The Kremlin is burning?

[Stefan Kotsch]

On import substitution in Russia. An article from Russia! The openness is interesting. There are all sorts of things bubbling under the surface.

'Import substitution in Russia: The results so far are not encouraging
from November 25th, 2024
...
It is probably possible to replace Prada handbags with Ivanovo products, but it is impossible to quickly complete the PD-14 aircraft engine for the MS-21 airliner.
...
In the automotive industry the situation is no less complex, but is exacerbated by competition with China.
...
A few years ago the press was full of nice headlines like “Let's catch up and overtake America!”, but over time there have been noticeably fewer publications. ... 350nm processor technology is very good for a country with production facilities that are 30-40 years old, but there are already machines in operation in the world that can print 3-5nm chips. Now Russia is 25 years behind Western countries.
...
No less impressive import substitution rates were reported for the civil aircraft industry. ...None of this will happen. ...
Apparently it has only now become clear that representatives of the aviation industry are throwing dust in the government's eyes.'
...

https://topwar.ru/254191-importozameschenie-v-rossii-predvaritelnye-itogi-ne-uteshajut.html

[Roman Alymov]

6 minutes ago, Stefan Kotsch said:

On import substitution in Russia. An article from Russia! The openness is interesting. There are all sorts of things bubbling under the surface.

'Import substitution in Russia: The results so far are not encouraging
from November 25th, 2024
...
It is probably possible to replace Prada handbags with Ivanovo products, but it is impossible to quickly complete the PD-14 aircraft engine for the MS-21 airliner.
...
In the automotive industry the situation is no less complex, but is exacerbated by competition with China.
...
A few years ago the press was full of nice headlines like “Let's catch up and overtake America!”, but over time there have been noticeably fewer publications. ... 350nm processor technology is very good for a country with production facilities that are 30-40 years old, but there are already machines in operation in the world that can print 3-5nm chips. Now Russia is 25 years behind Western countries.
...
No less impressive import substitution rates were reported for the civil aircraft industry. ...None of this will happen. ...
Apparently it has only now become clear that representatives of the aviation industry are throwing dust in the government's eyes.'
...

https://topwar.ru/254191-importozameschenie-v-rossii-predvaritelnye-itogi-ne-uteshajut.html

That is quite short article, why cherrypick parts of it when full text would do?

"Import substitution in Russia: preliminary results are not comforting

Well-forgotten old

If you look away from the current situation, then there is nothing good about import substitution. First of all, for the end user. What does the consumer always want? Products that it is both inexpensive and high-quality. To come to the supermarket or car dealership and shop cheaply. Only then most of the products will not be of domestic production. It turns out that household appliances are better made in China, cars in Europe and Japan, and agricultural products are easier to bring from South and North America than to grow at home. The consumer is satisfied, but later fundamental problems begin: unemployment (where to work if all production is abroad) and total dependence on external players.

You don't have to go far for examples. After the collapse of the USSR, Ukraine could not or did not want to preserve its own industry, blessing the domestic market to imported suppliers. As a result, part of the population was forced to look for work in Europe in the service sector, some of them get by as much as they can, the rest got a job in agriculture. Decades of Kiev's sabotage against its own people have turned Ukraine into a third-rate agricultural country.

Total dependence on imports not only destroys the sovereign intellectual potential, but also allows foreigners to dictate their terms. Unfortunately, Russia has fallen into this trap. Foreigners have taken over the automotive industry, and the market economy has actually put an end to the civil aircraft industry. The last straw was supposed to be the sale of military-industrial complex enterprises to foreign "partners", but, fortunately, it did not come to that. Although their managers have brought a considerable part of the military factories to the handle.

The situation with import substitution in Russia is both simple and complex. Since 2022, small and medium-sized businesses have been able to quickly replace a wide range of consumer goods. We are talking about food, clothing and simple household items that were previously imported from abroad. Now the horror stories of the "experts" of the 2022 sample seem ridiculous, promising Russia a return to the worst years of Gorbachev's perestroika.

According to scientists of the Russian Academy of Sciences, last year at least one and a half percent of the state's GDP growth was provided by small and medium-sized businesses engaged in import substitution of simple consumer goods. The leaky sanctions of the West also helped. More precisely, the inability to track the supply of "proscribed" to Russia through third countries. The total volume of imports for a couple of years has not just not fallen, but even slightly increased in value..

But that's where the good news ends, and it's time for difficulties. More precisely, not even difficulties, but a complete misunderstanding by a number of officials of the real state of affairs in the country. There is a feeling that people who develop import substitution programs in high-tech industries think in terms of light industry. It is probably possible to replace Prada handbags with products from Ivanovo, but it is impossible to bring the PD-14 aircraft engine to mind just as quickly for the MS-21 airliner. But as for aviation, they have not yet been able to establish the production of fully domestic refrigerators.

In the automotive industry, the situation is no less difficult, but also aggravated by competition with China. Giving away the domestic market of China means leaving Togliatti and several dozen smaller cities without work. And if you abandon the Chinese car industry and introduce import duties prohibiting imports, then the consumer will have to get used to living for decades with Grants and Loans for the price of a one-room apartment in Moscow. There is nothing good in balancing between two fires – AvtoVAZ, with forced import substitution, has accumulated more than 100 billion rubles of debt. Note that there was no dumping in prices for the domestic consumer. Fields of a million and Vests of 2-2.5 million have already become familiar to everyone. It's something out of the realm of fiction, but it's actually a new reality. As is the reality of paying off AvtoVAZ's debts from the Russian budget. The Ministry of Industry and Trade is discussing measures to support the auto giant, and there is no doubt that this support will be provided.

It is also alarming in Naberezhnye Chelny. The Kama Automobile Plant, which is quite successful in import substitution, has lost almost a third of sales over the past nine months. This can be explained both by the tense defense order and the aggressive offensive of Chinese trucks.

What will happen next

One of the most ambitious tasks set for the domestic industry is import substitution in the production of microprocessors. America has been using this strategically important technology as a sanctions weapon for decades. Japan, Taiwan and the Netherlands are three countries capable of building modern photolithographs and at the same time are totally dependent on the United States. Only Washington decides to whom it is allowed to sell machines for printing chips and microcircuits, and to whom it is not allowed. Russia and China, of course, are prohibited in the first place. Import substitution in this industry can be called, without exaggeration, the second space program, and it is expected neither shaky nor loose.

A couple of years ago, the information field was full of beautiful headlines like "Let's catch up and overtake America!", but over time there have been noticeably fewer publications. At the moment, there is only a working prototype or even a technology demonstrator capable of producing 350nm chips. Note that it is not a serial sample, but only an experimental installation. Vasily Shpak, Deputy Minister of Industry and Trade of the Russian Federation, was laconic in May 2024: "We assembled and made the first domestic lithograph. It is already being tested as part of the technological line in Zelenograd." The 350nm process technology is very good for a country with a production capacity of 30-40 years old, but machines capable of printing 3-5nm chips are already operating in the world. Russia is now 25 years behind the Western countries. We decided to catch up with our rivals quickly and efficiently. In 2026, there will be 130nm chips, and two more years later, 28nm chips.

No less impressive rates of import substitution were indicated for the civil aircraft industry. Everyone knows the Program for the development of the air transport industry until 2030. The authors of this document can only be justified by the fact that in the summer of 2022 they believed in the early victory of Russia in a special operation, after which all the forces of the state will be thrown at aircraft construction. Already in 2023, the delivery dates of new airliners were shifted to the right. You will laugh, but by the end of this year, carriers were supposed to receive two dozen Superjets, six MS-21s and seven Tu-214s. None of this is going to happen.

It seems that it became clear only now that officials from the aviation industry were throwing dust in the eyes of the government. Personnel changes have begun. Yuri Slyusar, Chairman of the Board of the United Aircraft Corporation since 2015, was transferred to lead the Rostov region. A very good parachute for an official who, to put it mildly, did not taxi the aircraft to the runway.

His place was taken by Vadim Badekha, who previously headed the United Engine Corporation of the same Rostec. He is a typical effective manager from Denis Manturov's team and must, first of all, make two aviation fiefdoms – aircraft and engine builders - work harmoniously. So far, such a tandem has not shown itself very well. Alexander Grachev went up the career ladder, who took the place of the head of UEC instead of Badekhi. Prior to that, the manager managed the ODK-Klimov enterprise, specializing in gas turbine engines and part of the Rostec perimeter.

Replacing such high–ranking bosses in the midst of import substitution in the aviation industry is a very bad sign. Despite the fact that people did not come from the street, they will delve into the course of things for some time, change the management team for themselves, and the civil aviation sector will lose another six months or a year at a pace. Therefore, are we waiting for another shift in the take-off time of domestic aircraft to the right?

The airlines are doing well so far, but the first black swans have already flown. On November 21, it became known about the forced downtime of every second of the 68 European Airbus A320/A321peos in Russia. Technically, they are in good working order, but the airlines decided to hold on to the resource of aircraft engines for the big season next year. It doesn't seem to be critical, but it will definitely affect the cost of flights. The shortage of wide-body aircraft forces airlines to lay down the cost of an intermediate landing when flying to the Far East and back. Refueling is planned in Krasnoyarsk, which promises extra money and loss of time.

If the situation in the aircraft industry is not corrected in the near future, foreign airlines will have to be launched into the domestic market. This will help for a while, but it will significantly reduce the income of Russian carriers. And they should, recall, purchase domestic Superjets, MS-21 and Tu-214. Where can I get money if the routes are for foreigners? This situation is typical not only for the aircraft industry, but for a large range of industries where we had to relearn how to do complex things. What should I do, you ask? First of all, we need to learn how to make realistic plans, otherwise completely different people will build the future for us."

   So, as we see, with all obvious difficulties reindustrialization it the only way to go, not only in Russia. "Let's make America great again!" as one politician repoeatedky say, meaning the same process (that will face simmilar, or even greater, problems). 

[Stefan Kotsch]

Just now, Roman Alymov said:

why cherrypick parts

If you want to read it completely, you can do it yourself. 😉

[Roman Alymov]

1 hour ago, Stefan Kotsch said:

If you want to read it completely, you can do it yourself. 😉

As you could see few lines above, i have provided full text (in Yandex-translation) for those who would like to read entire text.

[Stefan Kotsch]

33 minutes ago, Roman Alymov said:

As you could see

I didn't miss that. It makes things easier if just the main ideas are extracted. Anyone can read the full text themselves if necessary.

[Roman Alymov]

6 minutes ago, Stefan Kotsch said:

I didn't miss that. It makes things easier if just the main ideas are extracted. Anyone can read the full text themselves if necessary.

Main ideas are exactly ones that you have excluded: 

1. Reliance on import (not on own production) was mistake;

2.This mistake was so lasting that almost resulted in reaching no-return point in some industries;

3. By lucky coincidence, Western sanctions have forced Russia to turn to own industry;

4. Yes collapse (predicted and expected by West) dod not happened, but there are a lot of problems now and ahead to solve.

   Instead, you have just cherrypicked description of problems, probably in hope that lack of passanger planes would lead to Russia collapse (while the peak of Russia performance was in the years when passanger flights were still rare).

By the way note that problem of production of modern airplanes is completely artificial - it could be solved by proper regulation of jet fuel prices on internal flights (not difficult for Russia, major oil producer). There is no need for Russian passanger jets to be focused on fuel consumption reduction. 

[Stefan Kotsch]

1 minute ago, Roman Alymov said:

Main ideas are exactly [:]

Import substitution in Russia: The results so far are not encouraging

 

[Roman Alymov]

1 minute ago, Stefan Kotsch said:

Import substitution in Russia: The results so far are not encouraging

So what? May be it is strange for Westerner who lives in MSM bubble where everything is alwasy ok - but here in barbaric Russia it is normal to have problems and talk about them.

    By the way today: 1) Head of housing repair service of Moscow region detained on allegations of stealing, among other crimes, funds that were allocated to repair works in Donbass Главу фонда капремонта Подмосковья заподозрили в хищении средств для Донбасса

2) Vice-Gov of Rostov region (responcible for transport) and his deputy arrested while recieving bribe Вице-губернатор Ростовской области и его зам задержаны за взятку

[Stefan Kotsch]

58 minutes ago, Roman Alymov said:

So what?

That's why I use Russian voices. Please complain there.

[JWB]

In 2025, Russians will face a new series of losses and bankruptcies. The reason is not only sanctions restrictions but also growing problems inside Russia.

◾️ Rusal, one of the world's largest aluminum producers, announced the start of production optimization - it will be reduced by 250 thousand tons in the first stage. The company explained the decision of optimization by "record prices for raw materials and high risks of a continued negative macroeconomic environment."

◾️ Major Russian mining and metals company Mechel announced the suspension of one of its enterprises - Olzherasskaya-Novaya mine in Mezhdurechensk. The reason is problems with the sales market.

◾️ Major Russian corporation PJSC Gazprom made a record net loss of $6.1 billion in 2023, becoming Russia's most unprofitable company for the first time in 25 years.

◾️ ALROSA (Russian group of diamond mining companies) reduced its revenue under Russian Accounting Standards (RAS) by 30% and net profit by 3 times in 9 months. The net loss amounted to 6.5 billion rubles ($62,7 million).

◾️ Baltika brewing company is among the top ten most unprofitable companies in Russia in 2024. In 2022, the company's revenue was about 100 billion rubles ($965 million). In 2023, the net loss was 28.1 billion rubles ($271,1 million). The option of filling the budget by nationalizing profitable private enterprises has failed.

◾️ PJSC KAMAZ's net loss for the first nine months of 2024 amounted to 3.8 billion rubles ($36,6 million) against a profit of 15.8 billion rubles ($152,4 million) for the same period last year, according to financial statements published on the company's website.

◾️ AvtoVAZ automobile manufacturing company is talking about possible bankruptcy and debts of over 100 billion rubles ($965 million). This is due to the increase of the Russian key rate.

◾️ Rosneft CEO Igor Sechin is going to classify data on Russian oil exports and the production volumes of Russian refineries ostensibly to protect Russia's national interests from "unfriendly actions" by the USA and other Western countries. In reality, it is to hide the crisis in this field.

◾️ Sanctions were imposed on Gazprombank, the major bank, and fifty other banks. Sanctions were also imposed against the Russian System for Transfer of Financial Messages (SPFS, sort of Russian analog of the international SWIFT messaging system).

https://x.com/Gerashchenko_en/status/1861078363068039577

[Roman Alymov]

54 minutes ago, Stefan Kotsch said:

That's why I use Russian voices. Please complain there.

Why i have to complain? There is a lot of problems in Russia, and it always was like that (and, probably, will always be). Life in Russia is process of overcoming problems of all kinds - from drought/flood to another generation of civilizers from West trying to get hold of our barbaric lands, or another nomad horde from East/South. Nothing new. You Westerners usually grab this or that problem of Russia and run around with it to convince yourself Russia is colosus on feet of clay and it is safe to have another war with Russia. With the same result....

[Stefan Kotsch]

13 hours ago, Roman Alymov said:

You Westerners ...

Let your neighboring countries live in peace and go home. Then you can solve your own problems in your own country as you like.

[old_goat]

1 hour ago, Stefan Kotsch said:

Let your neighboring countries live in peace and go home.

Same applies to Israel too... Yet, you do not complain about IDF murdering thousands of innocent civilians in Lebanon... Also, what about the whole arab spring? Confirmed to be the work of CIA. Also resulted in tens of thousands of dead... And dont forget that "Maidan" was also confirmed to be work of CIA... So much about the "glorious west"...

[mkenny]

1 hour ago, Stefan Kotsch said:

Let your neighboring countries live in peace and go home. Then you can solve your own problems in your own country as you like.

Yes indeed. Western 'Rules Based Order' forbid occupying  neighbouring countries. Russia should do as the west does and  occupy only those  countries that are not your neighbours-- like  Afghanistan, Syria and Iraqi.

[urbanoid]

31 minutes ago, old_goat said:

Same applies to Israel too... 

'And in America they lynch negroes.'

Edited November 26, 2024 by urbanoid

[Stefan Kotsch]

1 hour ago, old_goat said:

2 hours ago, Stefan Kotsch said:

Let your neighboring countries live in peace and go home.

Same applies to Israel too ...

Either you're in the wrong thread by mistake? Or you demand the legalization of Russian aggression against Ukraine.

[JWB]

7 hours ago, old_goat said:

Also, what about the whole arab spring? Confirmed to be the work of CIA.

I wasn't aware the CIA tricked Mohamed Bouazizi into setting himself on fire.  Or that the CIA could control global food prices.

[JWB]

6 hours ago, mkenny said:

........ occupy only those  countries that are not your neighbours ...........

Does that include R.O.K. and the U.K. ?

[JWB]

I will believe it when I see it, but the signs are not good.

"There are clear signs that Russian economy is headed toward a collapse:"

https://x.com/Gerashchenko_en/status/1861325238803271709

[JWB]

Rich Russians and Russian officials are very concerned about the information that Cyprus is allegedly planning to join NATO. 

https://x.com/Gerashchenko_en/status/1861373599405232292

[Stuart Galbraith]

It wont happen. Turkey simply wont allow it.

[Markus Becker]

North Korean soldiers hooked on porn after getting internet access for first time while helping Russia fight Ukraine

https://nypost.com/2024/11/05/world-news/us-cant-confirm-north-korean-soldiers-in-russia-hooked-on-porn-after-getting-internet-access/?fbclid=IwY2xjawGy7bxleHRuA2FlbQIxMQABHYYbsmU-YANSGc0MPPIxv_45Jkw3M4ZZa7mFS2gpmmJbKQowqa8-en7_Sg_aem_LVSktqR_yATxGBRen8g82Q

 

Talk about missing the point. They'd certainly be interested but compared to Best Korea Russia is probably looking to them like The Land Of The Free. 

[JWB]

An unpleasant situation occurred with a veteran of the SMO, a convict who had only a month left to serve. Instead of finishing his sentence, he went to war, got injured, was paid only $4,000, and was thrown out of the hospital onto the street. Now he calls this state "pointless."

https://x.com/wartranslated/status/1861714078164492407

[Stefan Kotsch]

$4,000? That's a good ~400,000+ Rubles!  If the man has a little more patience, it will definitely be even more. 🤡

[Roman Alymov]

52 minutes ago, JWB said:

An unpleasant situation occurred with a veteran of the SMO, a convict who had only a month left to serve. Instead of finishing his sentence, he went to war, got injured, was paid only $4,000, and was thrown out of the hospital onto the street. Now he calls this state "pointless."

https://x.com/wartranslated/status/1861714078164492407

I'm sorry but it is strange story, What does it mean "was thrown out of the hospital onto the street" - he was sent back to Army, or he somehow becomes civilian again? It is not so simple to leave Russian Army even after disability following wound - see for example " More over, i can tell you definitely that Rus MoD is not able to tell own "Temporary WIA" from "permanent disabled" in any term reasonable timeline, as declaring (and counting) person officially "permanent disabled" is long medical-bureoucratic process (for example on member of out milhis community who have lost foot in Feb 2024 is still officially in the process, staying in theory in Army ranks and not "permanently written off")." ( www.tanknet.org/index.php?/topic/38893-kiev-is-burning/page/3806/#comment-1780421 )

   Then, "only $4000" (it is about RUR 440K on today's exchange rate) is 5-10 times less then even "welcome pay" new recruits get ( depending on the region) - and is only about two basic monsly salaries of infantry soldier on frontline (bonuses not included). He have not got even initial pay?

   Re "Instead of finishing his sentence, he went to war"  - it is quite regular situation as far as i know, as recruits are not only becoming well paid people, but they are also geting combat veteran status (and it means free univercity education for children, housing pay reduction, free use of public transport and so on) plus, in case of recruitment from prisons, criminal record is dropped.