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  • 2008 May 21

    OSK to correct others’ errors

    National shipbuilding companies are to upgrade production and to solve lots of legislation problems to improve their competitiveness. According to participants of the visiting session held by the Committee on industry, economy and property of St. Petersburg Legislation Assembly, the above issues are to be solved by OSK (United Shipbuilding Corporation). OSK has already started operation though legal implementation has not been finished yet.

     

    Mistake correction

    As of today, national shipbuilding companies loose the competition with foreign shipyards in all aspects including terms, price and quality. Under current situation it is not a surprise that the last decade saw Russian ship owners purchased only 6% of vessels built by national shipyards. “It should be attributed to errors of the previous years, Valeri Venkov, Director General of Central Scientific Research Institute of shipbuilding technologies, thinks. “United Shipbuilding Corporation analyses the errors of the previous years in order to eliminate them and to stimulate shipbuilding development.”

    As shipbuilders say, to rehabilitate the industry lots of problems are to be solved at the level of legislation. In particular, to improve competitiveness it is necessary to eliminate legislation drawbacks related to VAT rates and to subsidize both national shipbuilders and customers of shipbuilding companies. Otherwise, it will be more profitable for shipbuilders to export vessels as VAT is returned upon fulfillment of such contracts or upon purchase of equipment for export contracts. No similar advantages are provisioned for shipbuilders working for domestic market. Moreover, national shipbuilders take loans for three years at 15 - percent interest while foreign companies are provided with loans for 15 years at 5-6 - percent interest. Besides, the customers of shipbuilding companies require subsidies. According to Venkov, the budged of the RF for a 3-year period envisages allocation of RUR 8.4 billion for construction of vessels for lease including RUR 1.8 billion for 2008. Those allocations are to enter OSK’s authorized capital in case of additional issue.

    “All the proposals on VAT, antimonopoly legislation and facilitation of re-certification were furnished to St. Petersburg Legislation Assembly and Government, as well as to military-industrial board. We wish there were a feedback, Venkov said”.

     

    Rearrangement of production

    Besides legislative decisions aimed at improvement of competitiveness within national shipbuilding industry it is also important to restructure production. According to Venkov, it requires deep analysis as St. Petersburg shipyards specialize in similar production. According to OSK, Baltiysky Zavod (member of United Industrial Corporation, OPK) should continue production of icebreakers regardless the construction of new yard, the capacity of which is to exceed total capacity of Baltiysky Zavod and the other St. Petersburg asset of OPK – shipbuilding plant Severnaya Verf.

    This proposal was furnished by OSK to the company’s owner. According to Venkov, shipbuilders are to build some 1,000 of different vessels including icebreakers till 2015. Director General of Baltiysky Zavod Aleksandr Chistov said in his turn that backlog of orders of Baltiysky Zavod OJSC makes RUR 10 billion till 2010. According to him, the company has concluded contracts for production and delivery of shipbuilding goods for RUR 5 billion and machine-building goods for the same value. “We provide components for Admiralty Shipyards and Severnaya Verf including screw-and-steering equipment and accessories,” Chistov said. Besides, the company has orders from RosOboronExport, RosEnergoAtom, Beloyarsk, Rostov and other Russian NPP as well as Indian and Chinese NPP.

     

    Meanwhile, another member of OPK – shipbuilding plant Severnaya Verf – plans to create a shipbuilding complex for construction of civil vessels, LNG carriers, icebreakers, ice-class vessels and off-shore drilling platforms as well as all types of naval ships including aircraft carriers. Upon completion of the shipyard’s modernization, the company plans to build at least 2 gas carriers annually by 2014. The construction of one gas carrier is valued at some $260 million. According to Yuri Taratonov, Chief Engineer of the shipyard, the modernization envisages construction of a new dock (400-meter long and 60-meter wide), shipbuilding hall as well as a shop for production of cryogenic tanks, which is a licensable type of activity. Norwegians provide the possibility to work under their license for $1 million, Taratonov says.
    The construction and reconstruction activities are to be carried out without suspension of production or the plant’s capacity decrease. The construction is to start in 2008. The shipyard will be ready for keel-laying of new large-capacity vessels in 2010. By 2013, the renewed shipbuilding complex is to reach its design capacity of 500,000 deadweight per year.

    According to Andrei Fomichev, Director General of shipbuilding plant Severnaya Verf, OPK is willing to cooperate with OSK under Public-Private Principle. “Being a self-sufficient structure, we are, nevertheless, willing to cooperate with a state structure OSK,” he said. As of today, the backlog of orders of Severnaya Verf account for 75% of Russia’s surface ship construction. “We provide competitive prices - otherwise Norwegian customers wouldn’t make orders. However the issue should be solved at the legislative level. RF shipyards may be fully loaded provided that state undertakes correct measures,” Fomichev thinks.
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