Economy

Russia: Manufacturers face bleak investment landscape

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Statistics from Gardner Research’s World Machine-Tool Output and Consumption Survey estimate that Russia produced machine tools to the value of $234.4m in 2014, up from $210.9m in 2013. But the country remains a far bigger consumer of machine tools – the 7th largest in the world behind China, the US, Germany, Japan, South Korea and Italy – spending just over $2bn on equipment in 2013 and 2014 though this is predicted to fall to $1.7bn in 2015. Russia was also the fourth biggest importer of machine tools in 2013/2014, bringing in equipment to the value of roughly $1.9bn in both years. But it exported just $73m worth of components in 2014, down from $79m in 2013, with imported machine tools representing 92% of total domestic consumption, according to Gardner Research.

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The Russian government appears to be concerned about the country’s continuing demise as a domestic producer of machine tools, and is currently taking action to reverse the decline by encouraging state owned businesses to invest in home produced machinery and funding research and development into new technology. Russia has a long tradition of scientific excellence, but performs worse than other Organisation for Economic Co-operation and Development (OECD) countries in terms of scientific output and security patents. Companies do not often see technological innovation as part of their business model, an attitude the Moscow administration seems keen to change.

Government subsidies to boost output

The Russian Ministry of Industry and Trade approved a special program devoted to the development of the machine tool and tool-making industry in April 2014, for example, pledging over 15m rubles (€26m) of government subsidies between 2014 and 2016 towards its stated aim of tripling the share of Russian-produced numerical control (NC) machines from 10% to 33% by 2020.

Speaking at the opening of the Metalloobrabotka machine tool industry exhibition held in Moscow in June 2014, the Russian Federation Minister of Industry and Trade Denis Manturov said the money would go towards upgrading national enterprises and increasing the competitiveness of the Russian machine tool industry by encouraging the development of new types of products.

Much of the finance is earmarked for the RT-Stankoinstrument Holding Company (part of the government owned Rostec State Corporation) to fund the manufacture of over 1,000 high-performance 5-axis machines by the end of 2016, said Manturov, who forecast that Russian enterprises will require machining equipment worth 615bn Rubles (€10.5bn) during the 2014-2020 period. The Russian government is putting special emphasis on supplying components to the aviation industry, with RT-Stankoinstrument additionally signing co-operation agreements with the United Aircraft Corporation (UAC) and United Engine Corporation.

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