Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon.

We have gathered here in Kolomna today to discuss the problems of the defence industry. But since I am here I have asked you to join me to discuss the issues connected with the work of the Kolomna Diesel Locomotive Plant.

Some members of your team have sent me questions and requests to support your enterprise. Obviously, these are hard times for everyone, but it has been especially tough for transport machine-builders. I am referring to the problems the transport industry is facing because of the falling volume of cargo shipment. The volume of carriage has dropped substantially, which means that Russian Railways (RZhD), our main railway carrier, our main railway company, has seen a fall in its revenues.

In this connection opportunities regarding investments and contracts have diminished. From my data - I looked at this information before coming here - 1,147 people have left your enterprise or retired during 2009. Only approximately 260 people were laid off as part of restructuring.

Kolomna is not a single industry town and 260 people in the Moscow Region, in Kolomna, do not create a critical mass. Nevertheless, it is our duty to think about every single person, there is no doubt about it. That is my first point.

Now to my second point: The order book for 2009 has shrunk indeed, but it is still larger than in 2007, and 2007 was quite a good year, in physical terms. As for the financial aspect of the order, it is 32% larger than in 2007.

Nevertheless let me repeat that I have called you in to discuss this topic. And first of all I would like to give the floor to your trade union leader. I would like to hear your assessment.

Vladimir Kobzev (chairman of the Kolomensky Zavod trade union committee): First of all, I would like to say that the trade union organisation at the Kolomensky Zavod is the main engineering workers' union with a membership of 5,447. It is a powerful union. You have been addressed by a small group of the plant's workers, about twenty-five people.

Of course, the plant is going through hard times. All of us, including the team here and the city authorities, are extremely concerned about the fate of our plant. That is clear.

Of course, we need jobs. People must work. The plant must survive. We should above all retain our professional workforce, highly skilled engineers and workers alike.

Of course, we are aware that we have some orders at the moment. But that is certainly not enough to engage the workforce fully. After arduous and prolonged negotiations with the employer it was decided to downsize the workforce again. We have decided that 1,200 jobs are to be cut next year. That will enable the remaining workers involved in production to switch from a short week of 2-3 days to at least 4-5 days. It will enable us to raise wages for the workers who will stay.

What does the trade union do to protect the people who are laid off? We will take a stand in order to uphold labour legislation. That's the first thing.

Our second step is that we are negotiating with the employer on additional compensation for the people who have been laid off and have been unable to find employment for some time now. It is our duty to support them. We should keep that situation under control. We are committed to this.

The trade union committee has submitted several proposals to the employer's administration. The proposals are now under consideration. Some people, though not all, will get some help. Naturally, we are concerned to protect the rights of trade union members.

Another thing: We have assumed responsibility for the employment of the laid off personnel. How do we go about it? The week before last the Moscow Region Minister of Industry, Mr Kozyrev, conducted a meeting. We, the trade union, have agreed with the Moscow Region Employment Centre and the plant management to compare the vacancies available in the region with the redundancy statistics at our plant. We will work to find jobs for them.

We are currently working with the Kolomna Employment Centre. I have accurate information on the vacancies and on how many people will be laid off. We will seek to find jobs for them too. In other words, we will do our best to defuse the situation.

Vladimir Putin: I see.

Vladimir Kobzev: There are some promising ideas. I think the management of the holding will tell you about them. For our part, from the part of the trade union, I believe a difficult step has been taken, but we are aware of our responsibility and we will try to keep track of every staff member who has been laid off.

Vladimir Putin: I was just about to comment on this. I have not met with those who wrote the letter, but make no mistake, we are certainly going to listen to everyone. However, when it comes to determining the fate of the enterprise and helping people we will have a direct dialogue with the trade unions. We will work with you.

Vladimir Kobzev: Thank you.

Vladimir Putin: We will listen to everyone, but we will work with you. I want to be clear about it. We will listen to all sorts of spontaneous groups, but we should conduct an active dialogue with the main worker organisations such as yours. That's number one.

Number two. It is crucial to comply with labour laws. That is a matter of principle. We will do all we can to help you so that people's rights are fully respected and exercised. That's number two.

Number three. You have mentioned streamlining, and as far as I gather from the documents, this is not connected with the crisis. It is not connected with the crisis phenomena in our economy or in the transport machine-building. It is connected with the long-term plans of the company's development and the need to upgrade it technologically, to make its products more competitive and to raise the wages of the people who will end up working at the enterprise. Ultimately the aim is to make it more viable and competitive in the market.

I repeat, this is not connected with the crisis. This is a normal process in the economy and in every individual enterprise.

I very much hope that the management of the holding will work together with the trade union and with the support of the Moscow Region authorities. Both regional and federal authorities will be attentive to the social issues that arise in the process of tackling such tasks, the issues that involve people's lives.

Mr Gromov (Boris Gromov, Governor of the Moscow Region) will have something to say about it. As far as I know, the holding has over the past years invested more than 1 billion roubles in updating production facilities. But that is not enough. Further improvement and additional investments are needed. They must be effective. I repeat, this has to do with the current economic policy of the enterprise. But of course, everything should be decided through dialogue with the trade unions.

Mr Gromov, could you tell us about the social aspect, please?

Boris Gromov: Thank you. We have a good long-standing working relationship with the holding, practically from the first day it was formed when the plant became part of the holding.

You have said that last year almost 1,200 people have left the plant.

Vladimir Putin: It was this year. 1,147.

Boris Gromov: Yes, this year. But they did not leave because their jobs were cut or for some other reason, they quit mainly of their own accord. As you have said only 245 people were dismissed as part of job cuts.

Next year it will be 1,200 people, one of the largest job cuts at any single enterprise in the region. One has to bear in mind that in Kolomna today there are 600 vacancies and in the region as a whole there are 44,000 vacancies. Part of them - I cannot say exactly how big a part - but certainly a large part of them are within a short distance from Kolomna. And secondly, one has to bear in mind that we constantly work directly with all the enterprises.

The trade union chief has already said that our Ministry is constantly working with this plant. Of course, we will work with every single individual, we will help them, naturally, in order to make things easier for the people who need help, make things dramatically easier for them.

Of course, we will do everything, working together with the holding, not to leave a single person in the lurch.

Vladimir Putin: Go ahead, please (addressing Andrei Bokarev).

Andrei Bokarev, Chairman of the Board of Directors, President of Transmashholding: I would like to draw attention of all those present to the fact that our holding is very much engaged with the fate of our workers at each of our enterprises. In the Moscow Region and in other regions, since we seek to optimise production, improve the labour consumption indicator, output per worker, since we want to bring wages to a normal level, the number of people engaged in the output of a certain amount of production must be optimal. Naturally we pursue modernisation, restructuring, so we have to make job cuts.

At the same time there are joint programmes with the employment fund in every region to trace the fate of every person and to find new jobs for them. We have some potential within the holding. However, we must move forward and work towards a new product chain that our main customer, Russian Railways, needs if we are to have any future. On the whole, the workers of every plant, including the Kolomna plant, are aware of it. Today, if we continue to produce old-generation diesel engines, in three years' time we will not be producing anything because nobody is going to need these products.

We have serious plans for intersectoral cooperation involving our holding company, Energomash, RZhD and Oboronprom. We know that we are not the only company that needs an industrial diesel engine. All the industries I mentioned need it. We are aware that we are lagging far behind and that there are ways to create a new generation diesel. We have done some serious progress on that, and we have been working together with the Ministry of Industry and Energy and the Ministry of Economic Development.

I think there will be more clarity regarding specific figures over the next three months. We will have a programme that will enable us to move forward. I am confident that this plant has good prospects and there is no cause for concern.

Hard times happen, but that is just economics.

Vladimir Putin: I understand. Mr Kobzev, I see that the rumours about the demise of the enterprise are grossly exaggerated.

Vladimir Kobzev: Most definitely.

Vladimir Putin: This is what I wanted to be clear about in the first place. And one more thing. We cannot and must not interfere in the current economic policy of the shareholders, especially when it comes to reconstruction and modernisation of the enterprise. But we are always on your side when it comes to complying with labour legislation and we will support you in every way. We will also support the Moscow Region authorities on social issues. Whatever happens in connection with the modernisation of the enterprise not a single person should be left out of sight.

As for future contracts, the orders next year will be roughly at the same level as in 2009. In 2008 the figure was 7,380 million roubles and this year it is 6,900 million roubles.

The order for next year will be worth approximately 6.5-7 billion roubles. The management of the holding should seal it in a contract with RZhD in the shortest possible time.