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The United Shipbuilding Corporation was established pursuant to Presidential Executive Order of March 21, 2007 for the preservation and development of the defence industry’s scientific and technological potential, ensuring state defence and security, the concentration of intellectual, industrial and financial resources in order to implement projects for the construction of ships and submarines for the Navy, as well as the promotion of civil shipbuilding, development of the continental shelf and the global shipping market. The state owns 100% of shares in the corporation.

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Opening remarks at a meeting on the state and development prospects of the United Shipbuilding Corporation

President of Russia Vladimir Putin: Good afternoon, colleagues,

Today we will discuss the development prospects of the United Shipbuilding Corporation, which will be headed by Vladimir Shmakov, as we discussed just now.

Mr Shmakov has extensive experience in the defence complex and in the metals industry. I am confident that he will be able to make use of his skills and knowledge, above all in management and economics.

Let me outline the issues we will discuss today. I would like to note that the United Shipbuilding Corporation continues to strengthen its position, developing its potential in technology and human resources, increasing its assets portfolio, is gradually building up international cooperation and expanding its presence in promising sectors in the shipbuilding market.

“The corporation’s work on building military ships is one of the main challenges facing the new leadership of the United Shipbuilding Corporation.”

However, not all problems have been resolved and not everything is proceeding smoothly. Let me remind you that we have concentrated substantial financial, industrial and intellectual resources in USC. We did it in order to stimulate the manufacture of modern, high-tech products, and to improve the overall efficiency of both civil and military shipbuilding.

Nevertheless, there are still problems with the timing and quality of orders, including for the defence industry. In particular, there have been unjustifiable delays in the construction and supply to the Navy of several nuclear submarines and ships.

Today, I want to hear your reports about the causes of delays in the implementation of military shipbuilding projects and your plans to address these problems.

Significant funding has been allocated for the comprehensive re-equipment of the Navy and, naturally, the Navy has the right to expect that the arms will be supplied promptly according to schedule and to the required standards. That is, in addition to keeping to the terms stipulated in the contract, the prices must be competitive and reasonable.

I ask the USC to mobilise the necessary resources to speed up the supply of ships to the customer without, of course, compromising on the quality and equipment.

Once again, in the future you must ensure that the corporation’s work on building military ships is stable and fast-paced, and that is one of the main challenges facing the new leadership of the United Shipbuilding Corporation.

We also expect greater efficiency in civil shipbuilding. Production of icebreakers, various high-tech vessels, drilling rigs and production platforms is of strategic importance for our country.

This will determine the success of our efforts to expand Russia’s presence in the Arctic and other regions of the World Ocean, the development of natural resources of the Far Eastern and northern seas, and increased economic efficiency of oil and gas projects on the continental shelf.

Our companies are highly interested in top quality, modern naval equipment for the exploration and production of hydrocarbons, including, as I have just mentioned, on the shelf, in very difficult weather conditions.

“I find it unacceptable when orders for marine equipment and merchant fleet ships, which can be produced in Russia, are groundlessly placed with foreign shipyards. Priority should be given to domestic producers.”

In this regard, I think it would be right to establish closer cooperation between the USC, Gazprom, Rosneft and our other national mining companies in order to form a clear plan of action to develop the necessary marine technology and equipment.

I stress that our shipyards are able to create competitive and popular products, and therefore, I find it unacceptable when orders for marine equipment and merchant fleet ships, which can be produced in Russia, are groundlessly placed with foreign shipyards. I draw your attention to this.

We understand and I am well aware that we have traditionally purchased certain products from our partners abroad. This happened, above all, in the Soviet era, when orders were placed in Eastern Europe.

Today the order portfolio of our largest companies is worth $5 billion – and this has been going on for many years: about 80% of orders are placed with foreign companies.

Priority should be given to domestic producers – this is an unwritten rule that is applied in most countries. Yes, we should develop cooperation; yes, we should move the production to Russia, and this must be done. These orders can become a good stimulus for the development of innovation and creation of high-paying jobs, as well as for launching production modernisation.

With all that said, I think that the newly appointed head of the USC should focus on the following urgent tasks.

The first priority is to improve corporate structure. You must develop a programme for managing production costs, conduct an economic and financial audit of all contracts awarded for the state defence order and for large contracts with private companies.

Second, you must audit modernisation programmes of key USC enterprises, prepare specific proposals and report on the results in three months.

In addition, you have until September 1, 2013 at the latest to approve the USC Development Strategy in line with the Government programme The Development of the Shipbuilding Industry. I expect your report on the execution of these instructions by October 15, 2013.

Let's start the discussion.

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