Denis Manturov, Ministry of Industry and Trade of Russia - Минпромторг России
Release Date: 2008-10-09
Could you please outline the general policy and objectives for the Russian aviation industry today as suggested by your administration? What challenges are you facing to bring the aviation equipment production back to the levels before the collapse of the Soviet Union?Throughout the history of the development of aviation construction Russia has been among the leading countries in the world. Our aviation has always been the object of national pride, the implementation of the leading scientific and technical innovations and the catalyst of technological development.
Currently the issues of preserving and promoting the development of Russian aviation industry have become a national task due to the crucial role of this sector both in the military and civil spheres. Gradual implementation of a long-term program of integrating the Russian aircraft construction sector is in full swing.
The entire aviation sector is being reformed in Russia at the moment. The key purpose of the reform is to bring Russia back on the global map of aviation equipment manufacturers, including the civil aviation sector. It’s not only about the size of the country’s territory or its defense policy (although these factors are also extremely important). What is also important is that creation of an internationally competitive national aviation industry is a powerful boost for innovations in many aviation-based industries: from engines to composite materials production. In this respect, aviation is becoming one of the catalysts of forming a competitive innovation economy based on intellect, knowledge and hi-tech.
Of course, the current condition of the aviation industry does not yet fully correspond to the level of demands that it is facing. The crisis of early 90s has had a painful impact on the sector. The Russian aviation was left virtually with no state support and, as a result, not only did the production volume decrease but also some technologies and highly qualified specialists were lost.
Currently the first stage of creating “United Aircraft Corporation” (UAC) has been completed. The Corporation unites almost all the leading Russian manufacturers of aviation equipment. In the course of the next few months, Russian Aircraft Corporation “MiG” and Kazan Aviation Production Unit named after Gorbunov (KAPO) will join UAC.
This is what is supposed to be the real consolidation of the sector that will concentrate all the forces of Russian aircraft construction on designing new breakthrough products that are to ensure stable operation of the whole industry, its successful development, competitiveness, investment potential and, finally, enhance the position of Russian aviation on the global market.
Similar processes are taking place in helicopter engineering, engine manufacturing and instrument engineering.
The prospects of developing Russian aviation for the coming years lie in the field of its consistent integration in market globalization. The core of this strategy is enhancement of international cooperation, preservation and efficient use of the main aviation construction resources and breakthrough technologies on the Russian territory given reasonable asset concentration and broad involvement of private capital and initiative.
Implementation of the initial plans will allow Russian manufacturers to increase the Russian share in the world civil aviation equipment production from 1% to 5% by 2015 and from 10-12% by 2025. That should make Russia the third largest world aviation construction centre.
If we look at our prospects until 2025, the main sales increase will be provided by civil products. The planned sales volume for 2015 is about $12-14 bln whereas by 2025 it is supposed to reach about $20-25 bln.
Despite a positive outlook of the Russian economy with a positive trade balance, forex surplus and the determination of making the aviation industry a strategic one, the landscape of the industry has not changed much in terms of results, especially in the field of civil products. What changes need to be conducted in the sector? Are new projects, such as SuperJet, real catalysts for modernization and improvement?
The state policy concerning aviation industry has recently made a U-turn. First of all, V.V.Putin, while he was the President of RF, set up a trend according to which Russia was to become one of the leaders of world aviation construction. It should be noted that all the state bodies, ministries and authorities treated this issue with utmost seriousness, so the question of developing Russian aviation is on the agenda of all the relevant authorities. In this respect I.I.Shuvalov, first deputy Chairman of the Government of RF, and S.B.Ivanov, deputy Chairman of the Government of RF, as well as some heads of according authorities, became members of the Board of JSC “UAC”.
Currently a plan of activities has been put together to take the Russian aviation industry to a higher level that corresponds to mass-scale tasks that the whole Russian economy is facing. Thus, on February 12, 2008 Board of Directors of JSC “UAC” approved “The Main provisions of the Development Strategy of the Open Joint Stock Corporation “United Aircraft Corporation” for a Period up to 2025”.
The Strategy covering the development of the Russian aviation till 2015, approved by the government of the Russian Federation, envisages the production of hundreds of aircrafts per year for the next 10-15 years.
The next thing that will be done is simultaneous mass production of 2 models of regional aircraft - Sukhoi Superjet 100 and the latest modification of An-148 starting this year. Both aircraft are demanded by customers and have large order portfolios. They will prospectively replace regional aircraft fleet of Russian airlines that is gradually becoming outdated.
In 2007 the majority of UAC enterprises began to receive modern highly efficient mills and equipment in the framework of the development program. Some of the essential current developments are active increase of production facilities and comprehensive preparation for mass-scale technical re-equipment that is scheduled for this year.
Further growth of UAC competitiveness will be achieved through intensive development on the basis of new projects in civil and transport aviation, increase of R&D financing and technical re-equipment to eliminate the technological gap with the leaders and enter new market sectors (unmanned systems, international cooperation) and also through high level of using information technologies and broad application of innovations.
Consolidation of assets has been the main trend: United Aircraft Corporation, Oboronprom, Rostekhnologia and others. How do you, from the government’s perspective, evaluate the effectiveness of such consolidated structures? How does consolidation actually take place? What are the limits of massive consolidations and what is the role that private capital should play?
Branch consolidation is effective because it allows focusing the efforts of all the industry’s enterprises on creating innovative products that define industry’s general development and the national competitiveness.
Creation of consolidated structures takes place, above all, in strategic industries. Military and industrial complex, aviation and shipbuilding initially imply state participation because their development is what the national security depends on. Currently the core enterprises, unfortunately, cannot finance their activity on their own expense. As foreign experience shows, the initial stage always requires state investments to develop hi-tech industries.
As regards civil enterprises, unless they are among the strategically important ones, consolidation is not required. There’s no integration needed - all the companies are private and are consolidated independently. Our policy here is limited to creation of strategies of development for entire industries.
Decisions to create structures like United Aircraft Corporation (UAC) and Shipbuilding Corporation (USC), as well as integrated structures like Tactical Missile Armament Corporation and Almaz Antey are taken according to a more complex procedure. Currently, preparation for uniting manufacturers of automated control systems is underway. Besides, according to President’s Decrees, United Engine Construction Corporation is being set up.
If we take the helicopter sector: Mi-171 sales to China have increased during 2006; at the same time, Oboronprom is proposing mass production of Mi-171 in China. Are aircraft production alliances a threat or a positive trend?
Yes, further technological progress and the growth of costs of the international cooperation programs are becoming more and more important and even crucial for the successful implementation of future common programs, for instance in civil aviation. Russia has many times initiated the development of such cooperation.
The tendency of transition from bilateral partnership model to a multinational model should also be mentioned. It allows controlling the costs and forming new strategic alliances.
Aircraft and helicopter production alliances are a positive tendency. Development of aviation equipment requires considerable financial costs, especially regarding development of rotor-driven machines. Currently only 7 countries, Russia among them, are proud of their own designs of helicopters. The cost of development and production of airborne vehicles is constantly growing and currently almost all the helicopters are developed within international cooperation. Such organization allows consolidation of national resources.
Development of international cooperation is a global tendency. Its implementation in Russian helicopter engineering fully complies with modern processes of the world helicopter market.
How would this impact sales and how will Russia benefit from such sort of deals?
Mi-171 helicopter is a modern modification of the famous Mi-8 helicopter that became a legend of the world’s helicopter engineering. It virtually has no rivals in terms of constructed machines (over 12,000), number of modifications on its basis (over 120) and how it is spread in the world (operated in over 110 countries). Mi-8/17 helicopter has been taken in the armed forces of 80 countries (to compare: the Kalashnikov assault rifle has been taken by 58 countries). The glorious Mi-8 is the basis for not only military but also civil helicopter fleets in many countries of the world.
We’re constantly creating new modifications of this extraordinary machine that is famous throughout the whole world due to its reliability, efficiency and durability. More orders are coming in for Mi-171. Russian plants of mass production are loaded for several years ahead. Under such conditions one of the solutions can be to assemble an agreed number of helicopters in other countries.
China has long been one of the largest customers for Mi-8/17. According to forecasts, the demand for Mi-8 in China will grow. Setting up Mi-171 assembly in China will allow, on the one hand, meet the needs of our neighbour in Russian aviation equipment and, on the other, show a solid argument to the competitors who have long persisted in creating assembly facilities on the territory of China.
We expect that the organization of helicopter assembly in China will also help reduce the cost of products for the Chinese domestic market and simplify aftersales servicing of the helicopters.
What will be the general industrial policy in aviation towards relocating production to third world countries?
The industrial policy towards relocating production to the third world countries is a common tendency of the modern market that will continue to develop along the same lines given the interests of all the Russian manufacturers and operators of helicopter equipment and in compliance with Russian legislation.
China was the second country that President Medvedev visited after sworn in as head of the State. How do you evaluate the future of Russian-Chinese industrial cooperation and what would be your message to your colleagues in the Chinese administration?
Our cooperation can develop in a few directions. We’re ready to not only share our experience with our Chinese colleagues but also participate in joint development of new products. These products are not only to find a distribution market in China and Russia but also to take a corresponding share of the world market for the project to be mutually profitable.
| Company: | Ministry of Industry and Trade of Russia - Минпромторг России |
| Position: | Deputy Minister of Industry and Trade |
| Country: | Russian Federation |