods of rationing costs fails even in Soviet times. In modern conditions, the number of unreadable "variables" is incomparably higher.
It is clear that, due to the objective features of the defense sector as a quasi-market sector, it is quite difficult to find an alternative to pricing according to the “cost plus” principle. However, it is possible and necessary to look for options for its adjustment. Dmitry Rogozin set such a task at the Military-Industrial Conference at the end of September of this year, and today the relevant proposals are already being considered by the MIC board.
Industry retooling
According to the Ministry of Industry and Trade for 2012, the share of obsolete equipment (over 20 years old) in the machine park exceeded 65 percent. To solve this problem, the government approved five state programs related to the development of electronic and electronic, aviation, rocket and space industry, shipbuilding, nuclear power complex. The main role in the technical re-equipment was played by the federal target program “Development of the military-industrial complex of the Russian Federation for 2011–2020”. Many enterprises were indeed provided with modern technological equipment (until 2020, the scale of updating will be about 100 thousand units). In this regard, however, two related problems are worth noting.
First, direct subsidies for the modernization of production are not the best solution from the point of view of the system of incentives for the leaders of the defense industrial complex. What the state pays directly is not always adequately evaluated and calculated in terms of efficiency. Carrying out technical re-equipment of enterprises through the Federal Target Program was a necessary, but forced solution in the situation of accumulated depreciation of funds and low real profitability of companies. In the future, the main center of gravity in solving this problem should be transferred to the maximum consideration of the investment component in contracts. In his electoral article 2012 of the year “To be strong: guarantees of national security for Russia”, Vladimir Putin noted that “the purchase price ... must be ... sufficient not only for the recoupment of enterprises, but also for investments in their development and modernization.” At the time of writing this article, it sounded like a task for growth for the same pricing system, and now, when it has been worked out, and the relationship between the customer and the contractor has been normalized, a quite suitable moment is coming for the decision.
Secondly, one can only regret that the rather large-scale program of support for the technical re-equipment of the military-industrial complex was not coordinated from the very beginning with the task of re-creating the domestic machine-tool industry. At the very least, “it was necessary to choose several serious strategic partners, and the condition for the purchase of machines was to be their deep localization”. These are the words of Dmitry Rogozin on the Technoprom-2015 forum. This position has been expressed to them before, but, in all likelihood, did not become consensus in the government. This is one of the examples of discordance between the strategies for the development of the military and civilian industries (and in general, of different sectors of the economy), which is important to overcome if we seriously set ourselves the task of re-industrialization.
Import substitution
Under this hackneyed term recently applied to the DIC hides four quite different topics.
The first is the restriction of imports of final military products. As already mentioned, as of the beginning of the decade, there was a serious tendency to lobby for such imports. And with all the counterarguments, there was a high probability of following this path. Just because it is the path of least resistance. In addition, it is beneficial for many in terms of dropping responsibility for the development of problem industrial assets, and for business intermediaries. Before my eyes was an example of India, where import activity, despite all the talk about the priority of the local military-industrial complex, gained momentum because of the many intermediary lobbyists. There was a temptation to go the Indian way. Fortunately, thanks to the political position of the president of the country, the head of the military industrial complex, the new defense minister, this temptation was avoided.
The second topic is the replacement of sanction imported components in military products. The government has adopted an import substitution program, detailed “road maps” have been formed for a number of positions. According to official statements for the 2014 year, the task of mastering the entire range of components and components for the production of armaments and military equipment was to receive a solution within three to five years.
In the case of products supplied by Ukrainian enterprises, complete import substitution is a matter of time. Before the crisis, the Klimov plant mastered the production of helicopter engines supplied by Motor Sich, the only thing is to increase serial production. NPO Saturn was identified as the parent company for the production of gas turbine engines for fleetwhose monopolistic supplier the Nikolaev enterprise "Zorya-Mashproekt" earlier acted. According to the vice president of USC Igor Ponomarev (in May 2016), while all work is being carried out according to the schedule agreed by the Ministry of Industry and Trade, the Ministry of Defense and USC, the first prototype GTU is planned to be placed on a test bench in 2017, serial delivery to ships under construction of project 22350 may begin at the end of that year. By the way, no less urgent task was the development of repair of the Nikolaev gas turbine installations, which are equipped with many ships of our fleet.
As for the Western or East Asian elemental base (its share in some samples of the HEAT is of the order of 65 percent), here most often it is about replacing one import with another. To achieve a more acceptable result in this area, long-term and systemic solutions are needed. Industries such as microelectronics, on the one hand, are strategically important for the defense industry, but on the other, they can pay off only with the widest coverage of civilian markets.
This makes relevant the third dimension of the problem of import substitution: the development of basic industries that are of fundamental importance to both civil and military industries. In the machine tool industry, microelectronics, electronics, photonics, there are a number of programs of different levels, but much more intensive and complex efforts of the state are needed for these industries to be restored, and somewhere created anew. The basis of such efforts is the formation of an “anchor” domestic market for each of the positions. Often - an artificial "design" of such a market. As an example, Dmitry Rogozin at a recent congress of the Union of Mechanical Engineers referred to possible solutions in microelectronics: “If we today transfer passports, identity cards, various documents, goods to use national chips, then due to this huge order for simple civilian products, we will lower the cost price ... to create its own special purpose electronic component base. ”
Finally, the fourth aspect of import substitution is winning back the domestic civilian market by domestic engineering and, above all, by defense companies. Recently, much has been said about the unnatural situation in which 80 percent of the Russian civil aviation market belongs to the Boeing-Airbus duopoly, when large-scale shipbuilding contracts, without any localization requirements, lock themselves off to foreign shipyards when power-engineering orders go abroad again and again, despite all sanctions risks and the availability of relevant competences of Russian companies.
It must be admitted that in those sectors that directly border the military-industrial complex — civil aviation, shipbuilding, and rocket and space technology — great efforts have been made to recreate the industrial potential. Projects developed as early as 80, but still able to occupy positions in the relevant niches today (IL-96 in cargo and passenger versions, IL-114), are revived, although with great difficulty, the projects of the two thousandths are pulled out, albeit with great difficulty. (Sukhoi Superjet, Angara family of rockets), new ones are being implemented (MS-21, PD-14 engine), fixed assets for promising industries are being built (construction of the Zvezda shipyard, which will specialize in large-scale shipbuilding).
In the Address to the Federal Assembly 2016 of the Year, the President named among such markets adjacent to the defense industry the production of civilian products for medicine and energy. Indeed, defense companies are capable of playing a leading role in a number of positions. Again, subject to the purposeful formation of an “anchor” market, a consolidated civil order, open to defense enterprises (at the initiative of the military-industrial complex board, such a mechanism is already being formed today for the supply of medical equipment).
Personnel issue
Personnel hunger in the defense industry involves all levels of the division of labor, from skilled workers to designers and directors of enterprises. And different levels of training - from vocational guidance in school to complementary education of accomplished specialists. The military-industrial commission initiated certain solutions around the perimeter of these problems. Among them:
development of a new state training plan for the five-year period, taking into account the real needs of the defense industry organizations;
development of contractual relations “university-student-enterprise”, providing for the transition from targeted recruitment to targeted training, strengthening the role of the employer in the process of preparing specialists;
restoration of the system of additional vocational education, which allows up to 2020 of the year to carry out retraining and improve the skills of about 200 thousands of engineering and technical personnel of the military-industrial complex;
development of internal corporate training programs and corporate universities (they begin to play a major role in the training of personnel in working specialties);
social policy measures (increasing income levels, housing support) at the enterprises themselves.
The latter is especially important, since the weakest link in the personnel chain remains the link between the educational institution and the defense industry enterprise, as well as everything that the personnel managers of enterprises call the official term “consolidation”. Simply put, graduates of engineering faculties do not come to defense companies or do not linger on them. It is important that in this direction, associated with the motivation of employees, a lot has been done in recent years. In particular, mechanisms have been created to support cooperatives from OPK workers (free of charge to receive a plot for building and infrastructure) and to implement corporate housing programs. Today, a number of companies are implementing such programs in the interests of employees, including both preferential purchase arrangements and long-term lease options. The average salary in the defense industry has grown quite substantially. In 2011, it was 24 530 rubles, in 2016 (according to the expected results) 45 551 rubles (in the whole country the growth is noticeably lower - from 23 369 to 36 200 rubles).
The average age of OPK employees has dropped from 45,9 to 45 years. The improvement is not so significant, but a few years ago the “defense industry” was predicted by demographic failure: the core of experienced specialists is aging, the middle generation is extremely small, the new one is not in a hurry to change.
In short, in this case, too, despite the most alarming forecasts, the worst was avoided: both the statistics and the experience of observing enterprises suggest that the change nevertheless arrived, the defense industry has become younger in recent years and the average 45 years in practice do not mean the prevalence middle-aged specialists, and the industrial alliance of "grandfathers" and "grandchildren."
However, there is another component of the personnel problem. It is not only a shortage of specialists of certain categories, but also a negative selection, which also begins at school. Of course, this is not a general rule, but an alarming trend: engineering students usually go for not the best applicants, in the pool of target recruitment in the interests of the military-industrial complex are not the best students, not the best graduates come to work for enterprises and they are not always the strongest from comers
But the engineering elite, if we want to have a technological future, cannot be second-rate, consist of those who could not make it into financiers, lawyers or security officials. For a long time, this “second-rate” was programmed by the system itself of corporate hierarchies in industry. At the Council of General Designers and Representatives of the Academy of Sciences, which was held in 2013, Dmitry Rogozin shared his observation on a visit to one of the large corporations: carriers of design competencies in it at the third and fourth levels of the corporate hierarchy. If the “ceiling” for the best representatives of the profession is set so low, by definition, it will not attract ambitious and talented youth to it.
The desire to change this state of affairs, to shift the balance of power in favor of the technocratic elite, has become one of the clear priorities of Dmitry Rogozin as a “defense” deputy prime minister. Important steps in this direction are raising the status of the chief or general designer at the enterprise (their assignment to the military industrial complex / college of the military industrial complex, the rule of “two keys”, suggesting that the expenditure of funds for technical issues occurs only through two signatures - the general director and the main / general designer), the formation of the institute of general designers for complex weapons systems, and then - the institute of general technologists, leaders of the priority technological areas of the defense industry.
Of course, this is not enough to raise the prestige of the engineering profession to a new level - systemic changes in the economy and society are needed here. But it is obvious that such changes should start from the top level of the social pyramid.
Coordination and planning
In recent years, much has been said about the lack of interdepartmental and inter-sectoral coordination in industrial-technological policy, which makes the latter ineffective and uneconomical. Within the “defense” sector, this lack of coordination is gradually being managed to fill as the status of the Military Industrial Commission is strengthened and sectoral and inter-sectoral instruments are created under its auspices.
In 2012, the commission received the functions of an arbitrator in the event of a price dispute between the DIC and the Ministry of Defense. In 2014, the MIC was headed personally by the President of the Russian Federation. This decision made possible operational working coordination between the civilian, industrial wing of the commission and its power wing, which was always accountable directly to the president.
In the same series (the creation of working coordination mechanisms) stand the already mentioned decisions on general designers and technological managers. At the head of specialized scientific organizations and scientific and technical councils, they will be responsible for the targeting and mutual coordination of research and development in their respective fields, that is, to serve as a kind of system integrator of technological policy.
In one of the so-called May presidential decrees, the ambitious task of creating a qualitatively new system of analysis and strategic planning was put, which would link the state's scientific, technical and industrial policy, military construction with an assessment of the challenges and threats to national security for the long term. And the board of the military-industrial complex returned to the Soviet practice of developing fifteen-year "Basic Directions for the Development of Weapons and Equipment", which should serve as a basis for the development of the State weapons programs for a ten-year period. In particular, the “Main directions of development of weapons and military and special equipment for the period up to 2030 of the year” were approved, in which a list of samples defining the appearance of promising weapon systems was formed. Some of the priorities laid down in the strategic planning documents were reflected by Dmitry Rogozin in a speech in the State Duma. Among them:
automated control system of the Armed Forces;
automated battlefield control system;
visualization of the battlefield;
robotics;
reduction of types of weapons, military and special equipment;
modularity;
inter-clan unification and creation of inter-medium devices;
electronic component base;
transition to full life cycle contracts.
Such accents make it possible to expect that the issues of control, interaction, intelligence, information confrontation and, in general, the construction of modern network-centric systems will occupy a worthy place in the State Armaments Program until 2025 of the year.
However, the HPV-2025 itself still remains unaccepted. At the beginning of 2015, there were reports in the media about the postponement of the start of the next State Weapon Program from 2016 to 2018. The reason, in all likelihood, is that as the planning system in the military and military-industrial field is adjusted, the question of the instability of forecasts and plans of a macroeconomic nature is only more acute. Simply put, the caravan moves at the speed of the slowest camel. And state strategic planning should be comprehensive. Otherwise, we can assume that it does not exist at all.
Development policy
Of course, there are much more similar areas in which the bottlenecks were solved and at the same time problems for the future were solved. A separate discussion is required for the problems of asset restructuring, financial recovery and credit support to companies, optimization of the mobilization potential of the defense industry. I dwelt on only a few of the most obvious public priorities of the past "defense five-year plan." This is enough to see what phase of the process we are in.
At the aforementioned Military-Industrial Conference in St. Petersburg, the chairman of the military industrial complex’s collegium defined this phase as a transition from mobilization (and somewhere, I’ll add the “fire brigade” regime) to development policy: “Over the past few years, the MIC has proven its the ability to provide large-scale rearmament of the army and navy against the background of maintaining high positions in the export of VVST. We managed to mobilize the existing potential, and somewhere and restore the lost. Now the companies and branches of the defense industry are facing a higher level. We need to go from mobilization to sustainable development - to ensure its effectiveness over the long distance, the ability to respond flexibly to environmental challenges and change it in our own interests. ”
In the same speech, there was also a list of the main challenges that our development policy should “build up”. I think they were focused rather accurately.
First, it is a challenge to a new technological policy. The Soviet scientific and technical reserve in the weapons field is virtually exhausted. A new HPV should be primarily innovative, focused on the creation of qualitatively new IWT platforms. But it is much more difficult to control and program the sphere of research and development in terms of terms, costs, effectiveness, than mass production. Especially in our conditions, when the non-addressing and conceptual irresponsibility of R & D managed to become the norm.
Secondly, it is a challenge to corporate competitiveness, the quality of the corporate environment. As rightly noted in the UAC strategy prior to 2025, “it is not products that compete in the global market, but effective corporations by means of all their competencies and resources”. In addition to product performance and price, competitiveness factors include a stable financial position, transparent management, a developed supplier “ecosystem”, business reputation, a certified production system, a global service network, the availability of financial instruments (export credits, leasing), etc. the combination of these factors, the competitiveness of Russian defense companies is very limited.
Third, it is a challenge to the development of civilian markets for end products. There are more than enough skeptics who say: if you have an available market for less (conditionally) 500 of millions of consumers, then you should not even try to play in an industrial power. The domestic market is too narrow, and the external is hopelessly busy. As a rule, such conversations are arranged by arguments about “new normality” and “post-industrial future.” However, it is new technological trends that call into question this logic. In a number of industries, the new industrial revolution may reduce the return on technology and goods. In other words, the knowledge-intensive products of the new generation will be profitable in smaller markets, and the concept of global factories will gradually become a thing of the past. This is precisely the structural prerequisites of that turn towards re-industrialization and the protection of the domestic market, the beginning of which we are seeing in the West.
Therefore, it is time for speech leaders of our first persons to stop accompanying the findings of the new coming of protectionism with a “unfortunately” turn. This is a new reality, political and technological, overturning the dogmas of the Washington Consensus.
And here I come back to where I started from — measures of stimulating industrial policy can have an effect even in the conditions of our imperfect institutions, if they are consistently implemented for at least several years. By applying these approaches to other industries, we may well gain a “new course” instead of a “new normality”.
Support for sales and investments in fixed assets, subsidized loans, large-scale government orders, restriction of imports to protect the domestic market - the use of these and similar measures has always met with resistance from the liberal economic community in the government and the expert environment. Nonetheless, it was they who ensured growth rates that were significantly higher than the average for the economy, launching the process of rebuilding (and somewhere creating from scratch) entire industries, and increasing export potential. And all this under rather difficult starting conditions - the general imperfection of our institutions and the unenviable initial condition of the sectors themselves.
If the agro-industrial complex was considered to be the most problematic area of government in the Soviet period, the defense-industrial complex became such later. Therefore, the position of the “defense” vice-premier, which Dmitry Rogozin came to five years ago, was not called “shooting” unless due to the inconsistency of this epithet of the well-known humanity of the political mores of modern Russia.
Let us recall the main characteristics of the political situation that has developed around the military-industrial complex as of 2011 year.
Turned into a tradition of disruption of the HPV and GOZ. The first two post-Soviet state weapons programs (up to 2005 and up to 2010) were almost completely failed.
The outlined transition to import of VVST is no longer elements and components, but final products. Deals on Mistrals, Iveco armored personnel carriers, Austrian sniper arms, Israeli drones looked like trial balloons of a new model of relationship between the customer and the contractor, when the buyer, feeling like a welcome guest in the global arms supermarket, was already preparing to abdicate responsibility for the future of the Russian industry.
Expectations of a landslide reduction in arms exports due to a reduction in available MTC markets (as the largest buyers - China and India - switch to their own or at best joint projects), the Soviet Union’s obsolescence, problems with financial and credit support of transactions and after-sales service.
Chronic price and financial conflicts between the customer and the contractor, paralyzing the performance of the state defense order not only at the contracting stage, but also at all stages of execution. Their resolution, as we remember, was often transferred to a higher political level.
To the above, it is worth adding the well-known structural imbalances in the defense industry that have accumulated throughout the post-Soviet period: outdated fixed assets and oversized assets, personnel aging and washing out of qualified personnel, low or negative profitability, loss of a number of previously mastered technologies, gaps in the lower levels of cooperation, etc. It is not surprising that at the time of the launch of the LG-2011 – 2020 there was a widespread belief that the industry simply could not cope with the sharply increased, mobilization the essence of the state order. This was one of the main Kudrinsky arguments against increasing defense spending.
From the height of 2016, we can say that the worst fears were not confirmed. It is enough to compare the volume of industrial production of industrial complex in the 2011-m with the expected data for 2016-m. Increase - in 2,6 times. And the matter is not only in the increased state defense order, but also in increasing exports. According to a report by the Stockholm International Peace Research Institute (SIPRI), published in 2016, "Russian arms exports have increased by 28 percent over the past five years compared to the previous five year period."
As for the state defense order itself, the key point was that the industry was able to meet the increase in the volume of execution discipline. In financially successful 2011, performance of the GOZ on 80 percent was perceived as a great success. In 2014, the GOZ was performed on 95 percent, in 2015, on 97 percent. The data on 2016 is not provided yet, but at the end of September at the Military-Industrial Conference in St. Petersburg, representatives of the Ministry of Defense talked about a certain excess of the schedule for the implementation of the state defense order compared to the same period last year. No less important, as the president noted in his Address, that the increase in volumes is accompanied by a significant increase in labor productivity (expected by the end of 2016 of the year - 9,8 percent).
These achievements became possible not only due to the notorious “manual mode” of control, but also as a result of solving a number of system problems in the military-industrial complex. Of course, the decision in this case does not mean the final result, but rather - a process with positive dynamics in each of the most complex areas. We list some of them.
Contracting system
The contradictions in this area, which were mentioned above, were largely dictated by the imperfection of the legislative framework. An important step in its reform was the adoption in December of the 2012 federal law “On State Defense Order”. He made the contracting system more flexible - allowing different pricing models; more complex - focused on the entire procurement cycle, including planning, placement, execution of the contract; more balanced in terms of regulation of minimum and maximum profitability. In many ways, precisely because of this, the discipline of the execution of the GOZ has been strengthened.After the adoption of the law, the share of long-term contracts in the GOZ (2012 year - 33 percent, 2013 year - already 48 percent) significantly increased, which is very important from the point of view of economy of scale, investment planning, reduction of the cost of borrowed funds.
The next wave of reforming the rules of contracting was intended to increase the financial discipline of the state defense contractor. Since September 1, the package of amendments developed by the Department of Defense has come into force. The new requirements tightened the rules for banking support for the state defense order (separate accounts for each contract, stringent requirements for spending money, a limited number of authorized banks) and were very wary of industry representatives. Conversations about the inevitable disruption of the state defense order sounded on their part, albeit informally, but very insistently. Some of the new rules really looked ill-conceived. However, after a year and a half it can be fixed that in this case the worst fears did not come true. Largely due to the work on the mutual adaptation of the new requirements of the law and the realities of the defense industry, which was conducted during these one and a half years by the board of the Military Industrial Commission and the Ministry of Defense (at the moment the output is already the second package of corrective amendments designed to make the new rules of the game more thoughtful and executable).
Disputes over the new regime of banking support for the state defense order continue. However, an important result is already evident today: this regime qualitatively raises the level of state awareness of what is happening in the GOZ system, and allows at least partly to control the increase in costs. But it is important that in itself it does not create market incentives to reduce them.
Therefore, today the key issue in terms of increasing the cost-effectiveness of the state defense order is the pricing system. In its current form, it stimulates enterprises to overestimate costs. Increased costs in the application of a fixed standard of profitability allows the company to increase profits in absolute terms. And vice versa, cost reduction is unprofitable, since in subsequent periods all savings are withdrawn by the customer. Methods of rationing costs fails even in Soviet times. In modern conditions, the number of unreadable "variables" is incomparably higher.
It is clear that, due to the objective features of the defense sector as a quasi-market sector, it is quite difficult to find an alternative to pricing according to the “cost plus” principle. However, it is possible and necessary to look for options for its adjustment. Dmitry Rogozin set such a task at the Military-Industrial Conference at the end of September of this year, and today the relevant proposals are already being considered by the MIC board.
Industry retooling
According to the Ministry of Industry and Trade for 2012, the share of obsolete equipment (over 20 years old) in the machine park exceeded 65 percent. To solve this problem, the government approved five state programs related to the development of electronic and electronic, aviation, rocket and space industry, shipbuilding, nuclear power complex. The main role in the technical re-equipment was played by the federal target program “Development of the military-industrial complex of the Russian Federation for 2011–2020”. Many enterprises were indeed provided with modern technological equipment (until 2020, the scale of updating will be about 100 thousand units). In this regard, however, two related problems are worth noting.
First, direct subsidies for the modernization of production are not the best solution from the point of view of the system of incentives for the leaders of the defense industrial complex. What the state pays directly is not always adequately evaluated and calculated in terms of efficiency. Carrying out technical re-equipment of enterprises through the Federal Target Program was a necessary, but forced solution in the situation of accumulated depreciation of funds and low real profitability of companies. In the future, the main center of gravity in solving this problem should be transferred to the maximum consideration of the investment component in contracts. In his electoral article 2012 of the year “To be strong: guarantees of national security for Russia”, Vladimir Putin noted that “the purchase price ... must be ... sufficient not only for the recoupment of enterprises, but also for investments in their development and modernization.” At the time of writing this article, it sounded like a task for growth for the same pricing system, and now, when it has been worked out, and the relationship between the customer and the contractor has been normalized, a quite suitable moment is coming for the decision.
Secondly, one can only regret that the rather large-scale program of support for the technical re-equipment of the military-industrial complex was not coordinated from the very beginning with the task of re-creating the domestic machine-tool industry. At the very least, “it was necessary to choose several serious strategic partners, and the condition for the purchase of machines was to be their deep localization”. These are the words of Dmitry Rogozin on the Technoprom-2015 forum. This position has been expressed to them before, but, in all likelihood, did not become consensus in the government. This is one of the examples of discordance between the strategies for the development of the military and civilian industries (and in general, of different sectors of the economy), which is important to overcome if we seriously set ourselves the task of re-industrialization.
Import substitution
Under this hackneyed term recently applied to the DIC hides four quite different topics.
The first is the restriction of imports of final military products. As already mentioned, as of the beginning of the decade, there was a serious tendency to lobby for such imports. And with all the counterarguments, there was a high probability of following this path. Just because it is the path of least resistance. In addition, it is beneficial for many in terms of dropping responsibility for the development of problem industrial assets, and for business intermediaries. Before my eyes was an example of India, where import activity, despite all the talk about the priority of the local military-industrial complex, gained momentum because of the many intermediary lobbyists. There was a temptation to go the Indian way. Fortunately, thanks to the political position of the president of the country, the head of the military industrial complex, the new defense minister, this temptation was avoided.
The second topic is the replacement of sanction imported components in military products. The government has adopted an import substitution program, detailed “road maps” have been formed for a number of positions. According to official statements for the 2014 year, the task of mastering the entire range of components and components for the production of armaments and military equipment was to receive a solution within three to five years.
In the case of products supplied by Ukrainian enterprises, complete import substitution is a matter of time. Before the crisis, the Klimov plant mastered the production of helicopter engines supplied by Motor Sich, the only thing is to increase serial production. NPO Saturn was identified as the parent company for the production of gas turbine engines for fleetwhose monopolistic supplier the Nikolaev enterprise "Zorya-Mashproekt" earlier acted. According to the vice president of USC Igor Ponomarev (in May 2016), while all work is being carried out according to the schedule agreed by the Ministry of Industry and Trade, the Ministry of Defense and USC, the first prototype GTU is planned to be placed on a test bench in 2017, serial delivery to ships under construction of project 22350 may begin at the end of that year. By the way, no less urgent task was the development of repair of the Nikolaev gas turbine installations, which are equipped with many ships of our fleet.
As for the Western or East Asian elemental base (its share in some samples of the HEAT is of the order of 65 percent), here most often it is about replacing one import with another. To achieve a more acceptable result in this area, long-term and systemic solutions are needed. Industries such as microelectronics, on the one hand, are strategically important for the defense industry, but on the other, they can pay off only with the widest coverage of civilian markets.
This makes relevant the third dimension of the problem of import substitution: the development of basic industries that are of fundamental importance to both civil and military industries. In the machine tool industry, microelectronics, electronics, photonics, there are a number of programs of different levels, but much more intensive and complex efforts of the state are needed for these industries to be restored, and somewhere created anew. The basis of such efforts is the formation of an “anchor” domestic market for each of the positions. Often - an artificial "design" of such a market. As an example, Dmitry Rogozin at a recent congress of the Union of Mechanical Engineers referred to possible solutions in microelectronics: “If we today transfer passports, identity cards, various documents, goods to use national chips, then due to this huge order for simple civilian products, we will lower the cost price ... to create its own special purpose electronic component base. ”
Finally, the fourth aspect of import substitution is winning back the domestic civilian market by domestic engineering and, above all, by defense companies. Recently, much has been said about the unnatural situation in which 80 percent of the Russian civil aviation market belongs to the Boeing-Airbus duopoly, when large-scale shipbuilding contracts, without any localization requirements, lock themselves off to foreign shipyards when power-engineering orders go abroad again and again, despite all sanctions risks and the availability of relevant competences of Russian companies.
It must be admitted that in those sectors that directly border the military-industrial complex — civil aviation, shipbuilding, and rocket and space technology — great efforts have been made to recreate the industrial potential. Projects developed as early as 80, but still able to occupy positions in the relevant niches today (IL-96 in cargo and passenger versions, IL-114), are revived, although with great difficulty, the projects of the two thousandths are pulled out, albeit with great difficulty. (Sukhoi Superjet, Angara family of rockets), new ones are being implemented (MS-21, PD-14 engine), fixed assets for promising industries are being built (construction of the Zvezda shipyard, which will specialize in large-scale shipbuilding).
In the Address to the Federal Assembly 2016 of the Year, the President named among such markets adjacent to the defense industry the production of civilian products for medicine and energy. Indeed, defense companies are capable of playing a leading role in a number of positions. Again, subject to the purposeful formation of an “anchor” market, a consolidated civil order, open to defense enterprises (at the initiative of the military-industrial complex board, such a mechanism is already being formed today for the supply of medical equipment).
Personnel issue
Personnel hunger in the defense industry involves all levels of the division of labor, from skilled workers to designers and directors of enterprises. And different levels of training - from vocational guidance in school to complementary education of accomplished specialists. The military-industrial commission initiated certain solutions around the perimeter of these problems. Among them:
development of a new state training plan for the five-year period, taking into account the real needs of the defense industry organizations;
development of contractual relations “university-student-enterprise”, providing for the transition from targeted recruitment to targeted training, strengthening the role of the employer in the process of preparing specialists;
restoration of the system of additional vocational education, which allows up to 2020 of the year to carry out retraining and improve the skills of about 200 thousands of engineering and technical personnel of the military-industrial complex;
development of internal corporate training programs and corporate universities (they begin to play a major role in the training of personnel in working specialties);
social policy measures (increasing income levels, housing support) at the enterprises themselves.
The latter is especially important, since the weakest link in the personnel chain remains the link between the educational institution and the defense industry enterprise, as well as everything that the personnel managers of enterprises call the official term “consolidation”. Simply put, graduates of engineering faculties do not come to defense companies or do not linger on them. It is important that in this direction, associated with the motivation of employees, a lot has been done in recent years. In particular, mechanisms have been created to support cooperatives from OPK workers (free of charge to receive a plot for building and infrastructure) and to implement corporate housing programs. Today, a number of companies are implementing such programs in the interests of employees, including both preferential purchase arrangements and long-term lease options. The average salary in the defense industry has grown quite substantially. In 2011, it was 24 530 rubles, in 2016 (according to the expected results) 45 551 rubles (in the whole country the growth is noticeably lower - from 23 369 to 36 200 rubles).
The average age of OPK employees has dropped from 45,9 to 45 years. The improvement is not so significant, but a few years ago the “defense industry” was predicted by demographic failure: the core of experienced specialists is aging, the middle generation is extremely small, the new one is not in a hurry to change.
In short, in this case, too, despite the most alarming forecasts, the worst was avoided: both the statistics and the experience of observing enterprises suggest that the change nevertheless arrived, the defense industry has become younger in recent years and the average 45 years in practice do not mean the prevalence middle-aged specialists, and the industrial alliance of "grandfathers" and "grandchildren."
However, there is another component of the personnel problem. It is not only a shortage of specialists of certain categories, but also a negative selection, which also begins at school. Of course, this is not a general rule, but an alarming trend: engineering students usually go for not the best applicants, in the pool of target recruitment in the interests of the military-industrial complex are not the best students, not the best graduates come to work for enterprises and they are not always the strongest from comers
But the engineering elite, if we want to have a technological future, cannot be second-rate, consist of those who could not make it into financiers, lawyers or security officials. For a long time, this “second-rate” was programmed by the system itself of corporate hierarchies in industry. At the Council of General Designers and Representatives of the Academy of Sciences, which was held in 2013, Dmitry Rogozin shared his observation on a visit to one of the large corporations: carriers of design competencies in it at the third and fourth levels of the corporate hierarchy. If the “ceiling” for the best representatives of the profession is set so low, by definition, it will not attract ambitious and talented youth to it.
The desire to change this state of affairs, to shift the balance of power in favor of the technocratic elite, has become one of the clear priorities of Dmitry Rogozin as a “defense” deputy prime minister. Important steps in this direction are raising the status of the chief or general designer at the enterprise (their assignment to the military industrial complex / college of the military industrial complex, the rule of “two keys”, suggesting that the expenditure of funds for technical issues occurs only through two signatures - the general director and the main / general designer), the formation of the institute of general designers for complex weapons systems, and then - the institute of general technologists, leaders of the priority technological areas of the defense industry.
Of course, this is not enough to raise the prestige of the engineering profession to a new level - systemic changes in the economy and society are needed here. But it is obvious that such changes should start from the top level of the social pyramid.
Coordination and planning
In recent years, much has been said about the lack of interdepartmental and inter-sectoral coordination in industrial-technological policy, which makes the latter ineffective and uneconomical. Within the “defense” sector, this lack of coordination is gradually being managed to fill as the status of the Military Industrial Commission is strengthened and sectoral and inter-sectoral instruments are created under its auspices.
In 2012, the commission received the functions of an arbitrator in the event of a price dispute between the DIC and the Ministry of Defense. In 2014, the MIC was headed personally by the President of the Russian Federation. This decision made possible operational working coordination between the civilian, industrial wing of the commission and its power wing, which was always accountable directly to the president.
In the same series (the creation of working coordination mechanisms) stand the already mentioned decisions on general designers and technological managers. At the head of specialized scientific organizations and scientific and technical councils, they will be responsible for the targeting and mutual coordination of research and development in their respective fields, that is, to serve as a kind of system integrator of technological policy.
In one of the so-called May presidential decrees, the ambitious task of creating a qualitatively new system of analysis and strategic planning was put, which would link the state's scientific, technical and industrial policy, military construction with an assessment of the challenges and threats to national security for the long term. And the board of the military-industrial complex returned to the Soviet practice of developing fifteen-year "Basic Directions for the Development of Weapons and Equipment", which should serve as a basis for the development of the State weapons programs for a ten-year period. In particular, the “Main directions of development of weapons and military and special equipment for the period up to 2030 of the year” were approved, in which a list of samples defining the appearance of promising weapon systems was formed. Some of the priorities laid down in the strategic planning documents were reflected by Dmitry Rogozin in a speech in the State Duma. Among them:
automated control system of the Armed Forces;
automated battlefield control system;
visualization of the battlefield;
robotics;
reduction of types of weapons, military and special equipment;
modularity;
inter-clan unification and creation of inter-medium devices;
electronic component base;
transition to full life cycle contracts.
Such accents make it possible to expect that the issues of control, interaction, intelligence, information confrontation and, in general, the construction of modern network-centric systems will occupy a worthy place in the State Armaments Program until 2025 of the year.
However, the HPV-2025 itself still remains unaccepted. At the beginning of 2015, there were reports in the media about the postponement of the start of the next State Weapon Program from 2016 to 2018. The reason, in all likelihood, is that as the planning system in the military and military-industrial field is adjusted, the question of the instability of forecasts and plans of a macroeconomic nature is only more acute. Simply put, the caravan moves at the speed of the slowest camel. And state strategic planning should be comprehensive. Otherwise, we can assume that it does not exist at all.
Development policy
Of course, there are much more similar areas in which the bottlenecks were solved and at the same time problems for the future were solved. A separate discussion is required for the problems of asset restructuring, financial recovery and credit support to companies, optimization of the mobilization potential of the defense industry. I dwelt on only a few of the most obvious public priorities of the past "defense five-year plan." This is enough to see what phase of the process we are in.
At the aforementioned Military-Industrial Conference in St. Petersburg, the chairman of the military industrial complex’s collegium defined this phase as a transition from mobilization (and somewhere, I’ll add the “fire brigade” regime) to development policy: “Over the past few years, the MIC has proven its the ability to provide large-scale rearmament of the army and navy against the background of maintaining high positions in the export of VVST. We managed to mobilize the existing potential, and somewhere and restore the lost. Now the companies and branches of the defense industry are facing a higher level. We need to go from mobilization to sustainable development - to ensure its effectiveness over the long distance, the ability to respond flexibly to environmental challenges and change it in our own interests. ”
In the same speech, there was also a list of the main challenges that our development policy should “build up”. I think they were focused rather accurately.
First, it is a challenge to a new technological policy. The Soviet scientific and technical reserve in the weapons field is virtually exhausted. A new HPV should be primarily innovative, focused on the creation of qualitatively new IWT platforms. But it is much more difficult to control and program the sphere of research and development in terms of terms, costs, effectiveness, than mass production. Especially in our conditions, when the non-addressing and conceptual irresponsibility of R & D managed to become the norm.
Secondly, it is a challenge to corporate competitiveness, the quality of the corporate environment. As rightly noted in the UAC strategy prior to 2025, “it is not products that compete in the global market, but effective corporations by means of all their competencies and resources”. In addition to product performance and price, competitiveness factors include a stable financial position, transparent management, a developed supplier “ecosystem”, business reputation, a certified production system, a global service network, the availability of financial instruments (export credits, leasing), etc. the combination of these factors, the competitiveness of Russian defense companies is very limited.
Third, it is a challenge to the development of civilian markets for end products. There are more than enough skeptics who say: if you have an available market for less (conditionally) 500 of millions of consumers, then you should not even try to play in an industrial power. The domestic market is too narrow, and the external is hopelessly busy. As a rule, such conversations are arranged by arguments about “new normality” and “post-industrial future.” However, it is new technological trends that call into question this logic. In a number of industries, the new industrial revolution may reduce the return on technology and goods. In other words, the knowledge-intensive products of the new generation will be profitable in smaller markets, and the concept of global factories will gradually become a thing of the past. This is precisely the structural prerequisites of that turn towards re-industrialization and the protection of the domestic market, the beginning of which we are seeing in the West.
Therefore, it is time for speech leaders of our first persons to stop accompanying the findings of the new coming of protectionism with a “unfortunately” turn. This is a new reality, political and technological, overturning the dogmas of the Washington Consensus.
And here I come back to where I started from — measures of stimulating industrial policy can have an effect even in the conditions of our imperfect institutions, if they are consistently implemented for at least several years. By applying these approaches to other industries, we may well gain a “new course” instead of a “new normality”.
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