26 february 2013

Meeting on the prospects of aircraft engine manufacturing

Transcript of the beginning of the meeting:

Dmitry Medvedev: We have already had a good discussion, but I’d still like to say a few words. We are talking about the prospects of aircraft engine manufacturing. Aircraft manufacturing is one of our fundamental industries. All those present know that it integrates the products of very diverse industries and promotes R&D in metallurgy, the machine-tool industry, electronics and petrochemistry – practically in all areas. It also yields long-term orders and this is why our Government is paying so much attention to this industry’s development. This is why I have come to see you and hold this meeting.

The demand for quality aircraft equipment is constantly growing. The international market is developing and we are setting our own goals. The Policy Priorities of the Government to 2018 have set the following tasks for our aircraft industry: to double revenues from the sale of aircraft equipment by 2018 and to supply the world and domestic market with more than 230 aircraft and over 400 helicopters.

These are our goals for the next few years. Most important, we cannot miss the opportunity we have today. We must maintain our status as a leading aviation power.  They rightly say that the engine is the heart of the airplane – global market demand largely depends on the engine. We used to have problems with this, and not all of them have been resolved. However, these problems are not as serious as in the 1990s. Therefore, the design and development of fifth-generation engines has not reached the same stage as in some foreign countries. Obviously, our foreign competitors have launched serial production of engines. Again, we had been in a complicated situation – the lack of funding in the 1990s and the abrupt decline in orders for defence and civilian engines seriously affected the sector. In fact, the whole sector could have gone bankrupt but that didn’t happen. In 2008, the Government made a key decision to create the United Engine-Building Corporation. State support significantly increased. During the last five years (between 2008 and 2012) engine-building enterprises have received better funding: the Government allocated 71 billion roubles and state guarantees for almost 43 billion roubles. 

The state programme Aviation Industry Development, 2013-2025, allocates 70 billion roubles in federal funds for updating production capacities, for adopting innovative technology and for research and development. And this figure does not include the funds allocated under the state programme Development of the Defence Industry Complex. We are talking about large amounts here.

Of course, many problems have built up over time. In 2012 the United Engine-Building Corporation alone was over 160 billion roubles in debt. There are problems with labour productivity, excessive production facilities, outdated equipment and the lack of personnel, of course. Many enterprises face these problems, and I think we should discuss them today.  

I’d like to draw your attention to some other points. First, the sector has started to emerge from its systemic crisis. The formation of the corporation uniting main aircraft engine plants is in the final stages. This process is not simple. However, last year the United Engine-Building Corporation produced over 1,000 new engines and repaired 862 engines.

Second, and this is very important, it is necessary to restructure and diversify the production itself, to increase the share of engines for civil aviation, launch production of non-specific products. I mean gas turbine power plants for the energy sector, for shipbuilding, gas-pipeline networks, as we have just discussed. Cooperation is very important; however, we should reduce dependence on imported materials and components. We should seek 100% localisation of production. I know of such examples – we have just discussed this – such as the VK-2500 helicopter engine.

Fourth, research and development investment. The peculiarity here is that it generally takes much longer to create an engine than other components of an aircraft – this is something we all need to keep in mind. Moreover, to equip a new airplane with an engine it is necessary to work on all the necessary breakthrough technical solutions and technology – we have discussed this today too.  

And finally, personnel. I will not say anything in this regard. I expect that you yourselves will tell me what should be done to develop our sector and to make it globally competitive.

That is all, let’s hear the presentations.


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