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Visit to Ufa Engine Industrial Association

January 24, 2018, Ufa

Vladimir Putin visited the United Engine Corporation – Ufa Engine Industrial Association.

The United Engine Corporation – Ufa Engine Industrial Association is primarily engaged in developing, manufacturing, maintaining and repairing turbojet engines under state defence procurement contracts and gas compressor units for Gazprom, as well as manufacturing and repairing helicopter equipment.

The President was shown products manufactured at the enterprise, including commercial products, and viewed an exhibit of advanced helicopter engine components.

The President also met with staff members of the United Engine Corporation – Ufa Engine Industrial Association and answered their questions.

* * *

President of Russia Vladimir Putin: Good afternoon.

Remark: We are very pleased that you have decided to visit our company. We have been waiting for this opportunity for a very long time.

Vladimir Putin: Thank you very much. I am also very pleased to see how the work is going.

I do not know if you have been told this, but today we want to analyse the diversification of defence industry enterprises like this one. It is necessary to gradually increase the output of dual-purpose and civilian products. This company is doing this but the process has been slow. The peak volume of defence orders will eventually decline and it is necessary to use the capacities to their full, including such high-tech capacities as yours. I looked at your machines; they are excellent and must keep working. It will be one of the discussion points today.

Ruslan Khalitov: Mr President, may I ask you a question?

Vladimir Putin: Of course.

Ruslan Khalitov: In 2013, I purchased a home under a mortgage with a 13.5 percent interest. It is a very high interest rate for our country. Even workers of the Ufa Engine Industrial Association can only get a discount rate of 12 percent. I would like to know when the mortgage rates will finally go down in Russia?

Vladimir Putin: They are going down all the time. When you took out a mortgage with 13 percent, the average rate, I think, was 15 percent and even higher.

The mean national rate was under 10 percent at the end of last year, while in Bashkortostan it was around 9.75 percent at the end of last year. Of course, it depends on specific circumstances. The interest rate in Bashkortostan is even lower than the mean national rate. But it needs to get lower, of course. And this is possible to achieve because of the current low inflation rate.

Our country has a record-low inflation, which gives the Central Bank an opportunity to lower the key rate, which leads to a decline in all other rates.

However, we are preparing special programmes on mortgage lending. You are a young man. Do you have kids?

Ruslan Khalitov: Yes, I do.

Vladimir Putin: How many?

Ruslan Khalitov: One.

Vladimir Putin: Once you have your second child…

Ruslan Khalitov: I hope so.

Vladimir Putin: Yes, I hope so too. Once you have your second child, you can take part in a programme whereby, as I have said recently, when a second or third child is born into a family, the mortgage rate will not exceed 6 percent, and all the rest will be subsidised by the state from the federal budget. The head of your republic told me that the region pays out a 300,000 ruble subsidy when a child is born.

Just think about it: the regional government gives you 300,000 rubles; and if you have a second child, you can benefit from a 6 percent interest rate on your mortgage loan for three years from the date of the loan, and the state will take care of the remaining interest. This term will be extended for another five years if a third child is born. So, this is basically targeted support to specific people, especially those who decide to have kids, which is the right thing to do.

Overall, the interest rate will come down as the economy improves and if the inflation rate stays low.

Ruslan Khalitov: Thank you.

Vladimir Putin: We will work on it.

Alexei Khairitdinov: My name is Alexei Khairitdinov, I am a mechanical engineer at the manufacturing and technology centre. I have been working at the plant for 12 years. We used to have a primary healthcare unit at the plant, but the law changed, and it was dismantled. Is there any possibility to restore it?

Vladimir Putin: The law does not prevent enterprises from having facilities of this kind on their premises. Companies simply seek to cut benefits, preferring to transfer all these responsibilities to the mandatory insurance system. During my flight to Ufa, I looked through some reference materials. It turned out that there is a problem with expanding the network of medical facilities in some districts of Ufa.

One of the options is to restore medical units at enterprises. I will make sure to raise this issue with the head of the republic. He is a very experienced and proactive person, and works quite effectively, so I will talk to him. If any help needed, from the federal budget or the Healthcare Ministry, we will provide it. Your republic has been showing positive economic results, exceeding the national average on many indicators. As a matter of principle, the regional government could do it on its own, but I will still talk to the head of the republic about it.

Alexei Khairitdinov: Thank you.

Roman Khristoforov: Section foreman Roman Khristoforov.

At present, the share of the defence industry during the formation of the state defence order is tending to decrease. In this connection, what are the prospects for our enterprises within the framework of the state defence order?

Vladimir Putin: As a matter of fact, there has been no decrease. This is a purely formal indicator. Previously, the situation was like this: we financed the Defence Ministry and, consequently, the Defence Ministry funded the enterprises within the framework of the current state defence order. As usual, the budget funds were not enough, so the Finance Ministry came up with the idea of issuing loans to the Defence Ministry (the money was transferred to enterprises like yours), promising to provide money regularly for the servicing and repayment of the loans.

But, as is often the case, the Finance Ministry failed to do this in due time. As a result, the Defence Ministry accumulated debts. Therefore, the year before last, we decided to clear these debts that the Defence Ministry had accumulated. In other words, instead of giving the Defence Ministry much money – and total spending exceeded 4 percent of GDP – we repaid the debts accumulated over the past years, so the figure in the overall structure of defence expenditure increased. In a one-off payment we cleared the loan accumulated by the state itself as the debt of the Defence Ministry.

Today, we have simply returned to stable, regular financing, as we intended earlier. So, on the whole, there has been no decrease, just as there was no sharp increase last year. Everything was carried out fairly smoothly. We will continue doing this in the future.

We have now adopted the armament programme and the state defence order until 2027, so everything is stable and regular. You will all have work, there is great demand for your products, for engines. You know, we have a whole chain: all Sukhoi jets use your engines, and the PAK FA (this is a front-line aviation complex) will use your engine, and so will aircraft of the fifth generation.

But it is necessary, as I already mentioned, to expand this chain to include civil aviation products, so that by the time the state defence order is fully implemented and there is no need for such production volumes any longer, the enterprises could carry on and the staff could keep their jobs. This is precisely what we will focus on today.

Viktor Bogomolov: My name is Viktor Bogomolov, and I have worked at the plant as a maintenance engineer since 1980.

Back in the Soviet times, we had a tradition of awarding enterprises with commemorative medals and orders. Our plant’s personnel was awarded two Orders of Lenin and the Order of the Red Banner of Labour for outstanding achievements. Today, our enterprise is among leaders as well. Can this tradition of awarding enterprises be revived?

Vladimir Putin: Let me just give you a hug. (Laughter)

As regards your question. This was common practice in the Soviet period, but it was terminated during that time. As far as I remember, in 1988 the Council of Ministers of the Soviet Union issued a resolution to abolish it. This happened after an analysis – at least of that period – revealed that all those orders and medals did not lead to increased labour efficiency at those enterprises and better results, so this practice was terminated.

Back in the Soviet era, a decision was made to award people for their personal achievements and success. We continue these efforts today. I think there was an executive order signed by Boris Yeltsin in 1994 that introduced individual awards.

The practice of providing incentives to personnel still continues, such as the President's letters of acknowledgement, certificates of appreciation, and so on. This still exists. Of course, we can revive the Soviet traditions that existed before 1988, but we have to consider whether it is reasonable.

Viktor Bogomolov: Maybe this is a matter of prestige.

Vladimir Putin: Agreed. Let's think about it.

Viktor Bogomolov: Thank you.

January 24, 2018, Ufa