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President of Russia Vladimir Putin: Your corporation is marking its 20^th anniversary in January.

Director General of Tactical Missiles Corporation Boris Obnosov: Exactly, it is right around the corner, on January 24. The 20 years since you signed the Executive Order creating our corporation passed so quickly.

Vladimir Putin: At the first stage, we succeeded in keeping the main businesses afloat as the core of the future corporation, and built from there.

Boris Obnosov: You are right.

The first Executive Order covered six enterprises, which enabled us to devise a corporate governance framework, since this was the first corporation of its kind, while Almaz-Antey came afterwards.

You issued several other executive orders on our corporation. Today, it is a conglomerate of 38 enterprises with 55,000 employees. We specialise in aircraft armaments, which make up almost 100 percent of our order book, including about 70 percent of naval armaments, and, in part, space weapons.

I believe that the corporation has succeeded in saving several enterprises, which would not have survived otherwise. Today, the average salary at our corporation is 65,000 rubles. Of course, it varies from region to region, since some joined the corporation earlier than others. Still, the average stands at 65,000 rubles, which enables us to deliver on our social mission quite effectively.

Mr President, I wanted to draw your attention to the fact that many of our production sites have redundant space. As we upgrade and retool our industrial facilities, we have repurposed some of them for civilian construction. In fact, this amounts to building social housing, since we sell these properties at face value.

For example, in Ryazan Region we have built an apartment block recently where a square metre costs 29,000 rubles. Considering that people earn 70,000 rubles per month, on average, it is quite understandable that… After all, their offices are just a two-minute walk from their new homes. This way people can make better use of their free time after work, and be more productive at work.

We have been building housing along the same lines in Orenburg, Korolyov, Reutov, and are about to finish building an apartment block in Perm. The pace of construction depends on the region. Of course, there is the matter of streamlining procedures related to repurposing areas for civilian construction, especially when we do this for our own employees. After all, the paperwork is quite a challenging process, so I will refrain from sharing with you how long it takes to do that.

Most importantly, over these years we have completely retrofitted and upgraded our facilities, thanks to the support from the state under comprehensive targeted programmes for the defence industry, as well as those carried out by the Ministry of Industry and Trade.

For example, you would not recognise the Detal Ural Design Bureau in Kamensk-Uralsk. This is our main production site for making target-seeking devices. It also makes altimeters for all our aircraft. I used to call this plant a bedding factory, but today I am proud of it. The average employee there is 37 years old, and people are eager to work there. This really makes me happy.

The same applies to Strela in Orenburg: 7,000 people work there, and the factory has been completely retooled and upgraded, and contributes to all our major projects you have been mentioning in your statements, so it is well known.

Speaking of our accomplishments over these years, I have to say that not only did we deliver on our social mission, but most importantly, we succeeded in enhancing our country’s defence capabilities by developing over 20 various types of weapons, which passed state trials and came into service.

We have quite a long order book for exports. A joint venture like BrahMos is probably known not only in Russia, but around the world. I do believe that this is a good example of two countries working together to each other’s benefit. This is what I can say about the current state of our corporation.

Vladimir Putin: What about research and development?

Boris Obnosov: As for research and development, we have been paying a lot of attention to training lately, which includes not only university students, but also schoolchildren. In fact, we have been doing this for the past decade, or even 15 years. Each of our enterprises works with several schools in its city of presence. We have a very strong department at the Moscow Aviation Institute, where we train students in our field of expertise. We also have an entire faculty in Reutov within the Bauman Moscow State Technical University, and several departments within this university. Every production facility, be it in Perm, Omsk or Orenburg, has its own department at universities and institutes of the corresponding region.

This has enabled us to attract many young engineers. I have to tell you that over the past five years we have noticed that young people have been eager to become engineers. This is my personal opinion, but I do know what I am talking about, because I also teach. This used to be our weakest spot, since in the 1990s, as you know, there was this major gap with the older generation, since many left during the years of perestroika and, should I say, the power vacuum. Today, people want to work for us, and importantly, there are still people around who can guide them. After all, we have been paying a lot of attention to keeping the family traditions alive.

Taking this opportunity, I would like to note that you visited us back in 2007, and I remember this meeting very well. If you find some time to spend with us, I would like to reiterate that by visiting our core production site you would be able to see for yourself what we have accomplished over the past 15 years.

We have upgraded our procurement and warehousing facilities. We used to have single-storey structures spread across our territory serving as our warehouses. They took up a lot of space, but now we brought them together within a single building with a floor space of 18,000 square metres. This is where we also installed our automated cutting equipment, which greatly improves labour efficiency.

This has enabled us to make it into the top 50 global defence enterprises for the past five years, according to the Defence News annual ranking. This means that considering our headcount we have maintained labour efficiency at a good level. In fact, there has been a consistent increase in output per employee. To give you a number, the annual figure is over 6,000,000 rubles per employee, which is quite a solid performance.

Vladimir Putin: Developing the civilian component is quite a challenge for you, but still, how are you doing in this regard?

Boris Obnosov: Indeed, I even joke sometimes, among other things, that making reusable missiles is quite a daunting task.

However, you may remember your visit to the MAKS Aviation and Space Salon two years ago, together with President Erdogan of Turkey. We were showing a human skeleton with joints made from composite materials. In fact, usually these joints are made from titanium, but it has a limited period of use, and it is harder to implant it into human tissue.

Today, we have certified this product, and are preparing a production facility for making these joints. We believe this to be a very promising market niche.

In addition to this, take the Avangard manufacturing site in Safonovo. They are also proactive in using composite materials. Today, we make several types of pipe for heating stations from composite materials to replace brick structures that wear out much faster. I believe this to be a very promising market.

At the Strela factory in Orenburg we created a corporation-level tooling centre. It already has many customers. This means that instead of importing tools, we make them in Russia and offer them two or three times cheaper compared to foreign tools. This is a very important line of business for us.

There are examples of this kind for every enterprise within our corporation.

We have made significant progress on medical equipment, as I have already said.

Today, we are exploring opportunities for making civilian drones, among other things, to use them as taxis and for deliveries, including the delivery of goods. In all, I believe that by 2025, civilian goods will make up 30, or rather 28 percent of our portfolio. And when I promise something, I always make sure that I can actually deliver on it.

Vladimir Putin: Very well.

Thank you very much.