Question on 20 trillion
Last week, Zhukovsky outside Moscow hosted the "Land MAKS" - the international forum "Technologies in Mechanical Engineering - 2014" and the international exhibition of arms and technologies "Oboronexpo-2014".
The Forum traditionally gathered a representative audience: heads of companies from Germany, France, Switzerland, India, China and other countries came to participate in conferences, seminars and round tables. A number of corporate contracts were signed. Traditionally, for the second time already, VTB Bank acted as the general sponsor of the business program.
The context of the event was very disturbing. The sanctions of the Western states affected, among other things, the supply of military and dual-use products to Russia, including the machines and industrial equipment we need, as well as cooperation between domestic and foreign companies in the development and production of weapons. The stoppage of cooperation with Russian partners by the Ukrainian defense enterprises at the request of the Kiev authorities made a negative contribution - which is extremely unpleasant, because the defense enterprises of Russia and Ukraine at one time were formed as part of a single Soviet complex and therefore were linked by close cooperation.
In such a situation, it is advisable to consider what awaits our gunsmiths.
Great update
It is worth recalling that a cardinal renovation of our Armed Forces is underway. Since 2011, Russia has been implementing a rearmament program for the period up to 2020. The program is very ambitious: the total amount of funds for the purchase of new types of weapons by 2020 should be about 20 trillion rubles (for comparison: the country's nominal annual GDP is 66 trillion rubles).
As planned, the share of new weapons in the Armed Forces by 2015 should be 30%, by 2020 - 70%. Rearmament will affect all branches of the armed forces and all types of weapons and military equipment.
The growing interest in the army in Russia is noticeable even in international comparisons. So, last year our country took the third place in the world in terms of military expenditures, bypassing the UK and Japan. The military spending of the Russian state last year amounted to $ 68,8 billion. Only the "super heavyweights" of the world economy - the United States ($ 578 billion) and China ($ 148 billion) spend more.
In dynamics, the picture is even more impressive. In 2013, Russia not only ranked third in terms of military spending, but also became the leader in terms of growth in military spending. The country's military budget in the next three years will increase by more than 44%. In 2014, Russia will spend $ 78 billion on defense.
To complete the picture, we can mention that Russia also remains the world's second largest supplier of weapons to foreign markets (after the United States).
It would seem that with such volumes of military orders, domestic gunsmiths have no reason to worry. Nevertheless, problems remain.
To the bottom and back
First, it is still a repercussion of the industry collapse in the 1990s. By the middle of the decade before last, the Russian defense-industrial complex, with the rare exception of the industries that had established export supplies, was essentially in ruins. The enterprises of the industry "lost their shape", lost valuable personnel, failing to carry out timely modernization of production due to chronic lack of money, lagged behind Western companies in technical terms. And all these production problems need to be urgently solved in the process of implementing the rearmament program.
Secondly, the already mentioned need to supply equipment and elements of weapons from abroad also creates difficulties. Russia is highly dependent on imports of precision machine tools and electronics. Traditionally, for our defense industry, the supply of engines for helicopters from the Ukrainian Motor Sich enterprise was important, the Dnipropetrovsk Yuzhmash played an important role in missile armament, and Kharkiv's Khartron (formerly NPO Elektropribor) in military electronics.
In principle, we solve the issue. To reduce the technical backlog, together with the rearmament program, a federal target program for the development of the military-industrial complex in the amount of 3 trillion rubles is being implemented aimed at modernizing production.
Over the past year, the country has sought to reduce the dependence of the maintenance and repair of ships on foreign shipyards. In August 2013, the use of foreign machines was prohibited, if there are available domestic analogues. The emerging system integrator Stankoprom was tasked with bringing the volume of its own competitive equipment to one third.
The production of engines for helicopters under the state defense order was transferred to the facilities of the United Engine Corporation. In particular, in 2012, the UEC put into operation a new enterprise, the Petersburg Motors plant, for 6,2 billion rubles of investments.
Established in 2009 under the auspices of Rostec, the Radioelectronic Technologies corporation is actively developing domestic military electronics.
“We carry out a detailed analysis of imported components manufactured in Ukraine, the EU and NATO. In general, we plan to complete all this work by November of this year ... Within two or three years we will be ready to completely get rid of dependence on components and element base imported by domestic defense industry enterprises from abroad, in particular from Ukraine, ”says the Deputy Chairman Russian government Dmitry Rogozin.
Overall, according to the president of the National Strategy Institute Mikhail Remizov, disruption to the rearmament program does not threaten. Although certain postponements are possible: “The program may be revised towards extending the terms. This primarily concerns shipbuilding. Somewhere the weapons have not yet been brought in. Somewhere else under Serdyukov, enterprises entered into contracts at deliberately unrealistic, low prices. They tried to stake out a contract, but they cannot fulfill it for this price. Plus, the situation with Ukraine and the need for import substitution may slow down the rearmament somewhat. We will have to create in Russia production of products that were previously imported, and not engage in the development of new technologies. "
And of course, all this will require financial investments in the industry.
Forge money
One of the possible options for promoting the development of the defense industry, in addition to direct government subsidies, could be more active participation of financial institutions in supporting gunsmiths
In the 1990s, this did not become widespread for obvious reasons: banks preferred to go into more profitable areas of capital investment, gunsmiths did not have the opportunity to attract credit financing. Even if loans were given, they were small and short-term - to pay salaries.
In 1999, the situation improved slightly. The state undertook to pay off the enterprises of the defense industry complex for the resulting debts, and some payments began. It became more interesting to serve the state defense order, since the money began to be allocated more or less on time. Some payment delays remained, but their maximum period did not exceed three months, which was associated with such a concept as the budget year. In cases where the payment of the state order falls at the end of the year, it is usually shifted to the first quarter of the next year.
Now the state order is approved this year. And by the end of December, each enterprise operating under such programs knows what it has to do, how much of its own funds it can spend, and how much it needs to attract, including by borrowing from the banking sector.
Today, all the largest domestic banks, both state and private, work with the defense industry. In regions of traditional dense concentration of defense enterprises, for example, in the Urals, smaller regional banks also actively cooperate with gunsmiths. The banks do not disclose the share of investments in the defense industry in the total volume of loan portfolios, but they estimate it in different banks at the level of 7-25%.
With the implementation of the rearmament program, this interest is growing. As, for example, the sponsor of the aforementioned "land MAKS" bank VTB. This credit institution has always actively supported the enterprises of the Russian defense industry. Only on the first day of the forum VTB signed two agreements on strategic cooperation: with the Morinsis-Agat concern (the leading enterprise in Russian shipbuilding in information systems) and NPP Radar mms (the leader in the production of electronic systems and complexes). “In the first half of 2014 alone, the loan portfolio of VTB's government and defense sector's customer service department grew by 23 percent, or by 146 billion rubles. The defense industry complex accounts for more than 70 percent of all loans of the department, "says a member of the VTB Board Valery Lukyanenko.
It is likely that the demand for loans from defense industry enterprises will only grow. The industry is facing a global modernization. Most likely, in the coming years we will see an increase in the interest of banks and defense industry enterprises in cooperation. Competition in this market is just beginning.
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