Russian Shipbuilding Industry - 1990s
The shipbuilding industry was traditionally one of the leading defense industries in Russia. In the 1990s, for a number of objective and subjective reasons there occurred a dramatic slump in the shipbuilding industry and in all other areas of the economy.
By the late 1990s the Russian Navy continued modest investments in new construction, though some pessimists feared that by 2000 the reduction in Russia's shipbuilding capacity could become irreversible. In 1996 the nuclear-powered cruiser Petr Velikiy (Peter the Great) was launched at St. Petersburg after eight years under construction; assigned to the Pacific Fleet, the 28,000-ton vessel was armed with guided missiles designed to destroy enemy aircraft carriers. Experts rated the Petr Velikiy the most powerful cruiser in the world. The Russian Navy has also completed several new submarines of the third generation OSCAR SSGN and AKULA SSN classes.
In mid-1996 the Navy scheduled four submarines for production, including one upgraded addition to its existing fleet of Akula-class vessels and three of the new Severodvinsk class, which were expected to go into service in 2000. The Severodvinsk is a state-of-the art submarine that allegedly is so quiet that it eliminates the United States technical lead in this area, and it is armed with the new 650mm Shkval rocket that travels at 200 knots underwater. It also begun construction of its fourth generation LADA SS and BOREY SSBN class submarines.
Since the beginning of the defense conversion process, state military orders had been reduced from 60 percent of total production to 5-10 percent, and Russian shipbuilders sought new markets and expanded existing product lines.
In the mid-1990s the Council of the Ministry of Economy of Russia decided to create a modern shipbuilding complex. The investment project was included in the State program for the conversion and restructuring of the defense industry of the Russian Federation. This program, which is a Russian analog to the US "Moritex" program, was called "Russian Shipyards" and received presidential status. The program envisioned the merging of the three St. Petersburg shipyards (Baltiysky Zavod, Severnaya Verf and Admiralty Verf), and the subsequent creation a joint ship-assembly complex in the form of a joint-stock industrial corporation. The project of unifying the yard would cost approximately $650 million. Of this amount, 30% would go for the transfer of a number of machine building workshops to other enterprises in St. Petersburg and to the redevelopment of 150 Ha of freed property in the center of the city. It remained unclear at the time how the project would be financed.
According to some estimates, Russia needed an annual civilian and military fleet renewal of 150-200 ships, requiring an investment of $2.5-3.5 billion. However, Russian ship-owners did not have money to finance the construction of new vessels.
The financial meltdown of August 1998 further deepened the crisis of state finances and the political leadership vacuum. The momentum of military reform slowed, and nailed shut the coffin on Yeltsin's Russian Armed Forces.
In 1999 only 9 percent of the entire state defense order was allocated for the purchase of arms and military equipment. Its subsequent growth was minimal. In Soviet times, by contrast, the order for the navy had been as high as 25 percent. Faced by tough western and eastern competition, Russia was pressured to introduce new technology and construction practices in order to maintain its competitiveness.
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