Russia » Economics
Author`s name Dmitry Sudakov

Russian shipbuilding industry launches grand production of unique vessels

After the meeting with the President of the Russian Federation, first Vice Prime Minister Sergei Ivanov, who heads the process of establishing the United Shipbuilding Corporation (OSK) said that the shipbuilding capacities of Kaliningrad and St.-Petersburg will both join the new structure, in particular its “north-west daughter”. However, the north-west region is the place where the state has least percentage of the shares in the shipbuilding businesses. Private owners of the leading Russian shipyards Severnaya Verf (SV) and Baltiysky Zavod (BZ) have their own ideas of unifications in the shipbuilding and cooperation with the state.

Below we provide abstracts from the interview of Alexander Gnusarev, the chairman of the board of the United Industrial Corporation (OPK), the owner of SV and BZ, to Echo of Moscow radio station.

OSK runs two largest shipbuilding plants in Russia - Northern Shipyard and Baltic Plant. These manufacturers fulfilled the largest export orders, most important projects for the Russian defense complex. Literally within the next two weeks the latter will deliver the unique ship, nuclear ice breaker 50 Years of Victory to the customer, Murmansk Shipping.

Today there is a correct tendency to provide Russian shipyards with orders for large vessels required for the development of shelf. Whatever configuration for this purpose is chosen, whether the concept of creating the shipbuilding centers in the West, North and the Far East, or any other model, the main thing is to ensure state orders. Such association will be viable in case it gets the volume of orders which is today planned.

Today the Ministry of Industry seeks proposals from the shipbuilders on constructing new shipyards and re-reconstructing existing ones. It is a question of creating three centers of shipbuilding, i.e. it does not mean single uniform holding. How much it will help or it will be useful for the development of domestic shipbuilding? In general, probably, yes, i.e. the association in this or that from of the existing capacities is necessary.

Today special attention is paid to the energy security. We witnessed when extraction of oil and gas was put in dependence on the opportunities of their transportation. Today Russia inevitably goes into shelf. And the concept of “flexible pipe”, which today is actively discussed, assumes constructing a big fleet. It is a question where this fleet will be constructed. Shipbuilding capacities existing in the world or are fully loaded, or Russian customers did not talk yet about the opportunities of constructing such ships. Construction of new civil ships should not harm fulfilling the existing military orders.

One should not lose the quality which so far exists. In the past few years Russian shipyards delivered four large ships for one foreign customer and three for another. Today the newest corvette for the national navy is under trials. (Three more ships are at different stages of construction). This customer pays well. I think the shipbuilders and the Navy don’t have claims to each other.

Russia did not build new shipyards. All existing shipyards were built in the USSR. We have consistently followed the idea of obtaining Northern shipyard – Baltic plant and the design bureau "Iceberg", which always specialized on the ice breakers and ice class ships. The idea was to establish single enterprise on the basis of these assets. We always understood that one military component will not be enough and that a modern shipyard should focus on complicated civil orders. Today this is right the same orders which are about to come into the branch.

When the talks about reconstruction, about unifications, about creation of the new companies go long enough, it disturbs the whole branch. This must come to a full stop. I.e. when the heads of the state or private companies understand what a configuration is chosen, what are the rules of the game; it will help the branch in general and individual companies, in particular.

Secondly, it is senseless to discuss configurations, without discussing for what purpose all is done. For example, one of the basic priority projects of the United Aviation-building Company is creating a new regional plane. The state and participants input enough both means and efforts to successfully implement this project. Something similar must take place in shipbuilding. It is not necessary to invent regional steamship… This function can be fulfilled by the clearly determined plan regarding what way the Russian Federation will choose in developing shelf, i.e. the concept of this “flexible pipe”. It would mean orders.

The position of the Ministry of Industry concerning the development of shipbuilding is somewhat strange. Today it declares creating three centers of shipbuilding, which would have production capacities considerably surpassing what the existing shipyards have. A paradox, on the one hand shipbuilding plants are working to the degree of 30% of their production capacities and we speak about building more productions. However, it is about different ships and other sizes. Therefore it is logic to assume that if the government says it today, these capacities will be used.

Certainly, OSK waits what it will be, how these orders will be distributed. Today the problem is not receiving the order. These three centers of the shipbuilding and existing capacities will work at full capacity in case the program of shelf development is implemented. The state defense order is known, it is in the state arms program till 2015. Everything is specified there and there will be no new orders. I.e. today we focus on civil sector, on home civil sector.

The plan of establishing a single shipyard on the basis of the shipbuilding assets of OSK is likely to take 5 years. The first stage is modernizing the existing capacities, it is within one year; ensuring the opportunities of building the ships with 80-100 thousand tons displacement – this it two more years. Finalizing the upgrade will take 5 years. This will be the largest civil shipyard in Russia, bigger will be only military Sevmash.

Regarding the competition: As a matter of fact so far all competition was around military orders. Today the portfolio of military orders is fixed. As for the export contracts, the portfolio of orders is either already known, or it is on the contrary highly questionable. The prime goal is ensuring the construction of large ships in Russia.

Yuri Seleznyov

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