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Russian Shipbuilding - 2000-2007

Russia possessed 40 shipyards; however only seventeen among them had the capacity to build vessels greater than 122 meters in length and only five among them has the capacity to build large ocean ships. St. Petersburg is the most important center of shipbuilding in Russia since three of the country's main shipyards are located there, as well as many supporting industries (machine building, compressor manufacturing industry, ship design bureaus etc.).

Russian shipyards were not able to compete with the shipyards of South Korea, China, Germany and other European countries, where during recent years modern robotic shipbuilding technologies were implemented. Russia fell behind these countries in terms of level of production management, technology, construction period and prime costs. Due to this, Russia was threatened with the possibility that it could lose its competitiveness unless the shipyards were modernized. Modernization of each shipyard during the time period required no less then $500-600 million. According to experts, robotics and new technologies would not have made the shipyards highly profitable if they were installed in old yards.

Positive dynamics in the industry's development had been observed since the year 2000. Fixed assets were being renewed. Such plants as Sevmashpredpriyatiye and Baltiisky Zavod were carrying out reconstruction and retooling. In shipbuilding it wsa possible to maintain all the basic technologies that leading countries possess. Such arms programs as there were in the Soviet Union, when more than 10 nuclear-powered submarines used to be annually made, are out of the question. Russia must have a navy which will ensure its interests in the World Ocean with regard to the real state of the country's economy. The President signed a naval doctrine, laying the groundwork principles for maritime activities.

There were some positive trends in the introduction of Russian technologies into world markets. Thus, in 2000 deliveries of naval ships accounted for about 27 percent of the total volume. These figures were planned to be surpassed. There were prospects for submarines, high speed boats and other vessels, in particular air-cushion ships. Supplied to Greece, they received a high assessment. In 2001 Russia helped to build a complex in India that would help to make a breakthrough in civilian ship design.

It was important not merely to sell equipment, but also to back it with life-cycle services, both for foreign customers and for the Navy of Russia. The industry is ready to accompany each ship during its entire life cycle, including with the guaranteed supply of spare parts, tools and accessories. At the same time, in spite of the insufficient financing, by re-equipping production was able to organize the production of new ship-borne accumulators with an increased cycle of operation.

The Russian shipyards traditionally specialized on warship construction, and civil ships had been built abroad. As the result, in Russia production costs are high, the production cycle is long, mechanization is low, labor intensity is high. As the result, 44% of vessels are built against the state defense order, and 33% more are accounted for by the military ships' export.

The Russian shipbuilding suffered from a shortage of orders. By 2006 a total of 95% of the total tonnage of civil vessels built over the previous decade by the orders of Russian ship-owners, had been built abroad. Only 5% were built in Russia. At that, civil goods' production was decreasing. For the period January-October 2006 the reduction constituted 3,2%. The peculiarity of the situation is that production for export had increased by 19,7% and for the domestic customer it has decreased by 15,1%. During the first 10 months of the 2006 a total of 20 vessels of different purpose had been constructed, with 141 vessels are under construction.

The bank's interest rates for credit were too high in Russia, and foreign banks did not finance construction of vessels in Russia. Therefore, it is more favorable to build tankers and dry-cargo ships abroad. Besides, in Russia taxes and duties are high, which increases the cost of a vessel by 20-25%, and the conditions for the investments inflow are absent, too. Hence, one may not expect development of the branch at the expense of civil orders.

By 2006 there were many new ships under construction at shipyards. And the volume of financing required for their construction was much more than the state defense order can provide. Nevertheless, it did not prevent the development of state strategies and of the programs of development of the Navy, development of the shelf sea, construction of high-speed vessels, etc. At that, the state-of-the-art ships equipped with effective arms are built for foreign customers, and the Russian Navy, because of long period of construction, got, as a rule, the ships which are 15-20 years old.

According to Russian authorities, by 2008 the country's shipbuilding industry was in a deep crisis: Labor productivity at Russian yards was 3 to 5 times lower than in other countries, and Russian yards took from 2 to 2.5 times longer to build similar ships.

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Page last modified: 30-01-2016 19:11:58 ZULU