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United Shipbuilding Corporation (OSK)

In March 2007 President of Russia Vladimir Putin ordered the government to prepare a draft decree on creating the United/Unified Shipbuilding Corporation (OSK, Obedinennaya sudostroitelnaya korporatsiya - Russian abbreviation). The presidential administration is to participate in this work aimed at "legal registering the decisions which we had coordinated". The chairman of the government Michael Fradkov was personally asked to supervise staff support for these plans. On 22 March 2007 President Vladimir Putin signed decrees on the establishment of the United Shipbuilding Corporation.

Similar to the pattern laid down by aviation builders, the state run businesses will unite in the form of non-commercial partnership. But while OAK was and remained a leader among Russian military exporters, OSK would concentrate first of all on the domestic market and civil products. The newly established "United Industry Corporation", State-owned Shipbuilding Group was seen as one of the main cornerstones of Russia's future shipbuilding industry.

The company has three subsidiaries - the Western Shipbuilding Center in St. Petersburg, the Northern Shipbuilding and Maintenance Center in Severodvinsk and the Far Eastern Shipbuilding and Maintenance Center in Vladivostok. The head office of the shipbuilding corporation should be based in St. Petersburg, the country's second-largest city where the main shipbuilding R&D bureaus are concentrated. These shall also be joint by four more ship repair factories of the Ministry of Defense as soon as they undergo the financial recovery procedure. Nine design and development bureaus form a separate group in line organization with the head company. Some 13 to 20 more enterprises shall be integrated to become part of JSC "United Shipbuilding Corporation".

Not all Russian yards were integrated in OSK. As of 2008 it appeared that three of the most important yards - Vyborg, Severnaya Verf and Baltiyskij Zavod in St. Petersburg - were still privately held. It was speculated whether the owners of these enterprises will be asked to sell their assets wholly or partly to the state. With the most successful yards in private hands, the government may want to include them in the state corporation to help develop the whole sector.

The corporation was initially headed by Alexander Burutin, the presidential aide for the defense sector. On 27 July 2007, Senior Deputy Prime Minister, Sergei Ivanov, announced that the government recommended Deputy Prime Minister Sergei Naryshkin for the post of Chair of the Board of Directors of United Shipbuilding Corporation (OSK). This was a surprise because a few days earlier it was planned that Defense Minister Anatoly Serdyukov would take this post.

The federal target program Development of Civil Marine Engineering for 2008-2015, projected an investment in national shipbuilding of about 140 billion rubles through 2015, of which 97 billion would come from the state budget. The Ministry of Industry forecast a 220% production growth by 2015, with the share of civil projects growing from 25% to 34%. At the time of its formation, the corporation's contract portfolio totaled $12 billion.

President Vladimir Putin, in his state-of-the-nation Annual Address to the Federal Assembly on 26 April 2007, said "We have a fairly well developed sea traffic market, but we have practically stopped building civilian vessels. Over the last decade, our ship owners have placed orders for more than 90 percent of their new vessels with foreign shipyards. If we do not take action now, the shipbuilding sector in our country will go into decline and this will ultimately have a negative impact also on our country's security, on military shipbuilding. In order to rectify this situation, we have decided to establish the United Shipbuilding Corporation, which will work in all segments of the market, from designing and building ships to carrying out maintenance and repair work. The corporation's mission is to win itself a decent niche on the global shipbuilding market. This is a goal within our reach. I expect us to decide very soon on state support measures for the shipbuilding sector in Russia."

On 27 April 2007 Russian first deputy prime minister Sergei Ivanov said that a situation in which 96% of Russian cargo is transported by foreign shipping is an outrage. "Ninety-six percent of Russian cargo is transported by foreign ships, and 90% of new ships whose keels are laid in Russia's interests place orders abroad. That is just an outrage," Ivanov said at a conference on shipbuilding industry development. Ivanov said the meeting agenda is focused on the implementation of President Vladimir Putin's instruction to develop shipbuilding. "Shipbuilding is just lagging behind here, and time is against us. I would like to hear why and which ministries and departments protract the development of government documents aimed at implementing the president's instruction in the sphere of shipbuilding," the first deputy prime minister said.

The state owned shares of the JSC Nevskoe KB became the first input into the authorized capital of OSK, with the Nevskoye Design Bureau as an anchor company. On 04 September 2007 Russia's Ministry of Industry and Energy said that a government commission had set the equity capital of the emerging United Shipbuilding Corporation at 1.098 billion rubles ($42.9 million). This was based on a valuation of the shares of open joint-stock companies that will be transferred to the state corporation's charter capital.

The government approved the "Basic Directions of Development of Civil Naval Equipment 2009-2016" program on 08 November 2007. It allotted 140 billion rubles over that period for the establishment of the United Shipbuilding Corporation, of which 91 billion rubles was to come from the federal budget. The director of United Shipbuilding Yury Yarov and chairman of the board Deputy Prime Minister Sergey Naryshkin were presented to the government. The USC planned to build 30-35 platforms for the exploration and production of oil and gas on the continental shelf by 2015. Subsequently, the corporation was to focus on the construction of tankers of 140,000-160,000 tons displacement, with the first of these ships to be launched in 2015.. But existing wharves can handle ships of a maximum capacity of 70,000 tons displacement. Projects to build new wharves in three regions - western, northern and far-eastern - were to be chosen by VEB-Development Bank in the first half of 2008.

The approximate deadline for finalizing the unification of the assets was 01 January 2009. The more difficult matters were changing the status of the plants and placing their shares in the funds of the regional subholdings of USC (Northern, Western and Far Eastern), division of the plants' control and managements of USC's financial currents, negotiating the cooperation tactics with the private companies (for instance "Northern dockyard" where the state holds only 21% of shares; "Yantar" where the state owns 51% of shares, and others). With reference to the most optimistic expert views, most of the plants and companies will change their status only in 2009, instead of mid 2007 as it was originally planned. It took almost two years to establish the structure and the authorized capital of the corporation and this process was completed in due terms - by April 1, 2009. Roman Trotsenko, the owner of "Moscow Shipping Company", became the head of the Shipbuilding Corporation in October 2009.

Murmansk shiprepair plants #82 and 10 are to be conveyed to OSK by June 15, 2010. This was an order of Prime Minister of the Russian Federation Vladimir Putin given at a meeting held April 17, 2010 in Murmansk on situation at shiprepair enterprises of the region. "The deadline of the scheduled conveyance of plants ?82 and 10 to OSK is June 15, 2010," said Prime Minister. He also added that the current owner of these plants - the Ministry of Defense - together with OSK must settle on, and adopt a plan on production unification and reorganization prior to the conveyance.

On April 07, 2010 it was reported tha OAO Admiralteyskie Verfi and OAO Baltiyski Zavod (both of Saint-Petersburg) could secure orders for construction of two Mistral class vessels. As communicated to reporters by General Director of Admiralteyskie Verfi Vladimir Aleksandrov, this issue was under consideration, but there were no other details available. According to him, both enterprises can complete such an order. According to mass-media, the president of France (where Russia plans to purchase Mistral-class helicopter ships) Nicolas Sarkozy earlier announced that two of four such vessels can be constructed in Russia. According to him, at this date the parties agreed on construction of the first helicopter ship in Saint-Nazaire. The number of ships to be constructed was four. But after the business in Ukraine, this deal fell apart and the ships were bought by Egypt.

In June 2010 Russia will soon approve a single program for developing military and civilian shipbuilding, which will seriously boost the industry, said Russian President Dmitry Medvedev. "At a Security Council meeting on shipbuilding last week I ordered the development of a single program for military and civilian shipbuilding. This program is due to be approved in the near future," Medvedev said at a ceremony commissioning the Severodvinsk nuclear submarine in Severodvinsk.

The current measures are giving serious momentum to the shipbuilding industry, the president said. To increase the competitiveness inshipbuilding, resources and personnel should be concentrated in priority areas, he also said. Today, there is a need to not only restore old cooperation chains but also to create new ones, as well as to rationally spend budget funds and attract additional investment, the president said. This could be helped by mechanisms of public-private partnership, he said.

New massive projects are awaiting you, said Medvedev, thanking the Sevmash shipyard staff for the work they carried out. "I am certain that we will work further in such a coordinated fashion," the president said. Russia should actively modernize its Navy to be ready to efficiently respond to modern challenges, President Dmitry Medvedev said. "Most foreign countries invest a lot of money in the latest offensive and defense systems. We should do the same. Russia must carry out efficient modernization of its naval forces," Medvedev said. "Russia should be more active in building the most advanced ships, and this work is being done in lin e with the state armaments program," Medvedev said.

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Page last modified: 07-02-2016 19:43:53 ZULU