Vladimir region. Modernization on March
VIP-Premier visited Vladimir region in the framework of Russian Regions Presentation media project. Time has prompted the topic for an interview with regional Governor Nikolai Vinogradov: the talk was about modernization which is currently high on the national agenda. What are modernization specifics in the region where military-defense production has long been a major economic component? How does Vladimir region resolve economic problems? The answers are in the interview offered to the readers.
Nikolai V. Vinogradov has been administration head and governor of Vladimir region since 1997. Born in 1947 he graduated from the Moscow Engineering and Construction Institute and the Academy of Social Sciences at the Central Committee of the Soviet Communist Party (CPSU). He worked at the reinforced concrete production plant in Vladimir and later became chief engineer of the enterprise. He then careered from an instructor and deputy department head of the Vladimir regional Soviet Communist Party Committee to second secretary of the Vladimir CPSU City Committee, first secretary of Kolchugin CPSU City Committee in Vladimir region, an official of the CPSU Central Committee, and second secretary of Vladimir CPSU Regional Committee. From 1994 he worked as deputy director general of Vladimiropttorg wholesaler. He was deputy chairman of Vladimir regional legislature. From 1993 to 1995 he was a member of the Russian Communist Party Central Committee, but suspended membership in 2008. He was awarded with the Orders of Honor and For the Merits to the Motherland IV degree. Married with two daughters.
NEW ECONOMIC POLICY IN VLADIMIR
– Mr. Vinogradov, how is Vladimir region modernizing?
– Modernization for us means making enterprises produce competitive goods. The economic structure of Vladimir region underwent major changes. Earlier textiles comprised 30 percent, but unfortunately our textile facilities failed to compete on the market. Machine engineering and metal processing were also major industries, but they mostly dealt with military-defense production which also sharply fell in the 1990s. It all collapsed. As a result, industrial production in late 1990s comprised only 34 percent against 1991 which resulted in mass unemployment and other hardships of liberal reforms.
Long debates in regional legislative and executive bodies of authority determined a major development guideline which was the creation of new productions mostly in green field. The task of attracting investments, mostly foreign ones, became our activity guideline. Cooperation with foreign businesses has been going for long, as we have been conducting such an economic policy with varying success for 15 years, but in the last seven-ten years it developed into an economic strategy.
– What does the strategy give to the regional economy?
– Due to the strategy we regularly occupy one of the leading places among the regions of the Central Federal District by the volume of foreign investments. In 2009 only Moscow, Kaluga and Moscow regions were ahead of us. Today the investment situation is rather favorable in the region. In the past difficult year our investment efforts helped preserve capex volumes.
Since the regional economy began to switch to a new track we have launched close to 140 joint ventures with foreign capital that account for 40 percent of the total industrial output and employ at least 4 percent of regional manpower. The figures show that efficiency of newly created enterprises exceeds that of traditional ones dozens of times. Only last year we launched 15 new facilities with industrial output worth 12-15 billion rubles. We plan to maintain the same pace this year if, I keep my fingers crossed, the situation remains favorable.
– Which industries do foreigners prefer to invest?
– We have not only foreign, but also a lot of major domestic investors. The presence of foreign investors spurs their Russian counterparts and makes them join the competition.
Food industry has developed into a major cluster in the region of late and unites companies from the United States, Italy and the Czech Republic. A major chemical cluster (Austria) is emerging and pharmaceutical production enjoyed a good startup due to the contribution of Balkan countries (Slovenia, Croatia). Several Russian-South Korean joint ventures produce car accessories however they report both successes and difficulties. The problem is that our region hosts already five facilities producing car accessories, but we have no car assembly plant. A future task is to adapt to market conditions and join car production on the Russian territory.
We have formed a major white equipment cluster to produce washing machines, refrigerators, TV sets. Turkish companies dominate the sector. They also actively invest into the creation of glassworks and electronic facilities in our region. There are one-field companies among the Turkish investors, which means competition. Construction materials production is on the rise - all technologies are from Austria, roofing materials from a Russian company in Kostroma and a Danish firm. Mini glass fiber production is from France and furniture from Poland.
RUSSIA DOES NOT END IN MOSCOW
– How does Russian and regional Vladimir legislation assist foreign businesses?
– We have an acting regional law on foreign investments. It is specific because the investor has simply to offer a project. We have a special council that considers the project and proposes to the governor to okay an agreement that grants several tax benefits, in particular. They include property tax exemption for the payback period of the project which underwent all the necessary legal procedures. The exemption concerns the part of property tax remitted to the Russian federal budget. The law also stipulates subsidizing of interest rates on borrowed funds for investors and direct subsidizing by the region of infrastructure costs. Unfortunately, last year and this year federal legislation limited these regional powers because of the crisis. All benefits are provided for the payback period. Each investment project has its implementation period. If it is an industrial project, everything depends on the amount of investments: if the amount is minimal, the payback period shall comprise three years, if the amount is big, the payback period may last up to seven years. For an infrastructure project (we are currently dealing with industrial park creation on the regional territory) the payback period may be established for 25 years. Authorities are assisting in the creation of energy supply networks. Investors say they are offered comfortable conditions in the regional economy and they also agree we have lower corruption compared to other regions.
Russia does not end in Moscow, they say. Foreign business understands it can achieve better economic results in Russian regions than in capital cities due to easier terms.
– Vladimir region used to have popular brands known in the whole country: Kovrovets motorcycles, cut-glass ware from Gus-Khrustalny… What happened to them?
– You forgot yet another brand, which is the Vladimirets tractor of the VTZ tractor plant in Vladimir. Positive signs appeared at the enterprise after it joined the pan-Russian Agromash agricultural machinery holding. It has been decided to assemble all wheeled tractors of the holding in Vladimir. The VTZ launched practically new facilities with American assistance to produce internal combustion engines at traditional premises. The previous brand product of the enterprise was a small tractor intended for cotton plantations, hothouses and farms. However, in the early 1990s none of the abovementioned sectors was in demand and the plant experienced hard times. It is a merit of enterprise owners (and of authorities as well) that they preserved production capacities, but they are morally outdated now. Technical re-equipment is necessary and the Agromashholding is actively dealing with the problem.
Today there is a trend when top managers enjoying a rich production experience return to their enterprises. It has been otherwise until recently when top managers did not care which industry to manage. I believe such an approach dealt a heavy blow to the Russian industrial development in general. To prudently arrange production managers have know it in detail. Positive changes occurred also at Vladimir tractor works. In particular, I mean Director General Alexander Gudkov, who after a long time resettled back in Vladimir and returned to the enterprise together with his wife. All of us had a beginning and my production years are an unforgettable experience (Mr. Vinogradov worked as chief engineer at Vladimir reinforced concrete enterprise – VIP-Premier). Production taught me a lot and the knowledge and experience do not disappear.
As for the Degtyarev plant in Kovrov, which used to produce popular motorcycles, today it turns out licensed foreign products, mostly South Korean. It produces economy motorcycles. The enterprise would like to resume the production of its popular ZID motorcycles, but so far is incapable of competing with them on the market.
As for cut-glass ware, I would say the enterprise in Gus-Khrustalny is unique. The share of glass production has always been high in Vladimir region, as we have been considered a glass country since the times of merchants Maltsovs and their glassworks in the middle of the XIX century. What happened to cut-glass ware? A cupboard full of cut-glass ware was the indicator of prosperity in Soviet times. Now the Russians don’t care about it, as new demands have emerged that changed the situation on the
Once IKEA owner Ingvar Kamprad visited our region. When such business tycoons arrive you definitely want to make them invest into our production. As IKEA deals not only with furniture, but also with accessories, we decided to show him the pride of Vladimir region – the cut-glassworks in Gus-Khrustalny – and hoped he would buy its products. I was very surprised to learn that Mr. Kamprad saw the unique cut glass, but did not buy it. Instead he bought a major batch of ordinary glasses and signed a three-year contract for their delivery. The enterprise earned a lot from the deal. The western businessman was pragmatic, as demand for cut-glass ware fell everywhere. Our cut-glass makers have to look for new market niches.
– Vladimir region hosted a major nanotechnologies conference in August 2009. President Dmitry Medvedev, ROSNANO chief Anatoly Chubais and numerous ministers arrived. They came because Vladimir region is considered to be a Russian leader in nanotechnologies. Is that true?
– According to influential Moscow-based Expert business magazine, Vladimir region is among 16 territories that achieved and enjoy nanotechnology development prospects. The meeting attended by top national leaders was held in Petushki district at a new pharmaceutical facility. President Medvedev invited businessmen and scientists and raised the issue of cooperation with ROSNANO in the introduction of nanotechnologies at regional enterprises. A month later Mr. Chubais came to see the results. We offered him 16 projects for joint implementation. They include the production of liquid crystals and membranes, introduction of new technological processes to produce construction materials, highly purified quartz glass, and other guidelines. ROSNANO earmarks funds to boost nanobusiness. There are interesting ideas, but unfortunately there is a lack of money. There is a general opinion that nanotechnologies can breathe a new life into out traditional production. An example is the use of synthetic crystals at Gus-Khrustalny glassworks. The Technoquartz and the Dzerzhinsky glassworks also began to recover.
Nanoprojects actively engage the laboratories of Vladimir State University and Kovrov Technological Academy which designed innovative laser technologies used to bore deep holes in metals, as well as for health diagnostics and treatment of several diseases. Nanotechnologies are used in production at the electromechanical enterprise in Kovrov, instrument-making plant in Murom, at Electrocabel in Kolchugin, Avtopribor, Baromembrane Technologies, and Technofilter in Vladimir, and other regional enterprises. I believe the region is close to a transition to industrial nanocivilization. That is a guarantee of good future.
– Our magazine writes a lot about Gazprom activities. It would be interesting to know the situation with gas supplies in the region, as no modernization is possible
– We signed an agreement and have been cooperating for a third year with Gazprom in gas distribution projects in the region. We used to considerably lag behind neighboring regions in the sphere. All our investment programs directly depend on the carrying capacity of the gas network. So far natural gas supplies to consumers (and there are numerous new investors) are limited, as all existing gas pipelines in the region operate to full capacity. During the brief cooperation time with Gazprom (before that we allocated own funds to develop gas distribution) the region achieved major progress. Today gas supplies cover some 30 percent of the countryside and 85-87 percent of towns and residential settlements. Gas distribution expansion in the countryside is impeded by low paying capacity of the rural population, inactivity of local self-government bodies in raising the awareness of the population about gas supply programs, poor tender organization allowing contractors to drag construction. Gas distribution continues to expand in the countryside and this year 420 million rubles were allocated for the task. Gazprom not only supplies “blue fuel” to the country, but also implements long-term sport and health improvement programs in which we participate.
– Vladimir region is attractive for tourists. Naturally, Russian tourism lags far behind European standards. How do you plan to develop and civilize the rich regional resource?
– We have truly big tourism possibilities. We have a gigantic number of architectural monuments and artifacts and are second only to Moscow and St. Petersburg. Most of our monuments date back to the XI-XII centuries and have been registered by UNESCO.
We have picturesque nature, and ecological and water tourism is acquiring a great scope. The Klyazma River and over 200 small rivers and streamlets flow in Vladimir region and there are unique springs of the purest water.
We also hold unique events for Vladimir residents and guests. Suzdal annually holds the Cucumber Day! Initially the idea caused skepticism, but now it is growing in popularity, as the event offers cucumbers in any form, they cook jam from them and sing “cucumber” songs.
The folklore-ethnographic Epical Hero’s Pastime festival has become traditional. It offers events devoted to competition traditions of various social strata of Ancient Rus. The festival is held in five regional cities: Vladimir, Suzdal, Murom, Gorokhovets, and Yuryev-Polsky. Festivities in Vladimir are linked to princely pastime, in Murom – to handicraft traditions, in Gorokhovets – to merchant spree. Spectators can see battle reconstructions, weight lifting and wit competitions.
In Suzdal we plan to modernize the bus station that will get a major car park. Tourists will leave cars there and travel in Suzdal by live transport – by horse and dog teams. Yes, it’s true they used dog teams not only in the north, but also in Ancient Rus.
The whole history of Vladimir regional tourism development depends on the changing economic situation which can be bad today and better tomorrow. I believe our main achievement is that we recovered the 1980s level in the sphere of tourism after a long slump. At that time trade union-sponsored tourism was well developed and offered various trips. Today tourism provides 6 percent of the Gross Regional Product. We have doubled the number of hotel rooms and transport communications are properly developed. Many European countries earn 30-40 percent of the GDP from tourism. That is an example for us.
By Yuri SHILOV