18 june 2010

Prime Minister Vladimir Putin chairs a meeting in Rybinsk to discuss the production of next-generation aircraft engines and energy equipment at the Saturn Research & Development Centre

Vladimir Putin

At a meeting in Rybinsk to discuss the production of next-generation aircraft engines and energy equipment at the Saturn Research & Development Centre

“All social commitments should be fulfilled in full … I’ve said it many times before and I’ll say it again: valuable human resources should not be squandered. These people will be needed to increase production.”

Prime Minister Putin's introductory remarks:

Good afternoon, ladies and gentlemen,

I met with you here on December 2, 2008, at the peak of the crisis, when the recession was growing worse and the future was uncertain. At that time the government made a series of decisions to support engine production, and one company in particular: the Saturn Research & Development Centre.

Today we'll review how the directives we came up with at that time were carried out, the current state of the company and our plans for the future.

There is no need to say that Saturn plays a critical role in this region's economy, employing thousands of people. It fulfils important government orders, including for the defence industry.

In 2008 the company faced serious financial and economic problems, and the government had to enact a series of anti-recessionary measures promptly to ensure its stable operation.

The government increased the company's authorised capital by over five billion roubles and provided another 10 billion roubles in state guarantees for the loans that the company borrowed from VTB both before and after the government intervention.

These measures allowed the company to reschedule its debts and settle debts worth 6.5 billion roubles.

We refinanced 7.7 billion roubles in company debt. As a result, the share of short-term loans in its portfolio was decreased from 66% to 17%. In addition, we allotted 1.1 billion roubles to subsidise interest rates on loans.

The government also helped Saturn increase demand for its products: Saturn Gas Turbines and Gazprom entered into long-term agreements with our help. Incidentally, the Saturn management team brought up this issue today, expressing their appreciation of Gazprom's assistance. This support was worth 1.8 billion roubles.

Saturn has launched a joint programme with Oboronprom to modernise its production facilities and cut costs.

In 2009 the company saved over 300 million roubles, and is expected to save another 2.2 billion roubles in 2010.

These efforts have brought about very positive results.

These efforts have brought about very positive results, which have given this company room to breathe.

The main thing is that bankruptcy was prevented, strategic production did not come to a halt and commitments to the key contractors were fulfilled, including commitments to the Defence Ministry, the Sukhoi Civil Aircraft Company and our foreign partners.

The production facility's profits increased by more than 10% last year. The plant's current contracts are worth 26 billion roubles, and contracts worth another 29 billion roubles are now being processed.

Restoring the stable operation of such a major company made it possible to avoid a crisis at the regional labour market.

I'd like to emphasise that any streamlining that results in letting employees go must be well thought out. Therefore, I expect a separate report on the steps that are being taken today to protect skilled jobs and good professionals, and organise retraining and job placement services.

All social commitments should be fulfilled in full. I'd like to draw the attention of the company's top managers and the regional and municipal authorities to this.

I've said it many times before and I'll say it again: valuable human resources should not be squandered. These people will be needed to increase production, especially now that Saturn is working on a whole number of promising projects in high-tech engineering. This is radically changing its line products, which naturally requires new financial, production and technological capabilities. And, as I've already said, this requires human resources.

One of the most promising and in demand projects for Saturn is the production of Superjet-100 engines. The certification of the engine is almost complete, and Saturn will have to ensure it has the capabilities for production. How many are being produced? Twelve?

Answer: Thirteen.

Vladimir Putin: You should be producing 140 by 2014. This is the Sukhoi Company's target for the Superjet.

This is a priority project for us, and this fact should be reflected in the 2011-2012 budget. We need to assess the real needs of the facility and set aside the necessary funds.

In addition, we should consider the proposal of the Ministry of Industry and Trade. They suggested that part of the funds slated for the programme to develop aircraft manufacturing should be also be distributed for the production of SaM 146 engines this year. The resource requirements have been set forth in relevant documents. We will discuss this today. Needless to say, diversifying production and developing promising market niches are major factors in making the company more stable.

This year Saturn opened a facility on its premises to produce carbide tools with nano-coating. Let me say that this has given us a very good impression. In eight months they have built a very modern production technology. This is advanced technology in action.

In 2010 the company plans to produce more than 60,000 of these high-tech tools. Let's discuss today how the plant is going to reach its design capacity of 120,000 units per year, and whether this is a problem here. But the problem is clear: if they produce more, the tools will become cheaper.

Furthermore, Saturn's subsidiary Saturn-Gazovye Turbiny is carrying out a project to establish an "energy park". It will produce energy and gas-pumping equipment that can be used in low-energy fields like housing, utilities and for oil and gas companies.

This is a very interesting, promising field, primarily with regard to energy effectiveness and saving. Here we need to figure out the sales potential of developing partnerships with mining companies and interested regions. This requires support, of course. Let's talk about this as well. The federal departments concerned will be ready to provide this support.

And one more issue that I suggest we discuss today. I've already spoken about the measures that made it possible to stabilise the company's financial position. At the same time Saturn's loan portfolio is still big - about 23 billion roubles. Debt payments amount to 35% of the company's returns. This is comparable to the wages and salaries of all employees. Therefore, it is necessary to meet with experts from the company to explore and propose an optimal solution to pay off this company's debt.