Perminov to Putin: Everything’s A-OK With Us. How are You?

Roscosmos Director Anatoly Perminov’s Report to Vladimir Putin During Russian Leader’s Visit to Khrunichev State Space Center on March 18, 2009 (courtesy Roskosmos)

Dear Vladimir Vladimirovich,
Dear colleagues,
Dear participants of the meeting,

Russia is one of few countries in the world, which have developed unique rocket and space potential. This potential provides the opportunity to achieve strategic objectives aimed at enhancement and evolution of the rocket and space technologies (RST) beneficial for national socio-economical development, for security purposes, science, international cooperation, guaranteed access and presence of Russia in space.

Rocket and space industry is a basic element of the national space potential. It is distinguished by science-intensive, high-technological production processes and products; it is featured by high innovative capabilities, implementation of which can provide significant effect on the economical development of Russia.

Currently, Russian rocket and space industry includes 98 entities and organizations. In addition, more than 550 companies of the allied industries are involved in development and production of the military rocket and space products.

Nowadays Roscosmos, together with the interested Federal Authorities, have developed and approved basic documents, which define state policy in space exploration, as well as construction of economically stable, competitive, diversified, innovatively-evolving rocket and space industry capable of accomplishing strategic enhancement and development of rocket and space assets.

The most significant document here is “System of Visions Regarding Russian Independent Space Activity from the National Territory for all Spectrum of the Objectives to be Accomplished up to 2040”, which have been approved by the Security Counsel of the Russian Federation in April 2007.

In April 2008, you, dear Vladimir Vladimirovich, have approved “Basic Principals of the Policy of the Russian Federation in Space Exploration for up to 2020 and Beyond». It was followed by the Act of the President of the Russian Federation “About Development of the Vostochny Space Port” and Resolution of the Government of the Russian Federation about refinement of the Russian Federal Space Program and the GLONASS Federal Special Program. These laid the basis for practical implementation of new state space policy developed under your leadership, Vladimir Vladimirovich.

As a result, Russian rocket and space industry enters the required level of resource support which is providing the opportunity to implement the plans of the industry`s evolution and accomplish national space exploration objectives.

The precautions taken by Roscosmos aimed at implementation of the “Russian Rocket and Space Industry Development Strategy up to 2015”, together with the support of the Government of the Russian Federation and active work of the industry leaders, made it possible to consolidate improvement tendency of the status indexes in the rocket and space industry, as well as its production activities. Compare to 2007, the product rate is higher by 12,2%. This is twice as big as the average index in Russia.

Financial stability of the industrial companies improved in 2008. The number of the entities with the bankrupt signes became 3 times lower (from 16 to 6).

In 2008, rocket and space industry provided accomplishment of all international commitments undertaken by the Russian Federation, kept high rates in launch services. 27 launches were made last year, 43 spacecraft orbited, including 6 GLONASS navigation satellites.

Russia has made great contribution into the world launch services: about 40% of all the launches in the world have been made by Russia.

On the other hand, there are some problems linked with achievement of high reliability for rockets and spacecraft. The failures are mostly caused by insufficient quality of the ground testing procedures, which is linked with deterioration of the experimental and test facilities. 78% of the ground test hardware is aged much beyond its operational lifetime (20 years).

Establishment of the Scientific Rocket and Space Industrial Test Center state entity by the Presidential Act became an important step in improvement of the rocket and space industrial test facility operations. Budget financing of this Center through Roscosmos is studied now by the Federal Space Agency together with the Russian Ministry of Trade and the Government of the Russian Federation.

Angara space rocket system represents a high-priority objective of 2009 as an advanced launcher. Here, the prime role is under the Khrunichev Space Center, and we are sure that financial support obtained by this entity will provide them with the opportunity to accomplish the objectives defined.
Though, we rely not only on the state budget in this program. The company has contributed about 2 billion roubles of their own funding into the program, including evolution of the experimental facilities and technical retrofit of the company.

Renewal of some of the most essential assets is going more active today. However, the processes are slow enough for the technological retrofitting to remain on the level which is not sufficiently high.

In addition, in accordance with the rocket and space industry evolution strategy up to 2015, the measures are undertaken to reform the industry. The Acts of the President of the Russian Federation are implemented: integrated structures are founded (5 – completed, 7 – in progress, 3 – documents are being prepared).

Financial crisis has not impacted the demands and the production rates in the rocket and space industry. Starting from 2009, its influence is more visible. Production rate decreasing is predicted for the state orders. At the same time, production volume for the non-governmental contracts is predicted to be on a very low level. As a consequence, indirect expenses can increase, and the profit of the space and rockt industry can go down.

Critical situation in the Russian and world markets made the process of consolidation in the industry slower, and deteriorated the status of the industrial organizations. For many companies, access to bank loans became harder.

Increase of the loan interest rates made a negative effect on the net profits and efficiency of the companies. These entities, if they don`t get support from the government, may become unprofitable starting from 2010.

In order to stabilize the situation in the industry, Roscosmos takes active part in the work of the Inter-Agency Commission, chaired by A.G. Siluanov, Deputy Minister of Finance. The Commission defined the state support measures for the strategic defense and industrial entities in the current market conditions. Appeals of the organizations which seek for this support are being considered.

Roscosmos has established a special working group responsible for development of the support measures for such entities, coordination of the dedicated activities of Roscosmos divisions, as well as for interaction with the a.m. Inter-Agency Commission.

By February 2009, the Commission has examined 17 organizations under Roscosmos which applied for getting the state support.

For 8 of them, the decision was made to provide the companies with the grants necessary to reimburse some expenses for loan interest payment to the Russian banks. The decisions will be enforced under the determined procedure after approval of the corresponding Resolution by the Government of the Russian Federation.

The Governmental Board on Stability Enhancement of the Russian Economy made a decision about providing Khrunichev State Space Center with the financial support of 8 billion roubles to increase their statutory fund.

It is reasonable to enact state support instruments of the Russian President and Russian Government in order to back up the entities of the Russian rocket and space industry.

In general, within the upcoming years, Russian rocket and space industry will keep its level of competitiveness and provide implementation of the state space policy, including the provisions of the Federal Space Program for 2010-2011, with the effective support from the Government of the Russian Federation.