A unique chance for the country
The Ministry of Industry and Trade of the Russian Federation held an extended meeting of the Bureau of the Russian Engineering Union and the Association for Assistance to Defense Enterprises Association with the participation of the chairman of the union, the general director of the Rostec state corporation Sergey Chemezov and the Minister of Industry and Trade of the Russian Federation Denis Manturov. The bureau discussed the issue of pursuing an active scientific and industrial policy aimed at the early technological renewal of industry.
Chance for a good breakthrough
The results of the development of the economy of the Russian Federation for 2013 year became a wake-up call for the entire industrial community. GDP growth was only 1,3 percent. This is the worst figure in the last three years. Unfortunately, the engineering industry has demonstrated similar dynamics. Overall, industrial output remained at the level of 2012 of the year. Thus, in current conditions, the task of developing and adopting effective measures to stimulate industrial growth is particularly acute. To do this, it is necessary to analyze the potential points of growth of the domestic industry, paying particular attention to its main industry - mechanical engineering.
The global crisis of 2008 of the year undermined the credibility of the existing global financial and economic system and forced the transition of Western countries to a new technological structure. In addition, the crisis has pushed the process of competition and economic restructuring. The developed anti-crisis programs were aimed primarily at the development of science, innovation and the real sector of production. According to the available estimates, the restructuring of the economies of the leading countries on the basis of the new technological order will last another five years. After this, the leading countries must enter a new cycle of economic growth.
The Russian economy and its industrial sector face the most difficult task - to become competitive in the new technological order and at the same time upgrade the production of the old. In addition, it is necessary not so much to adjust the strategy of economic development in response to the changing economic situation in the world, but also to develop effective measures to counter attempts at political and economic pressure on Russia. Despite the frankly unfriendly rhetoric of a number of Western politicians, no large-scale economic sanctions against the Russian Federation have been introduced and we hope that it will not. However, we must be prepared to artificially limit the demand for Russian exports from the West, including in the area of energy, and to impose a ban on the export of certain types of high-tech products.
Therefore, it is necessary to assess the prospects for industrial growth sensibly, relying primarily on our internal capabilities. The central element of industrial policy should be import substitution, which will significantly minimize the consequences of the negative effect of possible sanctions. The machine-building complex of Russia needs to significantly intensify work in this area. This is one of the most important tasks of industrial development, which is directly related to ensuring the economic security of our country.
The Russian Engineering Union supports the position of the Russian Ministry of Industry and Trade, which was announced at a meeting with the country's president. The main task is to significantly increase the investment attractiveness of industry and, above all, high-tech engineering.
We fully support the proposals of the Ministry of Industry and Trade to create new mechanisms for solving this task as soon as possible. Such mechanisms have already been incorporated into the draft law “On the Industrial Policy of the Russian Federation”, which is now actively developed by the Ministry of Industry and Trade. All our engineering enterprises and, in particular, the corporations of the military-industrial complex (DIC) take part in this work. I ask the members of the Engineering Union to continue to pay special attention to the work on important draft laws for industry.
In the external economic sphere, it is necessary to more actively develop cooperation with those countries that do not raise the issues of the political agenda above mutual economic benefits. Thus, there remains a significant economic potential for expanding partnerships within the framework of the Customs Union and with the BRICS member states (Brazil, Russia, India, China, South Africa), primarily with China, as well as with the countries of South-East Asia.
Active economic sanctions are not being introduced now due to the fact that there are quite close cooperation ties between Western countries and Russian enterprises. This makes it possible to balance the negative influence that the policies of some states have on our country today.
Despite the complexity of the current situation in the Russian Federation, we have a unique chance. The high level of public confidence in the Russian president creates favorable conditions for solving the tasks of the country's socio-economic development. The key role in this issue should be played by the Russian industrial community, in particular the Russian Engineering Union and the League of Assistance to Defense Enterprises. Indeed, one of the main conditions for economic growth is the industrial segment of the economy and, above all, engineering and the military-industrial complex. Our country is going through a difficult stage of its economic development, which is complicated by the unfavorable political situation. However, right now we have a good opportunity to make a qualitative breakthrough in the development of Russian industry, while ensuring long-term economic growth.
The political situation in which Russia now finds itself is very ambiguous. On the one hand, it exacerbates the already difficult situation in which the Russian industry is now, but on the other hand, it gives a chance for the development of domestic industry. This point of view is voiced both in the leadership of the country and among representatives of financial and economic groups.
The idea of accelerating the pace of localization of production and import substitution was laid down in the draft law “On the Industrial Policy of the Russian Federation”. But the threat of the application of economic sanctions actualize its implementation and contribute to the development of the domestic industry, in particular, the manufacturing sector and mechanical engineering. The public discussion of the bill was attended by representatives of business and the expert community. Suggestions for improvement came from 70 subjects of Russia. The bill is to be submitted to the government in May, and to the State Duma in June 2014.
One of the fundamental points of the bill is the idea of creating an industrial development fund. The need to create a fund is due to the introduction of a new lending mechanism that allows industrial enterprises to borrow at rates comparable to foreign ones. This is due to the fact that financial and credit organizations currently operating in the market cannot go for a sharp decrease in interest rates on loans. This year we will use the funds of the Reserve Fund or the National Wealth Fund, which will be invested in Vnesheconombank’s capital in order to provide loans to enterprises of mechanical engineering not exceeding the rate of five percent. As you know, today the lending rate reaches 13 percent per annum and is unacceptable for the industry. The Ministry of Industry and Trade of the Russian Federation had a lot of discussions about how best to create this fund. We concluded that if the fund is created as a separate legal entity, then it will take a lot of time to organize it. I believe that the Vnesheconombank Institute is a perfectly suitable platform, on which separate accounting will be conducted.
One of the initiatives of the Ministry of Industry and Trade of the Russian Federation is the introduction of tax incentives. As a benefit, it is proposed to reset the federal part of taxes on profits and property and to provide the regions with the opportunity to reduce their part of the income tax to five percent. This reduction is explained by the fact that there is already a solution for the Far East, where a fixed income tax reduction is five percent. Aligning the tax rate helps to avoid competition in investment between regions. We took the initiative to limit the duration of tax benefits to 2025 year. Lost revenues will be compensated by the growth of other taxes, and the future taxable base of the regions will increase due to new enterprises. Limiting the period of validity of benefits to 2025 is explained by the fact that company managers must understand that the sooner they start a project, the more dividends they will receive.
The acceleration of the production growth process will be facilitated by the so-called special investment contract. This is a document that must be signed by representatives of the federal executive body (Ministry of Industry and Trade), regional bodies and business. At the same time, the investor undertakes to fulfill social and economic obligations: to create a new enterprise and high-tech jobs, to organize the production of innovative products. In turn, the authorities guarantee the investor unchanged business conditions and provide support in the form of preferential provision of state property, industry-specific preferences, and tax holidays.
We are currently working on the issue of providing special conditions for banks that will lend to enterprises under these special investment contracts. One of the fixed areas will provide an opportunity to reduce loan rates for management companies that will create the infrastructure.
Another innovation will be the creation of a state information system for industry. When the Ministry of Industry and Trade proposed this idea, some business representatives criticized us for trying to recreate the State Planning Committee. We are not trying to create the State Planning Committee, but we want to create an industry information system. It will receive all information from all regions where it is planned to create certain projects. After all, it often happens that the region is trying to create large investment projects, but no one takes into account how the creation of a new enterprise will affect the economy as a whole. In China, for example, due to overproduction of metal, it was decided to ban the creation of new metallurgical enterprises. You need to clearly know where a particular plant is required, and where not.
In the subprogramme on industrial parks, which is currently being considered by the government, we proposed among the support measures subsidies for interest on parks loans. Also, in accordance with the President’s Address, the subprogramme proposes to offset the costs of the subjects of the Federation to support industrial parks. Industrial parks are the basis of modern industrial infrastructure. The minimum need for the Russian economy over the next five years will be over 200 parks.
The Ministry of Industry and Trade of the Russian Federation has prepared a comprehensive plan for the introduction of the best available technologies (BAT), which was approved by the government in March. Already in May, we will create a council for the transition to the principles of BAT. This council will become a platform for solving all issues related to this complex, but necessary process for our economy.
I expect that all these measures should bring substantial assistance in increasing production and economic growth.
Minister of Industry and Trade of the Russian Federation
Solve industry system problems
The creation of a state fund to support industrial enterprises deserves all approval. This is especially important for such enterprises that produce final products, because sometimes we are faced with underfunding of projects. As a result, enterprise-finishers can not make those products that they have in the specification. Therefore, timely financing will be a significant contribution to the solution of the tasks that the Ministry of Defense and the Ministry of Industry and Trade of the Russian Federation are setting for us.
I would like to draw attention to such a significant moment in the formation of technological complexes (especially for new types of products), such as the procedure for the coordination of technical documentation. It is fully correlated with the purchase of process equipment in accordance with the Federal Laws 94 and 224.
So, it's time to put an end to the system, when anyone can enter the contests with a bunch of tempting offers. Often, these dubious firms win competitions at completely unrealistic prices, and then disrupt the supply of products. From this we all suffer. Especially finishers who are associated with these firms in a single technological complex. This leads to the disruption of the tasks that the Ministry of Defense, the Ministry of Industry and Trade and the Government of the Russian Federation set for us.
A separate question is the state of financing. Banks have so overstated the bar that the profitability that exists today, especially with contracts under the state defense order, does not allow us to work normally. Now the industry has to balance between zero and minus / plus five percent profitability.
And finally, on the pricing policy of commodity monopolies. They can be said to twist our arms with it. For example, metallurgists again staged a price race, despite the situation close to the crisis. Finishing companies from this, figuratively speaking, have another headache.
I want to draw attention to the problem of the personnel potential of the industry. His condition depends entirely on the state of education. It is impossible to simply take a person from the outside. He must be seriously trained. And then, the training program is closely linked to social programs: the provision of housing for employees of enterprises, the creation of a system of pre-school institutions, medical care. Without this social package, people will not come to production.
A sore point is the training of personnel in institutions of specialized secondary education. Such educational institutions must be equipped with the appropriate equipment, training programs, technologies. This is the only way to ensure that graduates will come to the enterprises by ready-made specialists.
If we talk about the specialists that we are offered to attract from the territory of Ukraine, then everything is not simple. In my opinion, they can be involved only within certain limits. There are known limitations. And not all Ukrainian citizens can get admission. God forbid, there will be a leak of information constituting a state secret. Then we will be in a very unsightly position.
General Director of the Research and Production Corporation “Uralvagonzavod” named after F. Dzerzhinsky
Domestic machines there, and foreign can not be bought
Enterprises producing the component base necessary for the creation of modern products are at the stage of technical re-equipment. In accordance with the decisions of the President, the Government and the Ministry of Industry and Trade, there has been a serious shift in the timing of the completion of technical re-equipment from 2018 to 2015 a year.
Moreover, the exacerbation of the political situation creates the threat of economic sanctions against Russia. The difficult situation of the industry will also be complicated by a serious outflow of capital and the growth of the dollar. He and so over the past six months has grown by over percent 20.
It is no secret that more than 70 percent of all investments in our industry is associated with the purchase of imported equipment. And now we are faced with the need to find additional billions of rubles in investments and loans for this. There is an opinion that it is necessary to compensate the exchange rate, but this is not always possible.
The situation is aggravated by the industry and the fact that the Ministry of Industry and Trade has imposed a strict ban on the purchase of foreign machine tools. But, unfortunately, there is no domestic modern equipment for the production of electronic component base. We buy Russian CNC machines, but lithography, like many other types of equipment, is not produced by our industry.
At the same time, the issue of these supplies is very acute. This applies to such large projects as the Federal State Unitary Enterprise "Scientific and Production Enterprise" Istok "and" Scientific and Production Enterprise "Pulsar". In this regard, it is necessary to make a separate decision on exemption of enterprises from import VAT and customs duties.
General Director of Russian Electronics OJSC
Credit policy as a way to bankruptcy
Machine tool factories have five to seven percent margin on their sales. The question arises: how do we replenish working capital? After all, the number of orders for the domestic machine tool industry is increasing, and with it the need for working capital increases.
If we proceed from the fact that the money for the replenishment of working capital is divided according to the principle of half and a half, then we must give half to the bundler. Thus, taking money in the bank at 15 percent, we, the finishers, get a loan of 7,5 percent, but at the same time we earn a maximum of seven percent of the margin. This ratio of margin and cost of credit leads to another bankruptcy.
There is a paradox: on the one hand, more and more orders are placed at the enterprises of domestic engineering, on the other hand, the existing credit policy of banks is focused on industries with a rapid turnover of capital, such as retail and trade. Therefore, I consider the system of crediting through the Industry Development Fund a good idea to be lobbied. And it is very important that the creation of this credit system is not put on hold, but begins to work already this year.
It is necessary to fully support the idea of applying to the government with a proposal to hold a meeting with the participation of industry representatives in order to determine the specific tasks of import substitution, especially in the machine-tool industry. The newly created company "Stankoprom" may well solve this problem.
In addition, it is necessary to resolve the issue of supporting domestic producers producing competitive products, comprehensively helping to regulate their relations with natural monopolies. First of all, it is about pricing and tariff policy.
Chairman of the Board of Directors, Kaskol Management Company LLC
Painful places of basic branches
The industry has a number of vulnerabilities. First, it is microelectronic production. In Soviet times, there was the Integral plant in Belarus, which supplied equipment. Part of this task was solved by Zelenograd plants "Micron", "Angstrom". Today, this industry practically does not exist. Therefore, every time a difficult situation arises, we return to the question of the revival of domestic electronics.
The second weak point of the industry is the machine tool industry. Microelectronics and machine tools are interconnected. Whatever area we touch, engine building or aircraft construction, we use electronic component base and machine tools everywhere. The process of retooling leaves much to be desired, not because we are not patriots and do not do well in the economy, but because in some sectors of the economy there is no alternative to imported equipment.
The threatening state we have with the production of composites. Western firms remain the only suppliers of composite materials for technologies that we are laying on aircraft manufacturing in Ulyanovsk and Kazan.
So, the component base, machine tools, materials are key industries that oblige us to find a resource for their development. What is being done so far with respect to these key industries presents an extremely unhappy picture: to give a little here, a little there. All these measures keep the underlying industries in a dying state.
Another sore point of our industry is education. From universities we get specialists who are absolutely not adapted to production, to scientific activity, and in general to effective actions. We need to use the potential of the older generation. Give him the opportunity to transfer knowledge in specific areas. Thus, the system of personnel retraining should play a central role. In the USSR, it was impossible to occupy the position of senior engineer or any other administrative position if a person did not complete refresher courses. In particular, there was a center for retraining and personnel training in Minaviation. We actively used the institutes of Moscow Technical University, MAI and MIPT. This system needs to be recreated because the people of the age no longer have time to transfer knowledge.
Another problem area for the industry is standards. They will start to work only when references to them are put in the contract system. That is, you need to take products solely on the basis of standards. Then we will begin to raise the level of these standards. The customer will receive an evidence base to assess on its basis the quality and level of product performance achieved. In this situation, both technical regulations and standards will work.
Now the situation with standards is rather paradoxical. There are no industry standards. Corporate standards are practically not developed. The covers of state standards change and international standards are obtained. But we need to adapt standards, and only through orders this adaptation is achievable.
From reactive to proactive service system
It so happened that Rosoboronexport was at the forefront of many problems associated with the promotion and maintenance of our equipment abroad. At Rosoboronexport we created a technical committee of the state standard. Mainly, this committee addresses the issues of integration, logistic support and life cycle management, including the management of so-called aging. To date, five GOSTs have been issued that regulate issues related to the assessment of the life cycle of military products.
An extremely sensitive topic for the industry is ensuring the availability of products with a long life cycle during its operation under conditions of obsolescence and the cessation of the release of purchased and component products. This applies primarily to the electronic component base. Using an actively foreign electronic base, we do not manage the situation in conditions when this base changes every three to five years. For this reason, products with a long life cycle are in a very dangerous area.
The procedure for assessing the situation and monitoring the state of the products require you to move away from the reactive maintenance system, when you solve the problem after the fact, and to move to a proactive system, when we can plan the breakdown of products due to obsolescence and organize the continuation of their operation by creating safety stock or through the organization of production in Russia.
Vice President of the Russian Engineering Union, Head of the Advisory Group of Rosoboronexport OJSC
- Sergey Chemezov, Denis Manturov, Oleg Sienko, Andrey Zverev, Sergey Nedoroslev, Boris Aleshin, Alexander Brindikov
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