Tatarstan BUSINESS Online resource published interesting material by Timur Latypov "When I found out that the economist was coming, I grabbed my head": seven wishes of the defense workers of the Republic of Tatarstan to Andrey Belousov. Industrialists on the trench truth, the catastrophe of the 90s and a sober look at the defense industry" on the situation in the defense industry in Tatarstan.
Anatoly Serdyukov (left), Andrey Belousov (right) © Dmitry Astakhov / RIA Novosti
The defense industry is flourishing. They are no longer being driven into loans, enterprises are being updated, employee salaries have increased by 2 times, and for certain categories they have "flown into space". But the heads of organizations admit that the effect was achieved largely due to extraordinary circumstances. The tops do not want to go back and "beg for money in the offices" again. But what should be done to develop the defense industry? As BUSINESS Online found out, in the new Defense Minister Andrei Belousov, defense workers see not only an industry executive, but also an ideologue who will give guidance to both the defense industry and the entire industry.
"No matter how much we want to grumble..."
Five years ago, aiming to clarify how the defense industry feels, BUSINESS Online, based on conversations with the heads of enterprises of the Republic of Tatarstan, published an article "There is no way out - we are like hostages": 7 claims of Tatarstan defense workers against Shoigu and Chemezov." The conclusions were disappointing: despite the external well-being, the economic conditions in which the industry is placed threaten its collapse. Today, in fact, in the new economic and historical reality, we once again invited the heads of republican defense companies and experts to identify the main pain points of the defense industry. The result was somewhat surprising. Although several problems from the previous list still need to be solved, the "claims" of industrialists have significantly shifted from economic issues to the field of government strategies and even ideological problems.
The reason for this transformation is that the defense industry has a "fat". Previously, one of the painful issues was the creditworthiness of enterprises, which were literally driven into the arms of banks. Today, according to our interlocutors, this is in the past. Loans are taken only in exceptional cases, with a minimum rate (no more than 5%), plus the mechanism of its compensation really works. Enterprises are making full use of subsidies. Financially, the defense industry feels good, the directors say, but at the same time they must clarify: "Compared to what? With the previous period. And if we compare it with our foreign colleagues and the times of the Soviet Union, then this is below the plinth."
"Hand on heart, [it is worth noting that] most enterprises have everything," one of the directors told BUSINESS Online. - Many have received billions for technical re-equipment. We bought machines and built them. According to the working conditions, everything has been seriously modernized, the workshops have become completely different. No matter how much we want to grumble, the basis is being created, it is impossible to blame someone for not giving us something. And I am aware that right now there is nothing to rely on but ourselves. You can complain that there are no staff, but there is an opportunity to educate them. Salaries have gone into space. Not everyone, but at any enterprise, a good CNC machine operator, milling machine operator, turner can consistently earn 250 thousand, and those with rare specialties can earn even more. And they throw it at the rest." As Alexander Lavrentiev, President of the Association of Enterprises and Industrialists of the Republic of Tatarstan (APP), assured in an interview with BUSINESS Online, it is impossible to say that they began to receive normally only through extracurricular work (second, third, night shifts, work on holidays and weekends). He noted that not everyone has a high salary and not everywhere, but the average in the industry from 55-57 thousand went for 100 thousand rubles.
Defense experts assess Sergei Shoigu's actions in the industry rather positively, but point out that a number of problems that have accumulated over the years have not been solved, and the visible improvements are no longer the result of consistent systematic work, but of special regulation and emergency circumstances - the catalyst was its own. But they are sure that what has been achieved is not only possible to consolidate, but also to develop. What needs to be done for this, BUSINESS Online tried to reflect in 7 instructions from defense industry workers to its main customer, the Ministry of Defense (MO) and its new head, Andrei Belousov.
Wish 1: take your time with innovations and admit that everything went down the drain in the 90s
"When I found out that the economist was coming, I grabbed my head," says one of the directors. Recall, according to Russian President Vladimir Putin, Belousov's choice is due to increased defense spending and the need to integrate the activities of the Ministry of Defense and the defense industry into the country's economy. "Everyone remembers the appearance of Serdyukov in the Ministry of Defense (Anatoly Serdyukov - Minister of Defense of the Russian Federation in 2007-2012 - ed.): then, in fact, the entire program of the state defense order (GOZ) was crossed out, and 10 months passed - and everything got back on track, but time was irretrievably lost," our interlocutor continues. - So I wish you not to mess up - to preserve the positive achievements of the previous leadership, thoroughly understand everything and not rush with your innovations. As a rule, when an economist comes, it seems to him that everything is overblown here, there is too much, he considers the situation from the position of an ideal, but everything is far from perfect with us."
As for the basic principle, industrialists want a realistic view of the situation. "To begin with, it is desirable for officials to admit that everything has gone down the drain since the 1990s," - this idea is present in one form or another in almost all of our interlocutors.
Experts also focused on it. Ruslan Pukhov, General Director of the Center for Analysis of Strategies and Technologies, made a curious historical digression in an interview with BUSINESS Online (in fact, these are the theses of the report of his now deceased colleague Konstantin Makiyenko). Since the time of Ivan III, the history of the Russian state can be considered a battle for military-technical independence, and in the field of military technology, the country has always been catching up. Moreover, the realization of this allowed it to survive and develop into a strong state. This is a kind of macro-historical norm. There was only one period when we achieved full military-technical independence - from the late 1940s to 1991. But many military-industrial leaders are overcome with pride, and they feed the idea, which is quite harmful in the current conditions, that we are the best, we can do anything. "Therefore, the lack of pride and a sober view of things," the expert advises. - But not to tear your hair out, but just to understand that in a number of positions we have lagged behind even Iran and North Korea. We need to become realistic, stop lying to ourselves."
Wish 2: review the pricing principles
But what is worth breaking is the situation with the profitability of products. The most painful topic. "They cut with a knife," sources say about the principles of pricing in the defense industry. According to them, the profitability of the GOZ is minimal. The interlocutors remind that this has been the case since the end of the noughties, as a result, it is impossible to talk about any planned development of enterprises - there is no money for this.
Rostec CEO Sergey Chemezov also drew attention to the problem in his recent interview. "In general, the profitability of production in the defense industry - up to 2.3 percent - is terrible, because there is no money for the development of production, and even more so for the creation of something new," Viktor Murakhovsky, editor-in-chief of Arsenal of the Fatherland magazine, said in a conversation with BUSINESS Online. In order to make some money, the directors are forced to dodge and cheat. "For example, since they are not given a normal profit from the series, they inflate the prices of R&D (research and development work - ed.)," explains Pukhov.
There is hope for changes. According to Lavrentiev, the APP sent a letter to the government of the Russian Federation with relevant questions and suggestions. "And we even got a response from Mishustin - there was never such a thing in my life! - He says. - We were informed that this and that is being done. The changes are not drastic, basically everything goes to the salary, but they are there."
Wish 3: change the attitude towards R&D and listen to the trench truth
As defense experts suggest, some of the ongoing R&D will be suspended, but funding will be opened for a number of other topics. This is how it should be, they say, because the state does not have so many funds to finance everything at once. Under Shoigu, money for R&D was smeared with a thin layer, but it would be good to gather efforts in this area into a fist - a targeted approach and targeted funds are needed. Lavrentiev shares this point of view: "Look at what's happening with drones! The whole country rushed into the drone. The whole country! You look: one governor, the second, the fifth, the tenth - everyone goes to the first person: "We are ready to do anything and everything." You have to have a head!"
He suggests paying attention to foreign experience, where the state assumes up to 80% of the financing of new developments. As a result, there is a rapid change of types of products. "We do not have such a supply - until now, money has been accumulated in the West," the head of the APP notes. And how would we get ahead if we funded new developments - not only in the defense industry. There would not be the import dependence that we are witnessing now, because entire institutions have closed, all applied science has disappeared."
As for choosing new topics for R&D, our interlocutors advise to listen more carefully to the opinion of those in the trenches: "There are many people there who can competently talk about the needs of the front." "Today, the Russian defense industry is competing directly with NATO equipment, the shortcomings that need to be urgently eliminated are already clear," Murakhovsky says. - Belousov was once one of the first to speak about our almost 100% dependence on imported components for drones. The situation is changing now, but not effectively enough."
Wish 4: if you tighten the nuts, then on both sides
The industry is hampered by the excessive regulation of contractual relations with the Ministry of Defense. Officials can be understood, but only until the control and reporting system turns into an insurmountable dam.
"Officials (in uniform and without them) live in one world, we live in another," our interlocutors state. - They do not understand the conditions in which we have to work. And often, when we talk about problems, it goes unheard. Any (and often justified) violation of the reporting deadline, literally a comma placed in the wrong place, is considered a violation of the agreement. Such a semiconductor: pressure is coming from them, but the feedback does not work. Officials have laid straw under themselves from all sides, for example, to spur the directors, they introduced changes to the Criminal Code: evasion from the execution of a state contract, its non-fulfillment. But, having tightened the nuts on the one hand, something must be done on the other. We need a liberalization of relations, more trust in enterprises. There are positive examples. For example, in one technical issue, officials relieved themselves of responsibility, shifting it to the directors, who had the opportunity to make quick decisions themselves in emergency situations, and please - it went right away."
The latest developments in the Ministry of Defense have added to the heat. "The directors are being squeezed from all sides, and this is happening there," says one of the top managers. "What's that supposed to mean?"
Our interlocutors see optimization of the number of hardware workers as one of the solutions to the problem: "How many people are involved in the formation of GOZ! Who just isn't there. You wonder what they all do."
Wish 5: Give long-term production plans
With one or two-year plans, it is impossible to predict your work, you cannot understand how many and what kind of personnel you will need, what optimization the company needs," says one of the directors. - Now some contracts have become three-year contracts, which is already good, but at least 5-7-year contracts should appear. In short, show clear perspectives."
As Murakhovsky says, the current plans cover only two years. Five-year-olds are a big question, since the formation of a long-term state budget "went to waste in connection with its own." "Alas, everyone demands: "Let's have more products, better quality," but no one will say what will happen in five years," the expert states.
As our interlocutors say, this year the defense industry has reached the peak of its development. Recall that in February, Putin announced that the volume of the state defense order for 2024 had been significantly increased and was fully provided with money. As Shoigu clarified, the amount of GOZ funding increased 1.5 times.
But what's next? What will be the fate of the defense industry after its own is a big question. "A year or two will pass, and I'm afraid no one will need anything, we'll start begging for money again," warns one of the sources. - This cannot be allowed to happen. Look at the history of Kazan military factories. Around 1947, the situation was one-on-one. The war ended, and our great directors went to look for orders, for whatever little things they did not take, just to load people."
Wish 6: defense developments - in a peaceful direction
"It would be right to put the developments into the civil sector, and we have them," Lavrentiev says. - The Americans used to do that at the time. The Internet, electronics, optics - all this has developed and become cheap only because it went to the international civilian market. Maybe we should follow the same path? We don't know many things yet."
As one of the directors notes, now everyone is moaning: "What kind of citizen? I would like to fulfill it." But it must be understood "that this carriage will not last long" and that, while the military locomotive is dispersed, it is necessary to start pushing the citizen without interruption. "Otherwise, everyone will relax," predicts the source. - After all, the defense industry forgives some shortcomings, sloppiness and even a certain percentage of marriage, but a citizen will not let you down, because you are on the free market and there is China, where everything is good and cheap. Now is a unique opportunity to load the engineering staff: let's start thinking about what we will do next with the same defense money, otherwise we will return to vegetating."
Among other things, civilian products are momentary living, unpainted money, which, unlike the funds of the state defense order, can be disposed of at its discretion - to use them for the development of production, to improve living conditions. Moreover, our interlocutor advises us to cling to any demanded products, not necessarily high-tech ones."
Nail Khairullin, the former general director of the Kazan Aircraft Factory, shared his experience in this area with BUSINESS Online: "We made duralumin boats. By December, the backyard was full of them, and in January and February they all disappeared. We supplied desks and tables to schools - there were a lot of orders. In the late 90s, this short money helped us maintain the plant and even buy metal and components for the Tu-214."
Industrialists note that formally civilian products are not the concern of the Minister of Defense, but of the enterprises themselves, but he is able to create favorable conditions for their development and production, for example, by redistributing overhead costs in the most difficult starting time.
Wish 7: since you are the main customer, do not forget about career guidance and science
It is necessary to pay attention to personnel training, career guidance, i.e. school, secondary specialized and higher education, science. Without this, nothing will work, no matter how hard you tighten the nuts. "To demand an increase in volumes - yes, we can mobilize, start doing something more, but there is a limit to everything," the defense workers say. "We need to look 10-15-20-50 years ahead and prepare the base - personnel, science."
Specifically, at the moment, personnel are from the category of those problems that cannot be solved even with money. "Despite good salaries and normal working conditions, we have a complete reluctance of young people to go to the factory," says one of the directors. - People's psychology has been broken. Everyone thinks that the defense industry is a prison, there is no white light there. That's because they don't work with society. Let's open the newspaper Pravda of the late 70s. We are reading: "They were awarded yesterday...." And there is a list: the leaders of production and two or three names of party workers. And now there are no workers on these lists: actors, singers, athletes, officials of all stripes, only at the end, maybe a couple of hard workers. You need to start brainwashing at school: the hegemon is the working people, namely the factory workers. Yes, look at who your classmates, classmates, friends and comrades are now, who of them is working to make the country really rich and grow. You will be shocked."
But do personnel and scientific issues depend on the Minister of Defense? Yes, our interlocutors emphasize, we are not saying that we should talk about militarization, but the Ministry of Defense is the largest customer in the country. There is a supplier development system abroad: a large company invests in them so that they meet a high level in terms of management, personnel, and technology. The Ministry of Defense is able to influence education, science, and related industries.
At the head of the cult of development
When communicating with Tatarstan defense industry leaders, it was difficult not to notice that they also wanted to see a kind of counterweight to the Ministry of Industry and Trade. "The defense industry is the tip of the iceberg, so changes are needed throughout the industry," says one of our interlocutors. - According to the Ministry of Industry and Trade, it is a disappointment. Superjet and MC-21 are presented to us as achievements for crazy money (there are no planes at the same time), Moskvich for two prices of the Chinese twin, Aurus with an updated hood. The program for the development of civil aviation has been postponed for more than a dozen (!) years. It is already very clear that the level of the aviation industry department is not enough for its development. Well, there was a specialized ministry in the USSR for a reason. Aviation is the level of a minister who is appreciated in the industry not as a high-ranking official, but as a specialist, a person who can move things along. And it's at a dead end. You have no idea what a terrible situation this is. Everyone is tired of incompetence, but the era of effective managers continues."
Belousov is seen not just as a minister, but as an ideologue of doing. Makiyenko, mentioned by Pukhov, when talking about ways to achieve military-technical independence, recalled Peter and the Bolsheviks. Both have managed to carry out their modernizations through the most powerful mobilization of resources. It was very expensive, especially in terms of lives, but both modernizations gave the country a leading position for 70-100 years. Makiyenko stated that today it is impossible to imagine such a mobilization paradigm, but a new mechanism for resource mobilization is not visible. However, Belousov seems to have found it. In an interview, he said that the mobilization state is the grouping of society around a narrow set of development-related goals. "If you want, the cult of development," Andrei Ramovich clarified.
This resonates with industrialists. They emphasize that Belousov's wishes are rather an appeal to the state. Until the authorities really need vocational schools, institutes, and airplanes, there will be nothing but an endless and fruitless infusion of money into individual enterprises and industries. A global government program is needed. "In the government, Belousov was responsible for a wide range of projects, is able to think big, organize interaction between large teams," our interlocutors are sure. - This project approach should also be applied to the defense industry: consider the case as one national project "The country's defense capability". That's when everything can work out."
