US aircraft giant concludes multi-billion contracts with Russian titanium maker
Boeing's President Harry Stonecipher and the Russian Minister for Industry Viktor Khristenko signed a memorandum on cooperation two days ago. According to the signed document, Boeing will place orders in Russia in the sum of $2.5 billion. Experts believe that Russia will gain only 40-50 percent of the money, taking into consideration possible investments in the construction of new enterprises.
Despite high-flown statements about the joint development of perspective aviation technologies, Boeing will spend the majority of the funds to purchase the Russian titanium, which enjoys great popularity in the West. Russia's Verkhnesaldinskoe Metallurgical Industrial Association (known for the Russian initials as VCMPO) is the key supplier of titanium for the Western aviation industry. This company presently provides 75 percent of titanium products for Europe's Airbus. Furthermore, the Russian company plans to become the central supplier of titanium for Boeing until the end of the current year. This intention can be seen in the contracts, which stipulate a considerable increase of deliveries as opposed to previous agreements.
Boeing's fondness for the Russian titanium has become the talk of the town. According to the Vremya Novostei newspaper, the US Department of Defense has already fined Boeing for the use of the Russian titanium in battle planes of the US Air Force. The fine and the spending to replace titanium parts was evaluated at $7.4 million. As it can be seen, such details do not chill out the American aircraft-maker. Spokespeople for the company VCMPO said that the sum of the new contract might reach the record of $1.3 billion. It is noteworthy that Boeing's contracts with other Russian enterprises do not exceed several million dollars a year.
Experts do not exclude that a part of the funds invested in the Russian titanium maker can be used to increase the company's industrial capacities. Furthermore, a lot of observers are concerned about Boeing's intention to cooperation with the Russian Central Aerohydrodynamic Institute (CAHI) and the Russian Institute of Aviation Materials (RIAM). Unlike at RIAM, the Aerohydrodynamic Institute currently experiences a lot of problems - low wages, first and foremost. The problems create perfect conditions for foreign companies to win Russian specialists. In spite of its troubles, the institute has managed to keep talented scientists and engineers.
The US air giant hopes for a possible indulgence as far as import aircraft duties in Russia are concerned. The duties have been supporting Russian aircraft makers for quite a long time. The conditions of Russia's entering the WTO cast doubts on the issue of the duties. It is not ruled out that the question has been solved already. The Director of the Federal Space Agency, Yury Koptev, stated that the question about reducing the duties for the import of foreign planes to Russia would be settled in connection with Boeing's intention to participate in the development of the Russian aviation industry.
Russian Ministry for Industry Viktor Khristenko called upon the Boeing administration to become a partner and investor of the United Aircraft Corporation, which was said to unite all Russian aviation assets, the Vedomosti newspaper wrote. It brings up the idea that Khristenko does not see the future of the Russian aircraft-making industry without a foreign participation. However, experts believe, Boeing evinces no interest in it. Russia is important for the US giant as the supplier of cheap titanium and as a customer to buy planes.