3 april 2009

Prime Minister Vladimir Putin at a meeting with Vladimir Yakunin, President of Russian Railways

Prime Minister Vladimir Putin and President of Russian Railways Vladimir Yakunin discussed the situation in the sector of rail cargo transportation and the operation of the rail monopoly, RZD.
Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon. Mr Yakunin, the volume of transportation has always been one of the most reliable indicators of economic health. Will you report on loading and shipment figures and the situation in the industry as a whole, please?

Vladimir Yakunin: I remember the November meetings of the Government, which you chaired, when you supported the need to analyse the situation in the rail sector with a view to the future.
I can tell you that the Government decision is fully in keeping with the current dynamics. We expect a fall of 19% this year, which is a realistic figure given the current crisis. We are keeping within these parameters, although the fall in the first quarter will be lower, just as we expected. However, the annual figure will be close to the target.

What do we see now? Unfortunately, long-term contracts between metallurgist and, say, Chinese consumers have expired, and so the volume of non-ferrous shipping has declined. The coal sector is working in a stable regime, although they also registered a decline, but shipping to the eastern borders is proceeding quite effectively. The coal sector is ahead of the other sectors in this respect.

As for the automotive industry, I can tell you - I have prepared for this meeting well - that we are now shipping automobiles by rail under an agreement with AvtoVAZ. I respect the Government's decision, because we were not involved in this type of transportation before

Vladimir Putin: Have you lowered tariffs?

Vladimir Yakunin: Tariffs are not the only thing that matters. We have come to an agreement and our subsidiary is now fully in charge of the auto giant's shipments. Consequently, the volume of vehicle transportation has grown dramatically, which I think is a notable fact amid the current downturn. What I mean is, the joint operation of railways and producers can yield certain results even in these conditions.

We cannot say that the economic situation has stabilised; this conclusion can be made on the basis of my regular reports to the Ministry of Economic Development and to you. We are connected to the global markets.

Vladimir Putin: Yes, but the specific measures you are taking in this situation to support not only the sector as a whole but also its individual segments are very important. I am referring to the rolling stock, etc. We have discussed this.

Vladimir Yakunin: Mr Prime Minister, I want to report that we fulfilled your instructions to visit the site in question - the rail car manufacturing plant in Tver. We held a meeting there yesterday. In effect, it was an enlarged meeting of the plant's board and the management of Russian Railways. We did not stint criticism. Frankly speaking, I liked the report made by the director and what the chairman of the Trade Union Committee said.

Some people only talk about what others must do, but they forget what they must do. But in Tver I saw a balanced attitude. We agreed to prevent cuts. We now have to make unpleasant decisions on cutting investment allocations. But we have decided that we will not cut investment in the rolling stock, the RIC type cars, which we should be able to use in the foreign rail network.

We have found a way to allocate more than 3.2 billion roubles to ensure that the Tver plant will continue working. This will not solve all of our problems, but the attitude of the plant's workers and managers can be described as constructive. For example, we spoke not only about the money allocated by the Government or RZD; we spoke also about the need to cut outlays. In terms of car production, the cost of each car contains a share allocated for the wage fund. But if outlays are cut while the wage fund remains intact, it means that there will be a share of the wage fund in the next car, which we will be able to buy. We like this approach.

Vladimir Putin: How much money did you say you found?

Vladimir Yakunin: More than 3.2 billion roubles.

Vladimir Putin: Including allocations for repair, or just for new technologies?

Vladimir Yakunin: No, this concerns only new technologies, because we hardly ever do repair jobs.

Vladimir Putin: Last time you said you were prepared to place repair orders worth 1.9 billion roubles at the plant.

Vladimir Yakunin: Mr Prime Minister, if you find the time to visit the plant, you will see that they have cutting-edge equipment. Fore example, they have sheet metal laser cutting equipment. By the way, they showed me a double deck rail car, the first one in Russia.

If you find the time to visit the plant, I think that its workers and we as the co-owners of Transmashholding, will be happy to welcome you there and to show you what is going on there.

The situation in the industries is not as bad as some people portray it. Yes, it would be better with more money, but at least we will not be ashamed to show the Prime Minister around the plant, that's for sure.

Vladimir Putin: Thank you, I will come.

Vladimir Yakunin: Can I tell the workers that you have accepted our invitation?

Vladimir Putin: Yes, you can.