HELICOPTER BUIULDERS HAVE CONSOLIDATED INTO INTEGRATED STRUCTURENezavisimaja Gazeta (Independent Newspaper), 02.11.2005
Branch enterprises can work more effectively in the world market
The process of helicopter holding establishment on the base of “OPK” Oboronprom” nears the completion: board of directors that was held late November-early December approved the results of additional issue of shares for establishment of integrated structure. Also, recently management appointments were made to the helicopter programs directorate that would coordinate the activities of the services of the holding enterprises.
The correspondent of the “Independent Newspaper” asks questions Denis Manturov, general director of the OPK ”Oboronprom” about these events and about prospects of development of the new corporation.
- You nominated Viktor Grigoriev, former president of “Kaskol” companies group to the position of your first deputy and the chief executive officer of the helicopter programs directorate. Why the choice did not fall onto the representative of any enterprise entering into the holding ?
One of the main tasks of the parent company which is “Oboronprom” with respect to helicopter-building enterprises, is definition of general targets and determination of ways for their achievement, search of reasonable compromise between all participants of the process. It is no secret that independent activities from early 90s, the branch enterprises stood out from each other, often conflicts arose between them which were associated with unproductive inner rivalry. Nowadays, it is time to start the process of adaptation, establishment of unique integrated structure responsible both for corporate control and targets to be realized. In the framework of this process, the holding participants signed the corporate agreement that defines the targets, principles and mechanisms of interrelations, as well as their rights, obligations and responsibilities. We fixed the limits of spheres of authority between the parent company and enterprises, and also formed unified corporate control bodies. Among them, in the first place, is the helicopter holding council which includes the general directors of all plants and which is, in some way, “brain center” of our corporation. One more management level is built around the helicopter programs directorate that shall constantly coordinate the activities of the holding participants and current activity of management bodies. The helicopter programs directorate includes six committees which are headed by the general directors of the enterprises. This decision was taken unanimously by all participants. The strategic development and programs coordination committee is headed by Vladimir Makareikin, deputy general director of “Mil” Moscow helicopter plant, the corporate construction, securities and real estate committee, by Vadim Ligay, general director of Kazan helicopter plant, the managerial committee of research-development, production engineering and intellectual property by Sergey Solomin, Ulan-Ude plant deputy general director, the marketing and commercial activity committee, by Valery Pashko, deputy general director of Kazan helicopter plant, the financial-economic policy and budget planning committee, by Petr Motrenko, deputy general director of Rostvertol JSC, the holding acivities supporting committee, by Yury Slyusar, commercial director of Rostvertol JSC.
As far as the directorate chief executive officer is concerned, we looked for, so to say, for compromised candidate who would be highly professional as a manager desirably in the sphere of aviation business. I nominated Viktor Grigoriev whom I know for a long time and with whom we actively and, I think, fruitfully collaborated when he headed the “Kaskol” companies group. Therefore, I know management and personal qualities of Viktor Grigoriev not by earsay.
Mr. Grigoriev himself considered my offer to be an opportunity for continuing helicopter business. As we know “Kaskol” recently completely left the helicopter sphere. And what’s more important, many directors of production plants know Mr. Grigoriev in person and this appointment met no objection from their side.
– It is known that during last 15 years there were several attempts to create some joint body in the helicopter business. Why do you think it became possible this time?
– You are right, the idea of joining Russian helicopter manufacturers was in the air during the whole period of the 90s (after “Perestroika”). There were examples of private initiative, when for example “Kaskol” company tried to realize this idea, as well as there were some attempts to do this on the state level through the Ministry of Economic Affairs in the times of Mr. Urinson. Although none of these plans came true. There were several reasons for that: heterogeneity of the share capital of helicopter companies, often without state-owned shareholding, the need for additional state subsidy for shares acquisition in the secondary market, interdepartmental inertia, etc. But the most important reason was that there were no political and ideological basis for this integration and no clear understanding of its goals. We all know the result: the share of “Mi” helicopters in the world market over the last 15 years has dropped from 25% to 5-7%.
The situation drastically changed after the year 2000, when the target program “Military-Industrial complex revival and development (2002-2006)” was accepted. It was in the framework of this program when in 2002 on the basis of federal state unitary enterprise “Rosoboronexport” and federal state unitary enterprise “Gosinkor” (the share of the corporation after its liquidation passed into ownership of Rosimuschestvo RF – “IN”) new united industrial corporation “Oboronprom” was created. And in November 2002 Decree of the President of RF about creation of a new helicopter holding on the basis of “Oboronprom” was issued. The moving force of this helicopter integration was “Rosoboronexport”. Taking into consideration the fact that 95% of all Russian helicopters are exported, 60% of which – under military procurement, the leading role of “Rosoboronexport” in the integration process is quite reasonable. Besides that “Rosoboronexport” has necessary initial off-budget investment resources and other assets that help to avoid budgetary funding of holding establishment.
I would like to point out that idea of such integration primarily has gained support of “Rosoboronexport” director Sergei V. Chemezov, whom I know from the times when we worked at Ulan-Ude Aviation Plant. In the late 90-s I worked as Deputy General Director at Ulan-Ude Aviation Plant and Sergei Viktorovich headed “Promexport”, military hardware special state exporter-company. And later when Sergei Viktorovich headed “Rosoboronexport”, and then – chaired board of directors of “Oboronprom”, I always was supported by him in the matter of creation of integrated structure.
Among several recent major procurement contracts which were executed by “Rosoboronexport” and “Oboronprom” affiliated companies I would like to mention contracts with Mexico and Venezuela for helicopter procurement as well as service center establishment for “Mi” helicopter maintenance in Mexico, signing of new agreements for procurement of “Pechora-2M” air defense systems that were manufactured by JSC “Defense systems” (“Defense systems” is an affiliate of “Oboronprom” company – “IN”) and so on.
– Some experts believe that “Rosoboronexport” participation in share capital of defense holdings will result in total control of their activities, bureaucratization and in the long run will hinder companies development.
– I’m afraid I can not agree with this opinion. Indeed, “Rosoboronexport” is a successor of Main Engineering Division of Foreign Trade Ministry (USSR), “Promexport” and “Rosvooruzhenie”. And I see it not as inheritance of bureaucratic traditions as it is presented by the opponents, but believe that “Rosoboronexport” has adopted this unique experience of working in complicated and delicate area of trade in arms. And it is this fact in my opinion that enables state company amid the toughest competition on the world markets to sustain high export standards.
In any case “Rosoboronexport” owing certain amount of shares and being represented in corporate management structures will “keep its on the ball” concerning what’s happening in these companies, on which execution of export contracts depends. This is a normal situation for a civilized society.
This being said, management team of “Rosoboronexport” headed by Sergei Viktoronich can outclass many managers from commercial companies in both strategic planning and specific tasks realization.
– At the moment the perspectives of “Kamov” and “Mil” companies integration are widely discussed. What is the situation in this area?
– The process of “Kamov” company acquisition from JSFC “Sistema” is close to its end. It is possible that later some plants from “Kamov” cooperation, for example Kumertau aviation production enterprise, will join our holding too. But in any case the point is that the two helicopter design schools will coexist in the framework of one parent company and in no way one of them will take over another. This united structure will enable us to satisfy customers’ needs effectively and just to react to the changing market environment.
From “NG” Records
OPK “Oboronprom” is a multisector investment and industrial group.
Pursuant to the Decree of the President of the Russian Federation of November 29, 2004 and the Governmental Decree of May 6, 2005, the Corporation became the parent (management and holding) company of a helicopter group, which consists of “Mil” Moscow Helicopter Plant JSC, Ulan-Ude Aviation Plant JSc, Kazan Helicopter Plant JSC, Rostvertol JSC, “Vpered” Moscow Machine Building Plant JSC, Stupino Machine-Building Production Enterprise JSC.
“OPK “Oboronprom” JSC also holds more than 75% stake in “Oboronitelnye Sistemy” (Defence Systems) and owns 100% of “Oboronpromlizing (Oboronpromleasing) shares, etc.
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