Aggravated copy of the Ministry of Food Industry
Short take-off and protracted peak of United Shipbuilding Corporation
For the Russian military-industrial complex 2013, the year was successful: the state defense order was fulfilled as a whole, and even exceeded for the Air Force. Against the background of the unprecedented supply of new and modernized equipment to the troops, the Navy turned out to be an outsider.
Although the seamen in the last days of the past year received the Yury Dolgoruky and Alexander Nevsky strategic submarine cruisers (SSBN), as well as the nuclear submarine with cruise missiles (SSGN) of the 885 Severodvinsk project, promised earlier, several promising orders were thwarted. The 20380 “Resistant” corvette of the 21631 “Grad Sviyazhsk” and “Uglich” project small rocket ships (MRKs) of the 21820 project “Ivan Kartsov” and “Denis Davydov”, several support vessels were not taken on time.
The construction of the Admiral Gorshkov frigate continues. The reasons for this were protracted state tests or, as in the case of “Resistant”, production delays. Unfortunately, there is no reason to be surprised at the current situation - domestic shipbuilding has never become an economically and technologically efficient industry that is ready to produce the necessary products on time and with high quality. We can recall the aircraft carrier Vikramaditya, the transfer of which to the Indians was postponed for five years. In the civilian sector, the situation is also pessimistic, production does not go beyond single and medium-sized orders. Against this background, there are serious questions about the immediate production structure, that is, the United Shipbuilding Corporation (USC).
This large structure has not yet justified the hopes associated with it. The following facts speak about this: according to the data of the Ministry of Industry and Trade of the Russian Federation, the financial loss of enterprises for 2012 is six billion rubles a year, and only in 2013 did the corporation receive the first profit. There is no clearly defined development program and an adequate internal structure; modernization and expansion of production are conducted at extremely slow rates. And most importantly - the personnel leapfrog which has become a peculiar feature of the USC. In the seven years of its existence, six presidents have changed in it, not to mention the frequent reshuffles on the board of directors. In such conditions, there is no reason to talk about any growth and development, the very existence of the corporation is in question.
Asian experience
Before analyzing the reasons for the failure, it is necessary to analyze in detail the tasks facing the new corporation and the conditions during its creation. In the middle of the 2000 for the first time after the collapse of the USSR, the government began to sufficiently finance the development of the Armed Forces, and then the crisis of the shipbuilding industry was still evident in 90. Some shipyards, such as the Kronstadt Marine Plant, were on the verge of bankruptcy, many others stood idle without orders and hardly kept themselves afloat. If enterprises specializing in the production of exclusively military products could survive at the expense of export orders, repairs and upgrades, in civil shipbuilding the situation turned out to be close to collapse. The shortage of skilled workers and modern equipment increased, there was no funding and a clear development strategy. As a result, the industry was extremely inefficient. Additionally, the situation was aggravated by the fact that the system of industrial relations between republics and regions that had existed in the USSR had collapsed, due to which the production of many components had to be restored. The advantages of the planned Soviet model of production, which involved many relatively small specialized enterprises tied to one another, became disadvantages in a market economy. In the new conditions each shipyard turned out by itself. It was necessary to establish a system of management and interaction appropriate to the market.
The government faced a choice - to recreate a structure similar to the USSR Ministry of Industry and Industry, which supported cooperation, organized effective interaction with the government and solved issues at the political level, or found a fundamentally different solution corresponding to the current economic situation. The first path, the most familiar and traditional, in the realities of a market economy was an economic anachronism. First of all, over the past 20 years, unprofitable production fell out of the chain of cooperation and interaction, many administrative structures were abolished and it was not possible to recreate the lost in the short term. More importantly, the market managed to penetrate into all branches of the shipbuilding industry, including the military, and the former administrative-planned management methods turned out to be inappropriate. Under the new conditions, the situation has become impossible when the industry could count on any necessary resources to accomplish the task. The state no longer had the opportunity to drive unlimited amounts into the defense industry, regardless of the profitability of production. Finally, many factories were in the hands of private traders, who were not so much interested in government tasks, but in profit. The very idea of combining planned management with market structures is initially not viable. Thus, it is obvious that for the return of the Ministry of the Judiciary it was necessary to return the Soviet economic system, which, of course, is no longer possible.
However, without the intervention of the state was also not enough. As world experience shows, the system was created in all leading shipbuilders with the active participation and protection of power. For example, in Japan, during 50, a policy was being pursued to increase the competitiveness of the industry through economic measures - the provision of preferential tax and credit conditions, large-scale asset optimization. The government also purchased advanced technology. By the beginning of 60, national shipbuilding has already become one of the world leaders. In addition, at the end of 70, the state stimulated and supported large-scale modernization through the creation of a special loan fund and the development of exports.
The example of the Republic of Korea is also indicative. Initially, shipbuilding was considered here not as a goal, but as a means of developing heavy and chemical industries. Work began late, at the beginning of the 70s, when the market was already occupied by the Japanese. Koreans went through a specialized and labor-intensive production, and later, at the end of the century, they switched to high technology. In the early stages, most of the equipment was purchased from Japan, and this was even encouraged - the government significantly reduced import duties on the corresponding range of goods. Only ten years later, the country established its own production. At all stages, the government supported the industry, adopted a detailed development plan, introduced significant economic benefits, stimulated the consolidation of the industry, provided legal support, financed a number of R & D projects. All these measures have allowed as a result to significantly raise the technological level. In difficult situations and crises, support was also provided; sometimes, administrative tasks were solved with the help of purely economic measures. For example, for the sake of consolidation, those enterprises that refused to be taken over by large corporations were deprived of state aid. In other words, an indicative planning model was implemented that lacked directivity and was of a recommendatory nature at the macro level, which guaranteed its flexibility and ability to restructure under adverse conditions. State assistance in such a model is carried out through tax mechanisms and point subsidies for the independence of enterprises.
The Chinese path largely repeated the experience of Asian neighbors. Benefits and subsidies, state-controlled conglomerates (for example, giants such as China State Shipbuilding Corporation and China Shipbuilding Industrial Corporation), combined with cheap labor and mass production, quickly made this country the market leader in the most common and popular types of merchant ships fleet.
The experience of the above countries has been carefully studied and taken into account in Russia. First of all, it was necessary to identify the goals and objectives of the shipbuilding industry and, on the basis of this plan, consolidate profitable enterprises for the subsequent purposeful rehabilitation and regulation. For mediation in this process, a fully state-owned corporation was required. 21 March 2007, the President of the Russian Federation signed a decree establishing the USC. According to the adopted model, the state financed R & D, provided a contribution to the authorized capital, contributed to building partnerships with private business, took on social obligations, participated in the planning of defense production. In general, she kept her hand on the pulse, in case of need, to assist or stimulate production.
The overall strategic planning and direct management rested entirely on the corporation itself. Such working conditions and a range of tasks were more suitable for a professional manager than a military specialist. The decision to put Alexander Burutin at the head of the newly-formed conglomerate became fully justified. He held staff posts in the military service, then became adviser to the president of the Russian Federation on military-technical policy. It is noteworthy that the list of contenders for the top positions of the corporation included only civilian leaders: Deputy Prime Minister Sergey Naryshkin, Minister of Defense Anatoly Serdyukov, Minister of Industry and Energy Viktor Khristenko. The only person in uniform, however, far from the Navy, was Deputy Prime Minister Sergei Ivanov. Probably, this meant the government’s reluctance to turn the USC into an exclusively defense-industrial structure, since the priority task was to reanimate civil shipbuilding. Briefly, Burutin formulated the essence of the work to be done: “The main task of the corporation being created is to return to Russia the previous capabilities and potential in the field of civil shipbuilding with unconditional implementation of the armaments program.” 15 June 2007, the USC officially began work.
Presidents like gloves
However, problems started at the start. The process of formation by the incorporation of state-owned enterprises with the further transfer of shares to the property of USC was delayed. Partly due to legal problems and disagreements, as is the case with Admiralty shipyards or the Kronstadt Marine Plant, partly due to traditional bureaucratic delays within the corporation itself. In time, we could not even register it. Although it was originally set to be four months after 21 in March - the time of the signing of the creation decree, it was possible to do everything only on November 16. Another extremely unpleasant factor was the fact that many plants entered the new structure with billions of dollars in debt, which were automatically transferred to USC. Already in September, President Alexander Burutin, 2007, left his post, considering, apparently, that he was unable to cope with the barrage of problems that had piled on him. But it’s not worth looking for the guilty ones, since the task to create a corporation of such a level in four months, requiring fundamental structural changes and a significant amount of legal approvals, was impossible initially.
The case of Burutin was continued by Yuri Yarov, who previously headed the Northern Design Bureau. As a manager, a professional directly connected with the shipbuilding business, he was pinned special hopes. The tasks were to complete the formation of the structure of USC and to adjust production facilities. To support scientific research and procurement of the necessary licenses, the state allocated 140 billion rubles to the disposal of the new leadership, which it was supposed to fully master by the 2016 year. Only the enterprises of the Northern and Western sub-holdings received money, since the Far Easterners (in particular 10, 30, 83 shipyards) still remained outside the USC due to large debts and problems with shareholding.
The state took upon itself the task of improving and economic scanning enterprises. Vladimir Putin was always interested in the corporation, 13 in May 2008, personally inspected the shipyards and held a meeting on industry issues. At the same time, they touched upon one of the principal issues - cooperation with private enterprises, such as the Vyborg plant, Krasnoye Sormovo, and the Northern Shipyard. Although they were very viable and promising assets, the USC leadership did not show any serious interest in them.
The first initiative came from the Ministry of Industry and Energy. In November, 2007 of the year it offered state support to the Vyborg plant and the Northern shipyard provided it entered the USK. At the 13 presidential meeting in May, Minister Viktor Khristenko pointed out the need for a partnership of private shipyards and USC, which could move the industry forward. However, the head of the corporation Yarov was cool about the idea and never took up its implementation. Other issues were on the agenda, including the gathering of enterprises, which was delayed beyond all deadlines, under the auspices of USC. Before 1 April, 2008 failed to complete the process, and the corporation received from Vladimir Putin the last reprieve until 1 April 2009. At the same time, new personnel changes took place, Yuri Yarov resigned.
The next leader was Vladimir Pakhomov, who previously oversaw the supply of naval equipment and ground weapons in Rosoboronexport. Experts assumed that his appointment was directly connected with the nationalization of private shipbuilding enterprises. It is known that this company had very warm relations with many non-state shipyards (CVD). Unlike its predecessors, Pakhomov was actively looking for partners in private business. Cooperation agreements were signed with the corporations Russian Technologies and Samsung Heavy Industries, negotiations were held with a group of defense companies on the Northern Shipyard, the Baltic Shipyard and the central design bureau Iceberg. At the same time, work was carried out with its own assets. According to the strategy adopted under Alexander Burutin, unprofitable and inefficient enterprises did not close down, but looked for an opportunity to reorganize production, or at least to join production plants. Theoretically, such an algorithm looks reasonable, but in the end, there were several completely unprofitable enterprises around the neck of the USC, with significant losses. Nevertheless, it was impossible to close them for political and social reasons, so as not to cut jobs.
By the deadline set by Putin - 1 on April 2009, USC was officially recognized as fully prepared to perform its tasks. In reality, the model did not work out to the end, there were plants in the Far East, the issue with the defense industry enterprises was stalled, a coherent, long-term development strategy was still being developed, and without it, the corporation could not take a clear course. So, at the beginning of his work, Vladimir Pakhomov said: "The main priority of USC is the preservation of our capabilities in the field of military shipbuilding, ensuring national security in this area." It turned out that the words of the first head of the corporation remained words for his followers. Under Pakhomov, the corporation really developed exclusively at the expense of military orders, while the civilian industry was trampling on the spot, not having enough orders and building capacities. It became obvious that without the technical possibility of building large-capacity vessels, that is, over 80 thousand tons, it would be almost impossible to enter the world market.
The painful questions were postponed for the future, but for now the corporation hastily got into its ranks the delayed assets from the southern and Volga regions - the Astrakhan Lotos, Tuapse and Novorossiysk CVDs. An unexpected blow was the global financial crisis of the year 2008, significantly slowing down the development of USC. It is not surprising that Vladimir Pakhomov went after Alexander Burutin to retire at his own request, since the solution (often halfway) of the main problems gave rise to a range of new ones.
Step forward
One of the key points in stories the corporation considered the appointment in October 2009 of the head of the USC Roman Trotsenko. He worked on water transport, headed the board of directors of the passenger and southern river ports in the capital, as well as the Moscow River Shipping Company since 2004. But he was not brought to the corporation by the experience of the riverman, but by an effective crisis manager, whom he recommended himself. It was believed that the new leader was “the man of Igor Sechin”, which could provide USC with additional political weight and opportunities for cooperation with Rosneft. Perhaps, it was under Trotsenko that the corporation earned, as was initially required: many defense and civil contracts were concluded, work began on creating a super-yard in Russia (the same “Star” in the Far East) in cooperation with Chinese and South Korean manufacturers Raffles and DSME, and the main thing is that the leadership has at least some kind of strategy. According to Roman Trotsenko's plans, the first thing was to collect a portfolio of orders, even if they did not bring tangible profits, showing market entry, and then come to grips with modernizing and optimizing production. The head of the corporation, not for the first time in its short history, drew attention to the fact that many enterprises are centers of losses, they must be eliminated or included in more stable and loaded ones. But the main complaints were against the existing system of regional centers of shipbuilding and ship repair. According to Trotsenko, the system of territorial subholdings was ideally suited for the formation of a corporation, allowing you to effectively dispose of enterprises in the area of responsibility of the subholding. However, for the high-quality functioning of the USC, a different model was needed, less dependent on administrative centers, based on the division of shipyard competencies.
Another important point of the strategy was the orientation of civil shipbuilding towards specialized vessels. It was obvious that for the time being Russia could not compete with the world's leading manufacturers in the traditional niche, that is, tankers, cargo ships, passenger liners, other commercial ships. Meanwhile, the domestic industry had a good start in the construction of specialized vessels, especially those designed for arctic conditions. These are drilling platforms, their maintenance vessels, icebreakers, ice-class tankers, research vessels, floating power plants. Given the recently increased interest in the development of the Arctic, this opened up broad prospects, which USC took advantage of.
Work was carried out on political lobbying of USC interests. 7 November 2011 of the year entered into force the federal law on measures of state support for shipbuilding and shipping, giving industry enterprises and operators of vessels flying the Russian flag considerable tax concessions, as well as introducing special economic zones. All this directly affects the cost of production, the profitability of operation and the payback period of the vessel, and consequently, the demand for domestic industry products increases. Finally, under Trotsenko, USC included assets such as Yantar and the Amursky GCC, and the number plants in the Far East were improved. In addition, the corporation acquired the share of the Finnish shipyard Arctech Helsinki Shipyard. In contrast to the predecessors, the new manager managed to dispose of all the newly acquired assets quite effectively: in two and a half years, the revenues of enterprises increased threefold - from 49 to 124 billion rubles. However, the overall balance remained negative. In addition, USC entered into many contracts and the total value of orders amounted to 1 trillion 539 billion rubles, among them military products (XVUMX percent), civilian 61 percent, 18 percent fell to military-technical cooperation.
What prevails PWP is not surprising. Giants of military shipbuilding, such as Sevmash, Admiralty Shipyards, GCC Yantar, are superior to civilian shipyards in terms of production potential, can take over the construction of several hulls at a time. But the main factor for the positive trend was the significant resources allocated by the USC in the framework of the state defense order. Even despite certain delays in financing in 2010 – 2011, the GOZ almost completely loaded the capacity of the plants. But there was still a lot of work to do, because, contrary to Trotsenko’s predictions, the corporation could not overcome the break-even point. The growth achieved was quantitative, not qualitative, production remained mostly military, which means that it was financed by government orders, and not market activity.
For the Russian military-industrial complex 2013, the year was successful: the state defense order was fulfilled as a whole, and even exceeded for the Air Force. Against the background of the unprecedented supply of new and modernized equipment to the troops, the Navy turned out to be an outsider.
In July, 2012, Roman Trotsenko, resigned as president of USC, explaining that, as an anti-crisis manager, he fulfilled his task of solving the problems of creating and developing a corporation and at a new stage of direct management of the structures received, another manager is required. As Trotsenko left, he took care of the successor - he was Andrei Dyachkov, previously the head of Sevmash enterprise.
The task before the new head was put in charge, but less laborious - to maintain the system in working condition and gradually increase the momentum. However, less than a year later, it became clear that Dyachkov did not cope with the task, and Deputy Prime Minister Dmitry Rogozin gave a hard reprimand to the USC leadership. The most serious claims were caused by the situation in the Far East, where it was planned to create a super-ship “Zvezda-DSME” and “Raffles” in cooperation with major eastern manufacturers. The project began with a considerable delay, and then it was completely in question. The reason was that initially the super docks were built entirely for future orders. First, large orders from Gazprom, Rosneft, Sovcomflot and Zarubezhneft were promised by Igor Sechin, high hopes were also pinned on the future development of the Shtokman field, and contracts were signed with smaller customers. However, after some time, customers began to refuse to cooperate with the future shipyard, and the unclear fate of the Shtokman project questioned the participation of the South Korean company.
The result was a vicious circle: the slower the construction of the super ship, the more it lost potential orders. A significant role in exacerbating the situation was also played by numerous organizational setbacks, unfortunately, traditional for USC. Separately, Dmitry Rogozin raised the issue of the asset allocation system, citing the Lotos plant as an example, where he considered the scheme to be “muddy and cross.” Developing the theme, the Deputy Prime Minister concluded that the civil shipbuilding industry was generally ineffective. An old problem has also surfaced - many of the assets collected in the USC, mostly civilian, were simply idle or only caused losses. According to the results of the work, the USC president was ordered to solve all the problems using any means and levers of influence. Such an approach, in its essence, has canceled out all previous attempts to act within the framework of market-based management and restored the primacy of administrative measures, finally destroying the original concept of the corporation.
Despite active criticism from the government, however, Dyachkov was not guilty in this situation. Without having the support of influential people behind him, not feeling support at the political level as the previous leader, he could not properly cope with the enormous mechanism and as a result attract or at least retain potential partners and customers. Although Sechin, as the head of Rosneft, promised to support the construction of a super-yard in the Far East and in Kronstadt through large orders, trust in USC management was already undermined. According to the results of a conversation with Rogozin, Dyachkov resigned on May 6 of the year 2013. During his short ten-month stay at the helm, he managed to attach the Vyborg CVD to the corporation, having bought 80 percent of the shares, and the Northern shipyard. In addition, he once again raised the issue of the strategy of the corporation, picking up the idea of Trotsenko, and emphasized the structure decentralization with the difference that he was not going to change the system of subholdings. But he did not have time to carry out the reform.
The next appointment caused a lot of questions. 21 of May of last year, the President of the Russian Federation approved Vladimir Shmakov, Deputy General Director of Uralvagonzavod NPK, as head of the USC. This man is in many ways the exact opposite of Andrei Dyachkov and not only because he had nothing to do with shipbuilding. The appointment of Shmakov meant a return to the model of the head-economist, and not the production worker, as before.
It cannot be said that this personnel decision had no basis. After all, most of the problems of USC was not so much in the difficulties with the construction of ships, but in organization, management and the general logic of development. In fact, the story made a circle, returning to the situation at the time of the creation of the corporation. Shmakov was faced with the task of devising a strategy for the development of a corporation, again finding partners and customers, providing a stable political base and overcoming the crisis of civil shipbuilding. As for the technical side, up to now, USC has been acutely confronted with the issues of modernization of production facilities, the actual lack of professional staff, non-optimized and unproductive labor, and generally low manufacturability. In fairness, we note that this is less true for large defense CVDs, in particular Sevmash. Another fundamental difference and a trump card of the new chapter was the support of a number of influential organizations - the Ministry of Industry and Trade, Rostec, Rosneft, Gazprombank. All of them were directly interested in the best fate of the corporation. Having such a rear, Shmakov actively took up the job, especially since his inauguration was accompanied by another serious reprimand from the entire industry from the deputy prime minister. He recalled that first of all, the USC is expected to have a coherent strategy for action before the new president starts serious events.
In November, the strategy saw the light. Further events will tell about its adequacy to the situation, and the main postulates of the document were growth based on guaranteed defense order and expected major contracts in the civilian sector, the indispensable modernization and expansion of production, and extreme optimization of assets based on the principle of competence. That is, divisions were created that produce certain products: submarines, surface ships, service ships.
The disadvantages of such a seal are quite obvious. First, such large structural changes, up to the transfer of production, will inevitably slow down or stop the execution of orders. Secondly, some enterprises, such as the Admiralty Shipyards or Sevmash, are capable of producing surface and submarine ships, not to mention the fact that the majority of Russian CVDs have long been working with equal success in the civilian and military sectors. Will it be possible to create a logical or at least a working system with such input? Another method to reduce costs made getting rid of problem assets, that is, simply selling into private hands.
Decentralization
The processes that occurred at the end of 2013 - the beginning of 2014 - are not easy to link into the big picture, as the gradual separation of production from the once merged corporation began. Back in September, the enterprises of the Far Eastern Center for Shipbuilding and Repair actually changed the owner, 75 percent of their shares would go to Rosneft and Gazprombank. Some piquancy of the situation is due to the fact that the oil company leaves only promising assets, but problem ones, such as the Amur and Khabarovsk CVDs, remain in the USC. A similar fate awaits the ambitious Zvezda super-shipyard, especially since Igor Sechin was at the forefront of this construction, clearly planning to use the plant in the interests of Rosneft. And some military shipyards, directly related to the construction, repair and disposal of warships, go into private hands. According to experts, this can have twofold consequences. On the one hand, getting classified or state-of-importance materials into private hands is unacceptable, and on the other hand, future owners have expressed interest in preserving and developing military production. For civilian enterprises, an office may also be a boon. For example, Zvezda is only breaking all schedules, but has already received significant financial assistance and is ready to finish construction three years earlier, considering the prospects for real orders.
The decision to sell the Krasnoye Sormovo and the Proletarsky Plant, which produces a number of the most important ship assemblies and machines, was completely unexpected. These enterprises are important in the performance of the state defense order, but they turned out to be unprofitable from the point of view of the civilian market. So far, no buyer has been found for them, but many are predicting Mikhail Gutseriev, the head of Russneft Oil Company, who will be able to support the shipyard with orders from offshore vessels for their company for this role. It is important that such an outcome was approved by the vice-premier.
In 2014, the civil shipbuilding market is expected to grow, mainly due to Rosneft and Gazprombank. The level of demand of these companies in specialized vessels even exceeded all the capabilities of USC, and part of the orders will be placed in foreign shipyards. Against this background, the conscious separation of factories capable of fulfilling such advantageous orders looks rather strange. One of the possible ways to solve the crisis could be cooperation with foreign manufacturers, but here two factors need to be taken into account. First, foreigners may not be eager to cooperate with USC. For example, Asian partners in super-boats refused to continue working together. Secondly, the curators from the highest circles and President Putin himself gave a clear guideline - placing large orders abroad without due reason is unacceptable and with all the justifications provided, each contract must be approved personally by the deputy prime minister. Considering the unsuccessful experience of USC in acquiring a stake in the Finnish Arctech Helsinki Shipyard, when domestic managers unexpectedly faced the need to pay large shipyard debts, it is possible that the corporation itself will be reluctant to contact with foreign manufacturers.
Of all these events, the following conclusions suggest themselves. First of all, it is striking that with the new strategy no decisive steps are taken to develop the corporation. The optimization that has been made leaves an impression of a spontaneous and ill-conceived in the long run solution, which only agitates a barely established system. Of course, USC intends to buy Novorossiysk Ship Repair Plant, which is quite a successful commercial enterprise, but this transaction is made more in the interests of the Navy than real development. In general, the corporation is shrinking, but not compacted, which means not growth, but rather a decrease in market presence (as opposed to the goal that Trotsenko set for the USC at one time). It is noticeable that donate primarily civilian shipyards. This is not surprising, for all seven years the management of the corporation could not squeeze out some sane profit from them, almost all the money came to the corporation through state defense orders and subsidies from the state. In fact, the long-predicted transformation into a military construction corporation took place. The transfer of large assets into private hands can be viewed as a complete defeat of the USC and a recognition of the inability to fulfill the task initially set.
Now the corporation, forced to start all over again, is trying to go a new way in order to first of all survive and find an achievable task. In fact, it remains only to recognize its military orientation and, from now on, to work in this area without being disintegrated, since the military-industrial potential of domestic shipbuilding today is at a high level and receives enough resources. But can the USC make any serious contribution to justify its existence?
The results of the seven-year activity of the corporation are contradictory. Successes, too, there is. First, it was possible to bring the issues of shipbuilding to the state level and to lobby for the interests of industry, although a stable lobby did not appear. The USC all the time of its existence attracted the close attention of state leaders and a steady flow of resources, support from the government and large businesses. Secondly, in spite of everything, civil shipbuilding has been given an impetus for development. Having relieved enterprises of most financial difficulties and re-launched the production process, albeit with relatively small orders, the corporation attracted the attention of private investors. Thirdly, considerable support was rendered to military shipbuilding due to the state-funded R & D, increased interest in the Navy at the political level and the corresponding expansion of the defense order. Frankly speaking, the majority of USC victories in the production sphere are based more likely on a good technological reserve of military CVDs and uninterrupted funding than on outstanding management decisions. Nevertheless, compared with the middle of the 2000-s, shipbuilding in Russia began real shipments for the needs of the fleet.
Old methods
However, all these achievements are crossed out by what the USC has not done. The initial goal was the creation of a corporation that consolidates industrial enterprises in order to harmoniously introduce them into the modern market and at the same time provide all the needs in military shipbuilding. It was assumed that the state, through the mediation of a corporation, would be able to develop shipbuilding primarily by economic measures and leverage, as required by the market economy. Having traced the history of USC, we see that its creators largely focused on the South Korean development model, concentrating on the industry in which Russia has significant competitive advantages, that is, in the production of specialized vessels and platforms, especially for Arctic conditions.
None of these points was completed. Asset consolidation is still in the plans. Having virtually eliminated civil shipbuilding, the corporation did not unite even military shipyards. There is still no cooperation of enterprises. For example, the Admiral Gorshkov frigate mentioned above cannot be completed due to disruptions including the supply of artillery weapons. The general mismatch of the shipbuilding complex remains, moreover, it seems that no measures have been taken to solve the problem.
Production issues also remain at the same level, first of all the notorious modernization, which is endlessly talked about at all levels of management and which drags on without really visible results in increasing the speed, quality and efficiency of production. Sailors have repeatedly noted the low quality of ships and weapons of the new construction, and construction and repair take longer than all reasonable terms.
In some places, even the old vicious tradition has returned to coincide with the transfer of ships to the fleet by a certain date. So it was, for example, with the newest submarine "Alexander Nevsky" project "Borey", which in an emergency order passed to the new, 2014 year. The final tests and refinement are likely to be conducted again during the service, distracting the crew from performing direct tasks. The staff is still difficult, there is a shortage of skilled labor in enterprises, many workers come from abroad. Finally, it has not yet been decided in which direction to develop shipbuilding further: until now, all efforts here have been reduced to an extensive expansion of production based on Soviet technologies. The beginning of the construction of the Zvezda Super Doctrine marked the first step forward, however, this undertaking nearly turned into a collapse.
The main thing is that the very idea of moving away from the Soviet command-administrative model and integrating into the modern world economy according to the best foreign models suffered a complete fiasco. In essence, the USC became the reincarnation of the USSR Ministry of Industry and Industry, but without its capabilities, resources and experienced personnel. The corporation mainly used administrative rather than economic management methods. She was never allowed to set sail on the market ocean, she was constantly kept in manual control and driven into tight limits. As a result, the USC did not have the opportunity to adapt to new conditions, since the administrative structure cannot be flexible, with a quick reaction, does not like private investment, rarely works with due economic effect, because it fulfills government orders at any cost.
The authorities also misunderstood against it that long-term programs are necessary in shipbuilding, since ship building cycles are calculated for years, it is impossible to create a global corporation in a few months, to prepare qualified specialists. Distinct results could be expected only in five to eight years, but no one gave their corporation, and without waiting for a quick improvement, the state began a reshuffle. The reprimands from the vice-premier are indicative in this regard. In addition to the fact that this measure is purely demonstrative, and dismissal could be a real penalty, the market and the final consumer give the best assessment of the situation. Finally, the administrative system killed all the shoots of competition, including in the military sector. If, for example, in the USA there are several corporations that compete for government orders and issue the most balanced and high-quality samples, then the domestic fleet is completely at the mercy of shipbuilders, any product is accepted.
The next pitfall, which ran the USC, was that its capabilities greatly exceeded the potential demand. Many enterprises were built and rebuilt in essence for virtual orders, as in the situation with the Shtokman field. It turned out that shipbuilding was directed along the South Korean way (to build what we can do best and what is in demand on the market), but in reality only a few factories producing special vessels work this way. For example, Baltiysky Zavod, Yantar, Vyborg CVD. The rest of civilian factories produce uncompetitive products and simply pull the corporation to the bottom, and it is very difficult to close them for social reasons. So the costs of the corporation’s activities turned out to be even more than if nothing had been done.
In general, USC prevented the impracticability of the task. If we recall the history, tsarist Russia and the USSR could not provide for themselves with ships and often placed orders abroad. Now it was ordered to build an undeveloped underdeveloped industry practically from scratch, so it is logical that the corporation is forced to accept the impossibility of completing the task and has narrowed its responsibility. A mistake in planning leaves open the question: did the government really intend to revive the shipbuilding industry, or simply make it like foreigners? The situation is similar in the United Aircraft Building Corporation (UAC), which also turned into a military construction corporation. There can be many ways out of the crisis: expanding cooperation and partnership with private business, purchasing technology abroad, creating economic and political competition. An alternative to this is the further slow and steady development of the existing reserves, with the prospect of falling behind the highly developed states forever.
For the Russian military-industrial complex 2013, the year was successful: the state defense order was fulfilled as a whole, and even exceeded for the Air Force. Against the background of the unprecedented supply of new and modernized equipment to the troops, the Navy turned out to be an outsider.
Although the seamen in the last days of the past year received the Yury Dolgoruky and Alexander Nevsky strategic submarine cruisers (SSBN), as well as the nuclear submarine with cruise missiles (SSGN) of the 885 Severodvinsk project, promised earlier, several promising orders were thwarted. The 20380 “Resistant” corvette of the 21631 “Grad Sviyazhsk” and “Uglich” project small rocket ships (MRKs) of the 21820 project “Ivan Kartsov” and “Denis Davydov”, several support vessels were not taken on time.
The construction of the Admiral Gorshkov frigate continues. The reasons for this were protracted state tests or, as in the case of “Resistant”, production delays. Unfortunately, there is no reason to be surprised at the current situation - domestic shipbuilding has never become an economically and technologically efficient industry that is ready to produce the necessary products on time and with high quality. We can recall the aircraft carrier Vikramaditya, the transfer of which to the Indians was postponed for five years. In the civilian sector, the situation is also pessimistic, production does not go beyond single and medium-sized orders. Against this background, there are serious questions about the immediate production structure, that is, the United Shipbuilding Corporation (USC).
This large structure has not yet justified the hopes associated with it. The following facts speak about this: according to the data of the Ministry of Industry and Trade of the Russian Federation, the financial loss of enterprises for 2012 is six billion rubles a year, and only in 2013 did the corporation receive the first profit. There is no clearly defined development program and an adequate internal structure; modernization and expansion of production are conducted at extremely slow rates. And most importantly - the personnel leapfrog which has become a peculiar feature of the USC. In the seven years of its existence, six presidents have changed in it, not to mention the frequent reshuffles on the board of directors. In such conditions, there is no reason to talk about any growth and development, the very existence of the corporation is in question.
Asian experience
Before analyzing the reasons for the failure, it is necessary to analyze in detail the tasks facing the new corporation and the conditions during its creation. In the middle of the 2000 for the first time after the collapse of the USSR, the government began to sufficiently finance the development of the Armed Forces, and then the crisis of the shipbuilding industry was still evident in 90. Some shipyards, such as the Kronstadt Marine Plant, were on the verge of bankruptcy, many others stood idle without orders and hardly kept themselves afloat. If enterprises specializing in the production of exclusively military products could survive at the expense of export orders, repairs and upgrades, in civil shipbuilding the situation turned out to be close to collapse. The shortage of skilled workers and modern equipment increased, there was no funding and a clear development strategy. As a result, the industry was extremely inefficient. Additionally, the situation was aggravated by the fact that the system of industrial relations between republics and regions that had existed in the USSR had collapsed, due to which the production of many components had to be restored. The advantages of the planned Soviet model of production, which involved many relatively small specialized enterprises tied to one another, became disadvantages in a market economy. In the new conditions each shipyard turned out by itself. It was necessary to establish a system of management and interaction appropriate to the market.
The government faced a choice - to recreate a structure similar to the USSR Ministry of Industry and Industry, which supported cooperation, organized effective interaction with the government and solved issues at the political level, or found a fundamentally different solution corresponding to the current economic situation. The first path, the most familiar and traditional, in the realities of a market economy was an economic anachronism. First of all, over the past 20 years, unprofitable production fell out of the chain of cooperation and interaction, many administrative structures were abolished and it was not possible to recreate the lost in the short term. More importantly, the market managed to penetrate into all branches of the shipbuilding industry, including the military, and the former administrative-planned management methods turned out to be inappropriate. Under the new conditions, the situation has become impossible when the industry could count on any necessary resources to accomplish the task. The state no longer had the opportunity to drive unlimited amounts into the defense industry, regardless of the profitability of production. Finally, many factories were in the hands of private traders, who were not so much interested in government tasks, but in profit. The very idea of combining planned management with market structures is initially not viable. Thus, it is obvious that for the return of the Ministry of the Judiciary it was necessary to return the Soviet economic system, which, of course, is no longer possible.
However, without the intervention of the state was also not enough. As world experience shows, the system was created in all leading shipbuilders with the active participation and protection of power. For example, in Japan, during 50, a policy was being pursued to increase the competitiveness of the industry through economic measures - the provision of preferential tax and credit conditions, large-scale asset optimization. The government also purchased advanced technology. By the beginning of 60, national shipbuilding has already become one of the world leaders. In addition, at the end of 70, the state stimulated and supported large-scale modernization through the creation of a special loan fund and the development of exports.
The example of the Republic of Korea is also indicative. Initially, shipbuilding was considered here not as a goal, but as a means of developing heavy and chemical industries. Work began late, at the beginning of the 70s, when the market was already occupied by the Japanese. Koreans went through a specialized and labor-intensive production, and later, at the end of the century, they switched to high technology. In the early stages, most of the equipment was purchased from Japan, and this was even encouraged - the government significantly reduced import duties on the corresponding range of goods. Only ten years later, the country established its own production. At all stages, the government supported the industry, adopted a detailed development plan, introduced significant economic benefits, stimulated the consolidation of the industry, provided legal support, financed a number of R & D projects. All these measures have allowed as a result to significantly raise the technological level. In difficult situations and crises, support was also provided; sometimes, administrative tasks were solved with the help of purely economic measures. For example, for the sake of consolidation, those enterprises that refused to be taken over by large corporations were deprived of state aid. In other words, an indicative planning model was implemented that lacked directivity and was of a recommendatory nature at the macro level, which guaranteed its flexibility and ability to restructure under adverse conditions. State assistance in such a model is carried out through tax mechanisms and point subsidies for the independence of enterprises.
The Chinese path largely repeated the experience of Asian neighbors. Benefits and subsidies, state-controlled conglomerates (for example, giants such as China State Shipbuilding Corporation and China Shipbuilding Industrial Corporation), combined with cheap labor and mass production, quickly made this country the market leader in the most common and popular types of merchant ships fleet.
The experience of the above countries has been carefully studied and taken into account in Russia. First of all, it was necessary to identify the goals and objectives of the shipbuilding industry and, on the basis of this plan, consolidate profitable enterprises for the subsequent purposeful rehabilitation and regulation. For mediation in this process, a fully state-owned corporation was required. 21 March 2007, the President of the Russian Federation signed a decree establishing the USC. According to the adopted model, the state financed R & D, provided a contribution to the authorized capital, contributed to building partnerships with private business, took on social obligations, participated in the planning of defense production. In general, she kept her hand on the pulse, in case of need, to assist or stimulate production.
The overall strategic planning and direct management rested entirely on the corporation itself. Such working conditions and a range of tasks were more suitable for a professional manager than a military specialist. The decision to put Alexander Burutin at the head of the newly-formed conglomerate became fully justified. He held staff posts in the military service, then became adviser to the president of the Russian Federation on military-technical policy. It is noteworthy that the list of contenders for the top positions of the corporation included only civilian leaders: Deputy Prime Minister Sergey Naryshkin, Minister of Defense Anatoly Serdyukov, Minister of Industry and Energy Viktor Khristenko. The only person in uniform, however, far from the Navy, was Deputy Prime Minister Sergei Ivanov. Probably, this meant the government’s reluctance to turn the USC into an exclusively defense-industrial structure, since the priority task was to reanimate civil shipbuilding. Briefly, Burutin formulated the essence of the work to be done: “The main task of the corporation being created is to return to Russia the previous capabilities and potential in the field of civil shipbuilding with unconditional implementation of the armaments program.” 15 June 2007, the USC officially began work.
Presidents like gloves
However, problems started at the start. The process of formation by the incorporation of state-owned enterprises with the further transfer of shares to the property of USC was delayed. Partly due to legal problems and disagreements, as is the case with Admiralty shipyards or the Kronstadt Marine Plant, partly due to traditional bureaucratic delays within the corporation itself. In time, we could not even register it. Although it was originally set to be four months after 21 in March - the time of the signing of the creation decree, it was possible to do everything only on November 16. Another extremely unpleasant factor was the fact that many plants entered the new structure with billions of dollars in debt, which were automatically transferred to USC. Already in September, President Alexander Burutin, 2007, left his post, considering, apparently, that he was unable to cope with the barrage of problems that had piled on him. But it’s not worth looking for the guilty ones, since the task to create a corporation of such a level in four months, requiring fundamental structural changes and a significant amount of legal approvals, was impossible initially.
The case of Burutin was continued by Yuri Yarov, who previously headed the Northern Design Bureau. As a manager, a professional directly connected with the shipbuilding business, he was pinned special hopes. The tasks were to complete the formation of the structure of USC and to adjust production facilities. To support scientific research and procurement of the necessary licenses, the state allocated 140 billion rubles to the disposal of the new leadership, which it was supposed to fully master by the 2016 year. Only the enterprises of the Northern and Western sub-holdings received money, since the Far Easterners (in particular 10, 30, 83 shipyards) still remained outside the USC due to large debts and problems with shareholding.The state took upon itself the task of improving and economic scanning enterprises. Vladimir Putin was always interested in the corporation, 13 in May 2008, personally inspected the shipyards and held a meeting on industry issues. At the same time, they touched upon one of the principal issues - cooperation with private enterprises, such as the Vyborg plant, Krasnoye Sormovo, and the Northern Shipyard. Although they were very viable and promising assets, the USC leadership did not show any serious interest in them.
The first initiative came from the Ministry of Industry and Energy. In November, 2007 of the year it offered state support to the Vyborg plant and the Northern shipyard provided it entered the USK. At the 13 presidential meeting in May, Minister Viktor Khristenko pointed out the need for a partnership of private shipyards and USC, which could move the industry forward. However, the head of the corporation Yarov was cool about the idea and never took up its implementation. Other issues were on the agenda, including the gathering of enterprises, which was delayed beyond all deadlines, under the auspices of USC. Before 1 April, 2008 failed to complete the process, and the corporation received from Vladimir Putin the last reprieve until 1 April 2009. At the same time, new personnel changes took place, Yuri Yarov resigned.
The next leader was Vladimir Pakhomov, who previously oversaw the supply of naval equipment and ground weapons in Rosoboronexport. Experts assumed that his appointment was directly connected with the nationalization of private shipbuilding enterprises. It is known that this company had very warm relations with many non-state shipyards (CVD). Unlike its predecessors, Pakhomov was actively looking for partners in private business. Cooperation agreements were signed with the corporations Russian Technologies and Samsung Heavy Industries, negotiations were held with a group of defense companies on the Northern Shipyard, the Baltic Shipyard and the central design bureau Iceberg. At the same time, work was carried out with its own assets. According to the strategy adopted under Alexander Burutin, unprofitable and inefficient enterprises did not close down, but looked for an opportunity to reorganize production, or at least to join production plants. Theoretically, such an algorithm looks reasonable, but in the end, there were several completely unprofitable enterprises around the neck of the USC, with significant losses. Nevertheless, it was impossible to close them for political and social reasons, so as not to cut jobs.
By the deadline set by Putin - 1 on April 2009, USC was officially recognized as fully prepared to perform its tasks. In reality, the model did not work out to the end, there were plants in the Far East, the issue with the defense industry enterprises was stalled, a coherent, long-term development strategy was still being developed, and without it, the corporation could not take a clear course. So, at the beginning of his work, Vladimir Pakhomov said: "The main priority of USC is the preservation of our capabilities in the field of military shipbuilding, ensuring national security in this area." It turned out that the words of the first head of the corporation remained words for his followers. Under Pakhomov, the corporation really developed exclusively at the expense of military orders, while the civilian industry was trampling on the spot, not having enough orders and building capacities. It became obvious that without the technical possibility of building large-capacity vessels, that is, over 80 thousand tons, it would be almost impossible to enter the world market.
The painful questions were postponed for the future, but for now the corporation hastily got into its ranks the delayed assets from the southern and Volga regions - the Astrakhan Lotos, Tuapse and Novorossiysk CVDs. An unexpected blow was the global financial crisis of the year 2008, significantly slowing down the development of USC. It is not surprising that Vladimir Pakhomov went after Alexander Burutin to retire at his own request, since the solution (often halfway) of the main problems gave rise to a range of new ones.
Step forward
One of the key points in stories the corporation considered the appointment in October 2009 of the head of the USC Roman Trotsenko. He worked on water transport, headed the board of directors of the passenger and southern river ports in the capital, as well as the Moscow River Shipping Company since 2004. But he was not brought to the corporation by the experience of the riverman, but by an effective crisis manager, whom he recommended himself. It was believed that the new leader was “the man of Igor Sechin”, which could provide USC with additional political weight and opportunities for cooperation with Rosneft. Perhaps, it was under Trotsenko that the corporation earned, as was initially required: many defense and civil contracts were concluded, work began on creating a super-yard in Russia (the same “Star” in the Far East) in cooperation with Chinese and South Korean manufacturers Raffles and DSME, and the main thing is that the leadership has at least some kind of strategy. According to Roman Trotsenko's plans, the first thing was to collect a portfolio of orders, even if they did not bring tangible profits, showing market entry, and then come to grips with modernizing and optimizing production. The head of the corporation, not for the first time in its short history, drew attention to the fact that many enterprises are centers of losses, they must be eliminated or included in more stable and loaded ones. But the main complaints were against the existing system of regional centers of shipbuilding and ship repair. According to Trotsenko, the system of territorial subholdings was ideally suited for the formation of a corporation, allowing you to effectively dispose of enterprises in the area of responsibility of the subholding. However, for the high-quality functioning of the USC, a different model was needed, less dependent on administrative centers, based on the division of shipyard competencies.
Another important point of the strategy was the orientation of civil shipbuilding towards specialized vessels. It was obvious that for the time being Russia could not compete with the world's leading manufacturers in the traditional niche, that is, tankers, cargo ships, passenger liners, other commercial ships. Meanwhile, the domestic industry had a good start in the construction of specialized vessels, especially those designed for arctic conditions. These are drilling platforms, their maintenance vessels, icebreakers, ice-class tankers, research vessels, floating power plants. Given the recently increased interest in the development of the Arctic, this opened up broad prospects, which USC took advantage of.
Work was carried out on political lobbying of USC interests. 7 November 2011 of the year entered into force the federal law on measures of state support for shipbuilding and shipping, giving industry enterprises and operators of vessels flying the Russian flag considerable tax concessions, as well as introducing special economic zones. All this directly affects the cost of production, the profitability of operation and the payback period of the vessel, and consequently, the demand for domestic industry products increases. Finally, under Trotsenko, USC included assets such as Yantar and the Amursky GCC, and the number plants in the Far East were improved. In addition, the corporation acquired the share of the Finnish shipyard Arctech Helsinki Shipyard. In contrast to the predecessors, the new manager managed to dispose of all the newly acquired assets quite effectively: in two and a half years, the revenues of enterprises increased threefold - from 49 to 124 billion rubles. However, the overall balance remained negative. In addition, USC entered into many contracts and the total value of orders amounted to 1 trillion 539 billion rubles, among them military products (XVUMX percent), civilian 61 percent, 18 percent fell to military-technical cooperation.
What prevails PWP is not surprising. Giants of military shipbuilding, such as Sevmash, Admiralty Shipyards, GCC Yantar, are superior to civilian shipyards in terms of production potential, can take over the construction of several hulls at a time. But the main factor for the positive trend was the significant resources allocated by the USC in the framework of the state defense order. Even despite certain delays in financing in 2010 – 2011, the GOZ almost completely loaded the capacity of the plants. But there was still a lot of work to do, because, contrary to Trotsenko’s predictions, the corporation could not overcome the break-even point. The growth achieved was quantitative, not qualitative, production remained mostly military, which means that it was financed by government orders, and not market activity.
For the Russian military-industrial complex 2013, the year was successful: the state defense order was fulfilled as a whole, and even exceeded for the Air Force. Against the background of the unprecedented supply of new and modernized equipment to the troops, the Navy turned out to be an outsider.
In July, 2012, Roman Trotsenko, resigned as president of USC, explaining that, as an anti-crisis manager, he fulfilled his task of solving the problems of creating and developing a corporation and at a new stage of direct management of the structures received, another manager is required. As Trotsenko left, he took care of the successor - he was Andrei Dyachkov, previously the head of Sevmash enterprise.
The task before the new head was put in charge, but less laborious - to maintain the system in working condition and gradually increase the momentum. However, less than a year later, it became clear that Dyachkov did not cope with the task, and Deputy Prime Minister Dmitry Rogozin gave a hard reprimand to the USC leadership. The most serious claims were caused by the situation in the Far East, where it was planned to create a super-ship “Zvezda-DSME” and “Raffles” in cooperation with major eastern manufacturers. The project began with a considerable delay, and then it was completely in question. The reason was that initially the super docks were built entirely for future orders. First, large orders from Gazprom, Rosneft, Sovcomflot and Zarubezhneft were promised by Igor Sechin, high hopes were also pinned on the future development of the Shtokman field, and contracts were signed with smaller customers. However, after some time, customers began to refuse to cooperate with the future shipyard, and the unclear fate of the Shtokman project questioned the participation of the South Korean company.
The result was a vicious circle: the slower the construction of the super ship, the more it lost potential orders. A significant role in exacerbating the situation was also played by numerous organizational setbacks, unfortunately, traditional for USC. Separately, Dmitry Rogozin raised the issue of the asset allocation system, citing the Lotos plant as an example, where he considered the scheme to be “muddy and cross.” Developing the theme, the Deputy Prime Minister concluded that the civil shipbuilding industry was generally ineffective. An old problem has also surfaced - many of the assets collected in the USC, mostly civilian, were simply idle or only caused losses. According to the results of the work, the USC president was ordered to solve all the problems using any means and levers of influence. Such an approach, in its essence, has canceled out all previous attempts to act within the framework of market-based management and restored the primacy of administrative measures, finally destroying the original concept of the corporation.
Despite active criticism from the government, however, Dyachkov was not guilty in this situation. Without having the support of influential people behind him, not feeling support at the political level as the previous leader, he could not properly cope with the enormous mechanism and as a result attract or at least retain potential partners and customers. Although Sechin, as the head of Rosneft, promised to support the construction of a super-yard in the Far East and in Kronstadt through large orders, trust in USC management was already undermined. According to the results of a conversation with Rogozin, Dyachkov resigned on May 6 of the year 2013. During his short ten-month stay at the helm, he managed to attach the Vyborg CVD to the corporation, having bought 80 percent of the shares, and the Northern shipyard. In addition, he once again raised the issue of the strategy of the corporation, picking up the idea of Trotsenko, and emphasized the structure decentralization with the difference that he was not going to change the system of subholdings. But he did not have time to carry out the reform.
The next appointment caused a lot of questions. 21 of May of last year, the President of the Russian Federation approved Vladimir Shmakov, Deputy General Director of Uralvagonzavod NPK, as head of the USC. This man is in many ways the exact opposite of Andrei Dyachkov and not only because he had nothing to do with shipbuilding. The appointment of Shmakov meant a return to the model of the head-economist, and not the production worker, as before.
It cannot be said that this personnel decision had no basis. After all, most of the problems of USC was not so much in the difficulties with the construction of ships, but in organization, management and the general logic of development. In fact, the story made a circle, returning to the situation at the time of the creation of the corporation. Shmakov was faced with the task of devising a strategy for the development of a corporation, again finding partners and customers, providing a stable political base and overcoming the crisis of civil shipbuilding. As for the technical side, up to now, USC has been acutely confronted with the issues of modernization of production facilities, the actual lack of professional staff, non-optimized and unproductive labor, and generally low manufacturability. In fairness, we note that this is less true for large defense CVDs, in particular Sevmash. Another fundamental difference and a trump card of the new chapter was the support of a number of influential organizations - the Ministry of Industry and Trade, Rostec, Rosneft, Gazprombank. All of them were directly interested in the best fate of the corporation. Having such a rear, Shmakov actively took up the job, especially since his inauguration was accompanied by another serious reprimand from the entire industry from the deputy prime minister. He recalled that first of all, the USC is expected to have a coherent strategy for action before the new president starts serious events.
In November, the strategy saw the light. Further events will tell about its adequacy to the situation, and the main postulates of the document were growth based on guaranteed defense order and expected major contracts in the civilian sector, the indispensable modernization and expansion of production, and extreme optimization of assets based on the principle of competence. That is, divisions were created that produce certain products: submarines, surface ships, service ships.
The disadvantages of such a seal are quite obvious. First, such large structural changes, up to the transfer of production, will inevitably slow down or stop the execution of orders. Secondly, some enterprises, such as the Admiralty Shipyards or Sevmash, are capable of producing surface and submarine ships, not to mention the fact that the majority of Russian CVDs have long been working with equal success in the civilian and military sectors. Will it be possible to create a logical or at least a working system with such input? Another method to reduce costs made getting rid of problem assets, that is, simply selling into private hands.
Decentralization
The processes that occurred at the end of 2013 - the beginning of 2014 - are not easy to link into the big picture, as the gradual separation of production from the once merged corporation began. Back in September, the enterprises of the Far Eastern Center for Shipbuilding and Repair actually changed the owner, 75 percent of their shares would go to Rosneft and Gazprombank. Some piquancy of the situation is due to the fact that the oil company leaves only promising assets, but problem ones, such as the Amur and Khabarovsk CVDs, remain in the USC. A similar fate awaits the ambitious Zvezda super-shipyard, especially since Igor Sechin was at the forefront of this construction, clearly planning to use the plant in the interests of Rosneft. And some military shipyards, directly related to the construction, repair and disposal of warships, go into private hands. According to experts, this can have twofold consequences. On the one hand, getting classified or state-of-importance materials into private hands is unacceptable, and on the other hand, future owners have expressed interest in preserving and developing military production. For civilian enterprises, an office may also be a boon. For example, Zvezda is only breaking all schedules, but has already received significant financial assistance and is ready to finish construction three years earlier, considering the prospects for real orders.
The decision to sell the Krasnoye Sormovo and the Proletarsky Plant, which produces a number of the most important ship assemblies and machines, was completely unexpected. These enterprises are important in the performance of the state defense order, but they turned out to be unprofitable from the point of view of the civilian market. So far, no buyer has been found for them, but many are predicting Mikhail Gutseriev, the head of Russneft Oil Company, who will be able to support the shipyard with orders from offshore vessels for their company for this role. It is important that such an outcome was approved by the vice-premier.
In 2014, the civil shipbuilding market is expected to grow, mainly due to Rosneft and Gazprombank. The level of demand of these companies in specialized vessels even exceeded all the capabilities of USC, and part of the orders will be placed in foreign shipyards. Against this background, the conscious separation of factories capable of fulfilling such advantageous orders looks rather strange. One of the possible ways to solve the crisis could be cooperation with foreign manufacturers, but here two factors need to be taken into account. First, foreigners may not be eager to cooperate with USC. For example, Asian partners in super-boats refused to continue working together. Secondly, the curators from the highest circles and President Putin himself gave a clear guideline - placing large orders abroad without due reason is unacceptable and with all the justifications provided, each contract must be approved personally by the deputy prime minister. Considering the unsuccessful experience of USC in acquiring a stake in the Finnish Arctech Helsinki Shipyard, when domestic managers unexpectedly faced the need to pay large shipyard debts, it is possible that the corporation itself will be reluctant to contact with foreign manufacturers.
Of all these events, the following conclusions suggest themselves. First of all, it is striking that with the new strategy no decisive steps are taken to develop the corporation. The optimization that has been made leaves an impression of a spontaneous and ill-conceived in the long run solution, which only agitates a barely established system. Of course, USC intends to buy Novorossiysk Ship Repair Plant, which is quite a successful commercial enterprise, but this transaction is made more in the interests of the Navy than real development. In general, the corporation is shrinking, but not compacted, which means not growth, but rather a decrease in market presence (as opposed to the goal that Trotsenko set for the USC at one time). It is noticeable that donate primarily civilian shipyards. This is not surprising, for all seven years the management of the corporation could not squeeze out some sane profit from them, almost all the money came to the corporation through state defense orders and subsidies from the state. In fact, the long-predicted transformation into a military construction corporation took place. The transfer of large assets into private hands can be viewed as a complete defeat of the USC and a recognition of the inability to fulfill the task initially set.
Now the corporation, forced to start all over again, is trying to go a new way in order to first of all survive and find an achievable task. In fact, it remains only to recognize its military orientation and, from now on, to work in this area without being disintegrated, since the military-industrial potential of domestic shipbuilding today is at a high level and receives enough resources. But can the USC make any serious contribution to justify its existence?
The results of the seven-year activity of the corporation are contradictory. Successes, too, there is. First, it was possible to bring the issues of shipbuilding to the state level and to lobby for the interests of industry, although a stable lobby did not appear. The USC all the time of its existence attracted the close attention of state leaders and a steady flow of resources, support from the government and large businesses. Secondly, in spite of everything, civil shipbuilding has been given an impetus for development. Having relieved enterprises of most financial difficulties and re-launched the production process, albeit with relatively small orders, the corporation attracted the attention of private investors. Thirdly, considerable support was rendered to military shipbuilding due to the state-funded R & D, increased interest in the Navy at the political level and the corresponding expansion of the defense order. Frankly speaking, the majority of USC victories in the production sphere are based more likely on a good technological reserve of military CVDs and uninterrupted funding than on outstanding management decisions. Nevertheless, compared with the middle of the 2000-s, shipbuilding in Russia began real shipments for the needs of the fleet.
Old methods
However, all these achievements are crossed out by what the USC has not done. The initial goal was the creation of a corporation that consolidates industrial enterprises in order to harmoniously introduce them into the modern market and at the same time provide all the needs in military shipbuilding. It was assumed that the state, through the mediation of a corporation, would be able to develop shipbuilding primarily by economic measures and leverage, as required by the market economy. Having traced the history of USC, we see that its creators largely focused on the South Korean development model, concentrating on the industry in which Russia has significant competitive advantages, that is, in the production of specialized vessels and platforms, especially for Arctic conditions.
None of these points was completed. Asset consolidation is still in the plans. Having virtually eliminated civil shipbuilding, the corporation did not unite even military shipyards. There is still no cooperation of enterprises. For example, the Admiral Gorshkov frigate mentioned above cannot be completed due to disruptions including the supply of artillery weapons. The general mismatch of the shipbuilding complex remains, moreover, it seems that no measures have been taken to solve the problem.
Production issues also remain at the same level, first of all the notorious modernization, which is endlessly talked about at all levels of management and which drags on without really visible results in increasing the speed, quality and efficiency of production. Sailors have repeatedly noted the low quality of ships and weapons of the new construction, and construction and repair take longer than all reasonable terms.
In some places, even the old vicious tradition has returned to coincide with the transfer of ships to the fleet by a certain date. So it was, for example, with the newest submarine "Alexander Nevsky" project "Borey", which in an emergency order passed to the new, 2014 year. The final tests and refinement are likely to be conducted again during the service, distracting the crew from performing direct tasks. The staff is still difficult, there is a shortage of skilled labor in enterprises, many workers come from abroad. Finally, it has not yet been decided in which direction to develop shipbuilding further: until now, all efforts here have been reduced to an extensive expansion of production based on Soviet technologies. The beginning of the construction of the Zvezda Super Doctrine marked the first step forward, however, this undertaking nearly turned into a collapse.
The main thing is that the very idea of moving away from the Soviet command-administrative model and integrating into the modern world economy according to the best foreign models suffered a complete fiasco. In essence, the USC became the reincarnation of the USSR Ministry of Industry and Industry, but without its capabilities, resources and experienced personnel. The corporation mainly used administrative rather than economic management methods. She was never allowed to set sail on the market ocean, she was constantly kept in manual control and driven into tight limits. As a result, the USC did not have the opportunity to adapt to new conditions, since the administrative structure cannot be flexible, with a quick reaction, does not like private investment, rarely works with due economic effect, because it fulfills government orders at any cost.
The authorities also misunderstood against it that long-term programs are necessary in shipbuilding, since ship building cycles are calculated for years, it is impossible to create a global corporation in a few months, to prepare qualified specialists. Distinct results could be expected only in five to eight years, but no one gave their corporation, and without waiting for a quick improvement, the state began a reshuffle. The reprimands from the vice-premier are indicative in this regard. In addition to the fact that this measure is purely demonstrative, and dismissal could be a real penalty, the market and the final consumer give the best assessment of the situation. Finally, the administrative system killed all the shoots of competition, including in the military sector. If, for example, in the USA there are several corporations that compete for government orders and issue the most balanced and high-quality samples, then the domestic fleet is completely at the mercy of shipbuilders, any product is accepted.
The next pitfall, which ran the USC, was that its capabilities greatly exceeded the potential demand. Many enterprises were built and rebuilt in essence for virtual orders, as in the situation with the Shtokman field. It turned out that shipbuilding was directed along the South Korean way (to build what we can do best and what is in demand on the market), but in reality only a few factories producing special vessels work this way. For example, Baltiysky Zavod, Yantar, Vyborg CVD. The rest of civilian factories produce uncompetitive products and simply pull the corporation to the bottom, and it is very difficult to close them for social reasons. So the costs of the corporation’s activities turned out to be even more than if nothing had been done.
In general, USC prevented the impracticability of the task. If we recall the history, tsarist Russia and the USSR could not provide for themselves with ships and often placed orders abroad. Now it was ordered to build an undeveloped underdeveloped industry practically from scratch, so it is logical that the corporation is forced to accept the impossibility of completing the task and has narrowed its responsibility. A mistake in planning leaves open the question: did the government really intend to revive the shipbuilding industry, or simply make it like foreigners? The situation is similar in the United Aircraft Building Corporation (UAC), which also turned into a military construction corporation. There can be many ways out of the crisis: expanding cooperation and partnership with private business, purchasing technology abroad, creating economic and political competition. An alternative to this is the further slow and steady development of the existing reserves, with the prospect of falling behind the highly developed states forever.
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