Rosteh is called to become multitask manufacturer. The state corporation will get all supplies of equipment for defense industry complex

25 July 2013

Source: Newspaper Kommersant, No. 130 (5161)

State Corporation Rosteh may actually monopolize the Russian machine tool industry based on subordinated Stankoprom OJSC. Prime Minister Dmitry Medvedev approved the idea of ​​transferring exclusive rights for the supply of Russian and imported equipment for defense plants. Only this fact will provide Stankoprom with cash flow of 500 billion rubles until 2020. It will participate in civil tenders on a common basis, but in any case, 80% of the procurement of machines in the next few years will accrue to the military-industrial complex.

Yesterday, Prime Minister Dmitry Medvedev held a meeting on the development of domestic machine tool industry, recognizing that the situation in the industry “is not brilliant”, while Russia is “in the third tenth of countries” producing metal products. The branch brings only 0.03% of GDP, while this figure for the market leaders in Germany, Japan and China reaches 1%. As a result, foreign manufacturers occupy nearly 90% of the Russian market. Moreover, the prime minister accented that the majority of machines are synchronized with the “global network”, and “we are dependent on decisions made in other countries”, and “this spigot can be shut off at any time”.

Measures to change the situation are ready. According to Dmitry Medvedev, it is necessary “to expand the list of machine tool products” for which “there is a special procedure of procurement”. In 2011, the government forbade defense enterprises to purchase foreign equipment for budgetary funds from foreign companies if its analogues are produced in Russia. The head of Ministry of Industry and Trade Denis Manturov explained that when this decision was taken, the domestic machine tool builders “did not produce a number of the nomenclature”, but now the list of equipment will be expanded. According to the Ministry of Industry and Trade, the production of new products shall be stimulated by the federal target program “Development of domestic machine tool industry for 2011-2016”, the total amount of financing for which amounts to about 26.5 billion rubles. According to Mr. Manturov, “implementation” of domestic machines will occur due to the consolidated government order, primarily under the Federal Target Program “Development of DIC until 2020”. He stressed that “such conditions are not inconsistent with WTO rules”, because the issue is a “government sector”.

However, administrative support is not enough. Denis Manturov told that “the system integrator was created recently” on the base of subsidiary of the holding Oboronprom (included in Rosteh). The sources of Kommersant, which were present at the meeting, explain that we were talking about Stankoprom. “At the meeting, Stankoprom was proposed to become a major integrator of the industry, which also will receive the status of the sole supplier of machinery for defense enterprises,” says one of the interlocutors of Kommersant. He emphasizes that “the prime minister fundamentally supported this idea”.

Sources of Kommersant say that all machine tool assets of Rosteh, including those that are now included in the sub-holding RT-Stankoinstrument will be consolidated on the basis of Stankoprom. Enterprises of RT-Stankoinstrument are likely to be transferred directly to Stankoprom, but their contribution to the charter capital is possible, the scheme is being worked out. Ex-president of Stroytransgaz Sergey Makarov (see issue of Kommersant dated May 27), who has become also the CEO of RT-Stankoinstrument, has been the head of Stankoprom since May.

“It is Stankoprom that expects to gain the major amount of funds under the Federal Target Program for the development of machine tools industry, planned for 2014-2016 for research and development and investment, ultimately the holding shall be the main government producer of machine tools in Russia,” said one of the interlocutors of Kommersant. Source of Kommersant notes that after the consolidation of assets of Rosteh, Stankoprom considers the possibility of setting up joint ventures with foreign producers, as well as “purchasing private domestic enterprises”. “Nevertheless, the technological base of most part of the domestic plants is poor,” said one of the interlocutors of Kommersant.

Moreover, the structure of Rosteh will monitor supplies of imported machines for DIC. “A single order for foreign machinery will be formed by Stankoprom, it will hold tenders and then the equipment will be distributed according to the request of defense enterprises,” says one of the interlocutors of Kommersant. He emphasizes that Stankoprom expects supplies of large shipments, but not single pieces”, because “this only makes economic sense and can provide access to technologies”. The interlocutors of Kommersant assure that the scheme is fully consistent with the law on public procurement, because it concerns only the defense industry complex, Stankoprom will participate in civil tenders on a par with the other participants.”

However, the criteria of how to separate defense orders from civil orders of large state holdings as United Shipbuilding Corporation, United Aircraft Corporation and Uralvagonzavod has not yet been determined. “Many enterprises manufacture products for both military and civilian purposes, often on the same equipment,” said the source of Kommersant working in the industry. Another interlocutor of Kommersant adds that “the priority will be given to the enterprises that somehow produce defense products, for example Uralvagonzavod will likely be defined as a defense enterprise, although it produces cars”. They emphasize that “machines which are used for civilian products only, will not get into the single supplier system”.

Sources of Kommersant mention that the relevant ministries can be instructed to prepare proposals on “the centralization of supplies” of machines for DIC, as well as to give their consent to work through Stankoprom until mid-October. It is supposed to form the consolidated order already after the October 20, and to complete the inventory of domestic machine tool companies and to assess their capacities to fulfill this order by the end of the year.

According to the sources of Kommersant, the volume of orders of defense enterprises, including import deliveries, may reach about 500 billion rubles until 2020. At the same time, Mr. Manturov said that the portfolio of orders on Russian production could reach 150-200 billion rubles that will ensure the industry’s growth by 30–35% per year. The minister emphasized that up to 80% of the total volume of machine tool orders will be accounted for by the defense enterprises in the next seven years.

Military men reacted calmly to introduction of the new scheme. “For us it is important that the machines that meet the technical requirements be supplied to the plant timely, that there were no situations where the state defense order was not executed due to the late delivery,” says the source of Kommersant in the Defense Ministry. According to him, taking into account the practice of implementation of the transfer of military maintenance plants concentrated in Oboronservis OJSC, industrial enterprises, the military men will “be maximally distanced from functions which are non-relevant for the armed forces”. According to the source of Kommersant in the Military-Industrial Commission, its leader Deputy Prime Minister Dmitry Rogozin, “supports the idea in general”.

Egor Popov, Ivan Safronov