2 december 2008

Prime Minister Vladimir Putin chaired a meeting at the Research and Production Association Saturn

Vladimir Putin

Meeting at the Research and Production Association Saturn

"Saturn is one of the leaders of the domestic aviation sector, and is playing a major part in implementing such projects as the development of the SuperJet-100 regional airliner, and a promising fifth generation fighter."

Transcript of the start of the meeting:

Vladimir Putin: Good afternoon, colleagues.

Last Friday I met with Governor of the Yaroslavl Region Sergei Vakhrukov. He briefly told me about the problems in the region's economy and in this particular company where we are now.

I would like him to say a few words about his concerns. Please, go ahead.

Sergei Vakhrukov: Thank you. The Yaroslavl Region and other constituent entities have certain problems, and as a Governor I'm naturally very concerned about them. This is why during our previous meeting I mentioned a number of problems that are typical for our region.

I would like to reiterate that on the whole the situation is stable. We are closely monitoring it but certain issues which require joint measures must be discussed, and we can change this situation by concerted effort.

The Research and Production Association Saturn is a vivid example. It is one of the biggest companies in the region. It determines the economy not only of this region but also of the entire Russian Federation in certain positions. It manufactures unique products for a major segment of both civilian and military equipment. The current situation at Saturn may have serious consequences.

Saturn has taken out big loans to develop production and launch new projects, and has used the money very efficiently. But in the current difficult financial situation, it cannot continue taking out loans, to get extra money. It cannot complete many of the projects it has launched. This is reducing the number of contracts and jobs. I was very concerned that it has sent to the employment service an application to cut 4,000 jobs. This is a huge figure for Saturn, for Rybinsk, and the region as a whole.

The situation is still under control. If we take measures which would allow the association to improve its financial position and to receive enough contracts, I am convinced that we can develop it further, and considerably increase rather than reduce the number of jobs.

Moreover, Saturn is the local economic mainstay. An enormous part of the social sphere depends on it. It provides heat, water, and other utilities for social institutions, and the bigger part of the city of Rybinsk. Therefore, it is very important to help it survive. I am confident that the measures we have already discussed, and those which we talked about while visiting the association, will be adopted. We are able to bring it to a new level.

You visited Saturn eight years ago. It was a serious stage in its development; it was launching new production lines. Today, you can see the results. Your current visit will also be a landmark for Saturn.

Vladimir Putin: You have told me about this association, and also about Avtodizel, which we will discuss later.

I would like to say straight away that I support the Governor's concern. These are major companies, and they are vital for the economy of the region and the country as a whole. These are high-tech machine-building enterprises, and this is a very important sphere, something we have been trying to develop with greater or lesser success in the last few years.

It is particularly important that, as the Governor said, social welfare of tens of thousands of people directly depends on the stable work of these companies, in particular, Saturn, where we are now. Tens of thousands of people. This is no exaggeration if you consider the number of jobs in the allied industries.

After the meeting in Moscow, I gave a number of instructions, and all those, or many of those colleagues present now in the hall took part in drafting the required stabilisation measures. Let us sum up some results today, seal the agreements, and map out further steps which would not only resolve the predicament but will also guarantee the association's effective development.

Saturn is one of the leaders of the domestic aviation sector, and is playing a major part in implementing such projects as the development of the SuperJet-100 regional airliner, and a promising fifth generation fighter.

How many people are working here now? Fifteen thousand?

Yury Lastochkin: 19,000 all in all, but it is 13,000 now.

Vladimir Putin: 13,000. If the application is for 4,000, it is almost one third, 29%.

Today, Saturn is having problems, as we heard earlier. Judging by the documented results which I have seen today, I agree with the general assessment, the association is making headway.

At the same time, it is clear that the association's recent financial policy has been rather risky. As a result, it found itself unable to service interest on loans or to pay them off on time, especially in the current unstable financial situation. This should also be mentioned. This is true. This is a difficult task in the current conditions, and not only for Saturn but also for other companies, although there were problems here before as well.

As a result, implementation of vital projects has been jeopardised. One of them deals with the testing of the SuperJet airliner with Saturn's SAM-146 engines. There is also a threat of personnel lay-offs, as the Governor has already mentioned.

Obviously, it will be very difficult, if not impossible, to resolve these problems without the state's participation. It is also important for public companies with experience in high-tech machine building to increase their contribution to Saturn's development. In this context, the owners have agreed to sell almost all shares of the enterprise to the Oboronprom State Corporation. Packages of shares of the private owners will be purchased on a commercial basis, and at market prices. I would like to note that under the agreement, the current managers will keep their jobs. They have earned the reputation of good professionals, and I hope that this work will continue effectively.

I would like Deputy Minister of Industry and Trade Denis Manturov to report about this in more detail.

Furthermore, a package of measures has been drafted to support Saturn.

First, its debts will be refinanced. Our Foreign Trade Bank will spend about 10 billion roubles to this end. Its President Andrei Kostin will tell us about the work on the decisions required to refinance the company. I would also like to ask Mr Manturov to say when these additional development resources will be required and how much.

I have just talked with Yury Lastochkin, and he believes that additional resources will be needed for the full implementation of the projects, and I agree with him.

Second, the Rosnanotekh Corporation (a state-run nanotechnology corporation) is prepared to implement together with Saturn a project to produce modern nanomaterials and products that incorporate them. As far as I understood from what the management told me, this work has been going on for some time with the Kurchatov Institute's involvement, and substantial progress has already been made. The total investment will be one billion roubles, half of which will be contributed by Rosnanotekh. Mr Chubais will tell us about this in more detail.

Finally, we should secure the sales of Saturn's produce to its key customers - the Defence Ministry, airline companies, the United Aircraft Building Corporation, the power industry, and Gazprom. All top managers of these companies are present here, and I would ask them to report in more detail on progress in this sphere.

Let's start.

I want to ask Mr Subbotin, president of the Sukhoi Civil Aircraft, to tell us about the development of production cooperation with Saturn on the SuperJet project, and then I would like those responsible for the other areas I indicated to speak one after another.