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Some 1,000 delegates from 68 regions are participating in the conference, including governors, representatives of federal agencies, financial institutions and businesses, public figures, and heads of leading industrial corporations and associations, as well as some of the largest research and educational institutions. Delegates from mechanical engineering unions of Kazakhstan, Belarus, Armenia, France, Italy, Germany, Austria, Switzerland, Argentina and China have been invited.

The Russian Mechanical Engineers Union was established in 2007 and brings together Russian companies, holdings and corporations to protect the interests of the Russian mechanical engineering industry. The union is in charge of the industry’s development strategy in Russia and contributes to the development of related state policy.

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President of Russia Vladimir Putin: Colleagues, friends,

The Russian Mechanical Engineers Union brings together almost all the largest companies of the aircraft, space, energy, defence and many other industries that employ over one million people.

I would like to start by emphasising the following: of course, we all understand the complexity of the current situation. The Russian economy is facing serious challenges. It goes without saying that these challenges have not failed to affect the mechanical engineering industry: investment declined along with demand for products, and production volumes dropped. I understand all too well your misgivings and concerns regarding the future of your companies and employees.

In 2015, the production index for machinery and equipment came in at 88.9 percent of that in 2014, with transport manufacturing at 91.5 percent and electrical, electronic and optical equipment at 92.1 percent. There is no denying this decline. However, in the first quarter of 2016 this same index was already at 105.4 percent, reversing the trend compared to the sluggish 2015.

Of course, we will continue to support industries that are now facing risks. As you all know, the Government’s anti-crisis plan attaches special importance to these industries. This year, just like in the previous one, considerable resources were allocated to this effect.

The anti-crisis plan I just referred to allocates 137.7 billion rubles this year to support the automotive sector (including an extra 49 billion rubles), and 10 billion rubles each for the transport and agricultural engineering sectors.

We will also work on our long-term development goals. We see mechanical engineering as one of the Russian economy’s drivers. The sector has tremendous export potential and could become a symbol of Russia’s national success and technological leadership, as our defence industry has.

We did not start the defence sector’s modernisation only yesterday. The modernisation plans were put together nine years ago and not in connection with any current events.

Labour productivity has tripled in the defence sector over that time. This is a real record among our economic sectors.

As we carried out the federal targeted programme for developing this sector over 2007–2015 and introduced new technology, labour productivity rose three-fold, 1.7-fold over 2011–2015, and by 7.2 percent in 2015.

The defence sector’s output increased by nearly 13 percent last year. Russia is now the world’s second-biggest arms exporter. Last year, our arms exports came to around $14.5 billion.

Let me note some of our other achievements over these last years. In the mechanical engineering sector, a number of segments have completely modernised their fixed assets. Around half of our railway locomotives and cars, and around 40 percent of our buses are now produced at facilities that started operation in the last five years. This creates a solid foundation for continued development.

Let me note for reference, that facilities opened in the last 15 years account for respectively 30 and 40 percent of capacity in freight and passenger wagon manufacturing. This is a substantial and visible result.

We have made a lot of progress in localising production of electronics and household appliances in Russia. More than 70 percent of the fridges, freezers and washing machines are produced at facilities opened since 2000, more than a third of which started operation since 2010. Televisions are assembled at new facilities, and around 50 percent of facilities producing gas stoves and water heaters are modern.

But in other engineering segments, not more than 10–15 percent of capacity has been modernised. This is progress, but it is slower than in the other sectors I mentioned.

Colleagues, we place our hopes on those who seek success, want to become more efficient, invest in modernising their equipment, produce competitive goods and conquer global markets. Companies ready to tackle these tasks will receive all possible support. As you know, we have created support mechanisms.

A number of projects using the Industry Development Fund’s instruments have already been launched in the engineering sector. The Government and the Industry Ministry come in for a lot of criticism, but this instrument works well. Let me remind you that we decided to top up the Fund’s capital by another 20 billion rubles. This is probably not enough either, but we will look at what else we can do. There is more that we can do. I will not go into the details now before the final decision has been taken.

Russian and foreign companies can benefit from long-term guarantees and preferential terms within the framework of special investment contracts. Let me add that these projects can be exempted from profit tax. The State Duma has already approved these legislative amendments.

We do have some key conditions here though, the first of which is to not just set up assembly operations, but also bring to Russia advanced technology, establish technological innovation centres here in Russia – this is what’s important.

The Technological Development Agency will provide practical assistance in acquiring new patents and know-how and concluding license agreements. It is being established at the initiative of businesses and will start working this summer.

Finally, on the whole we have formed a system for supporting exports. Yes, these are probably just the first steps, and they are not enough, but, importantly, the system is being established. At present, the Russian Export Centre reviews about 100 projects worth a total of about seven billion dollars.

In 2015 the exports of shipbuilding increased by 51 percent in value terms, radar and navigation equipment by 50 percent, special car manufacturing by 21 percent, and microelectronic components by 20 percent. This is an indisputable achievement.

I would like to define the key areas of our joint efforts in the near future, in the next few years.

First. It is critical to overcome excessive dependence on foreign technology. No doubt, mutual dependence cannot be avoided in the modern global world, but there are some key areas, and you know this better than anyone else, where excessive dependence must be eliminated.

I am referring to the manufacture of equipment and means of production. We must develop our own, modern machine tool building and continue its formation on the basis of cutting edge foreign and domestic developments.

This year the Industry Development Fund will launch a special programme for supporting the domestic machine tool building.

The federal budget has allocated 1.2 billion rubles for its implementation.

To participate in the programme on serial production of machine tools and equipment, it is necessary to have at least 30 percent of one’s own funds. The loan is granted for a term of up to seven years with five percent interest. The terms are certainly good. The scale of federal support is still small, but we will increase it.

Second, we need to pay particular attention to the radio-electronics industry, especially microelectronics, which, like the machine tool sector, is a basic sector that determines the entire engineering sector’s competitiveness. In this respect, I ask for immediate action to implement the decisions on developing demand for civilian microelectronics products.

In 2019, our industry will start the transition to best available techniques. This involves using equipment and waste treatment facilities that will considerably reduce environmental pollution.

We have discussed this issue before and we know that it can create an added burden, but we have no choice but to move in this direction, there is no other option. This is not only for the environment’s sake, but also for the sake of innovative development in industry itself. I ask the Ministry of Industry and Trade to draft a mechanism for supporting companies that introduce these technologies, and to develop instruments that will enable Russia to localise production of equipment that meets the demands of the best available techniques.

Moving on, like I said, state defence procurement orders will reach a peak next year and then orders will gradually decrease. I hope that the defence industry companies will use their accumulated potential for conversion, diversifying production, and will start to produce competitive, high-tech goods for the civilian sector. This is something you need to start thinking about today, and take the necessary steps.

I know that the Mechanical Engineers Union is actively engaged in identifying and promoting talented young people, young graduates. This is a very important area of our work together – creating platforms and opportunities for internships and students’ work experience, getting young people involved in resolving the practical tasks facing particular businesses today, and organising engineering competitions for schoolchildren. This openness and desire to cooperate is important too for our teenagers and youth, given the growing interest in engineering and design.

We have taken a big step forward in developing strong technology universities. There is more and more competition to get into these universities. I remember that only a few years ago, we lamented that young people weren’t applying to these universities and there was no competition to get into engineering. Now the situation has changed dramatically.

I would also like to point out that this year we will offer free education in engineering professions to 38,500 students. In all, about 300,000 students will be able to enrol in publicly funded university departments to study for engineering and technical professions.

We must now focus on improving the system of secondary vocational education. We must admit that our system of training workers is below the global standard, as the results of international skills competitions show. These competitions are an effective way to judge vocational skills and to help improve them. In this connection, I want to ask you to more actively participate in these skills events, both national and international ones. As you know, our national team will participate in the world championship.

Our common task is to ensure that at least half of Russian colleges provide vocational training in the most popular trades in keeping with the topmost requirements, which must be reflected in professional standards. We have been actively working with you towards this, and I hope to be able to carry on this cooperation.

One more thing. We are doing much to promote supplementary education in technical professions. Of course, we must find a way to improve instruction in Technology in general school, so that school pupils will be able to apply the basic knowledge they received in physics, chemistry and other subjects during this practical training.

Educational equipment is a vital element, although teaching skills are no less important. I am asking the Ministry of Education and Science to join forces with the Union of Mechanical Engineers and other professional associations to formulate their proposals. It is very important to combine your abilities with the potential of the state.

School and university students often make breakthrough projects such as robots, drones and micro spaceships. Our teenage teams demonstrate incredible skills and knowledge at skills championships. We should support them and help them attain superiority in their chosen trades and implement their boldest dreams. If we do this, our engineering industry will have a bright future, of which there is no doubt.

Thank you very much. I wish you successful work and promise for my part to continue working on this.

All the best. Thank you very much.