Prime Minister Vladimir Putin met with the staff of the Tver Wagon Works
Transcript of the meeting:
Vladimir Putin: Good afternoon.
(To trade union committee chairman Viktor Koltsov) Mr Koltsov, I greet you separately as the initiator of this meeting. Mr Koltsov attended my meeting with representatives of shop floor union organisations in Moscow, and told about his concern over the shrinking number of contracts. He said the company needed to preserve its volume of output and available jobs.
I know the Tver Region experiences many difficulties. I hope you will not load them all on me. At any rate, I am ready to answer all your questions as best as I can. We will concentrate on the problems facing your industry and your company on Mr Koltsov's initiative, even if he had not asked me to come here.
I spoke with Mr Koltsov not so long ago. I think you are aware that Russian Railways has secured additional contracts to total 3.1 billion roubles since we last spoke, despite the fact that the Railway Carriage Works needs something in the region of 7 billion roubles to gain a considerable sense of security, as company and holding managers say. However, 3.1 billion is enough to start up production, retain all jobs and have decent prospects for the future. That's what I want to start with. We will get back to this topic later on.
I don't want to waste time giving long monologues. Let us now begin our talk. If Mr Koltsov liked our conversation at the Government House, he is welcome to contribute.
Viktor Koltsov: Mr Putin, representatives from virtually all company shops and branches have gathered here. We want this to be a productive meeting, and we thank you for your consideration towards our personnel and for having found the time to come here. We are all the more grateful as practical decisions have been taken since our meeting at the Government House. These decisions are reassuring. For us they guarantee, to an extent, a stop to the output-cutting trend.
I thank Mr Vladimir Yakunin for the decisions he has made. They are indeed well timed and straightforward. The 3.1 billion roubles promised to us by new contracts will allow us to keep afloat for several years. Still, our output and personnel are shrinking despite everything, and that is our worst dilemma for today.
As I have told you, the company reduced staff numbers by 400 from December to March. Another order has been issued to cut 629 jobs. It is apparent that yet another order is being drafted. This will concern not only the abolition of the third shift, but also the dismissal of another 650 or so workers. They are really indispensable people - auxiliary hands, managers, specialists and office workers.
Vladimir Putin: If I am not mistaken, the company employed 10,000 at the end of last year?
Viktor Koltsov: Yes, 10,000. The staff will be reduced by 1,700 or so from July. That's difficult to bear - all the more so as we understood the situation and made a joint decision in December to suspend many clauses of the collective agreement and freeze all bonuses. We have shifted to a three-day working week. Pieceworkers' earnings have fallen two to three times.
Vladimir Putin: They used to make good money, I know - up to 34,000 roubles a month.
Viktor Koltsov: That's approximately right.
Vladimir Putin: The average monthly wage was 25,000 roubles, with 34,000 roubles for pieceworkers. Am I correct in that?
Viktor Koltsov: Yes, the average was 25,000, against 18,000 last March. The average concerns also pieceworkers and people on salaries. The others' earnings are a third less with the three-day working week. The main concern is that it is quite discouraging to work like that for a long period of time. We are accustomed to intensive work on a continual basis. We made outstanding railway carriages day after day.
Vladimir Putin: Yes, they are indeed high standard, modern carriages.
Viktor Koltsov: Mr Nikolai Sokolov is here in the audience. With his own hands, Mr Sokolov, along with his team, are the ones who make the railway carriage bodies.
Nikolai Sokolov: Some may think I make them on my own, the way you are putting it. In fact, the whole company makes them.
Viktor Koltsov: His team manufactures five bodies a day. That is admirable work. We know that the federal budget is currently being amended. Not that we need extra allocations, but we would like Russian Railways to receive some. That would help them to put into action their investment programme, while we might have something of what remains.
Vladimir Putin: So, does this mean you need money?!
Viktor Koltsov: No.
Voice from the audience: We do, for sure!
Viktor Koltsov: We will do what we can and meet our targets. We have invested 6.5 billion roubles in reconstruction within the previous six years.
Vladimir Putin: That's right.
Viktor Koltsov: Here are some statistics to illustrate what reconstruction has contributed to the company. Our annual commodity output in 2006 was 1.7 million roubles per worker, against 2.6 million in 2008, following the reconstruction. We have enhanced labour efficiency by 50% - indeed, a tangible rise.
We certainly want to have some success later, too.
Meanwhile, the output volume is shrinking. We made 1,193 cars last year. Now, we have contracts only for 549 - this is very small.
The staff are kept in anticipation. What will happen? The 3 billion-rouble windfall might help us to make another 150 cars - but will we cope, with three working days a week? Even if we survive until the end of the year, what will we do next? Will we remain afloat in 2010? Will we keep our personnel? Today, there are 13,100 unemployed registered in the Tver Region with slightly over 4,000 vacancies.
Vladimir Putin: 4,700, to be precise.
Viktor Koltsov: That's right.
Vladimir Putin: And there are people returning from St Petersburg, Moscow and the Moscow Region.
Voice from the audience: Tver is right between those two main cities, which are ousting our people who then join the unemployed here. If you are used to normal work, you will never find a job to your liking. The excavator works is closing down. Tsentrosvar has shifted to a work schedule similar to ours. Social tensions will mount with every passing day. It worries the entire staff here.
Decisions have been made to get workers into retraining and public works. Take Boris Ignatyev. That's him. He has worked here for his whole life. We have assembled many special purpose cars together. He is a master of the highest standard. What's the use in retraining him?
Vladimir Putin: Retraining programmes are not meant for high-skilled personnel. They offer advanced training to those who need it. Now, you have thoroughly updated your equipment, which demanded career enhancement. I understand this entirely. But let us allow others to speak up. We will return to this theme later.
Vladimir Kireyev (grinder): We are afraid we will lose high-skilled people. That's our concern. I work at the tool workshop, so I can talk about the company as if it is a tool. In truth, an industrial company is a tool to manufacture commodities. It has been adjusted to manufacture particular goods - not that we have chosen them ourselves - and we cannot change to making other products. The personnel have been trained and necessary equipment and materials purchased -what will happen next? Our equipment, which costs millions, will be standing idle. Personnel training also costs a substantial sum - and what then, I repeat?
Vladimir Putin: You are right. I have just been told that in the Soviet Union two thousand railway cars were manufactured every year.
Vladimir Kireyev: Not so many!
Vladimir Putin: You know better, of course. You must have been working in the industry for many, many years.
Vladimir Kireyev: The Soviet Union manufactured 1,200 cars a year.
Vladimir Putin: And your company alone made a thousand last year.
Vladimir Kireyev: We had a similar output in the Soviet years - but we made only third-class carriages, while Germany and other countries - I don't remember which ones - made first- and second-class compartment carriages. Now, we can do every kind of passenger wagons.
Vladimir Putin: Luxury class included.
Vladimir Kireyev: We cannot get back to producing old models -that's like an auto plant shifting back to good old Zhiguli. We can only work with the latest models.
Vladimir Putin: You know it very well, as if you were employed in the automotive industry.
Vladimir Kireyev: We are metalworkers, in one sense - our work is connected with metalwork and related technology. This is what I say: we have not invented such wagons. We were commissioned to make them. Clients came to us and said: "It isn't quite up to the mark. Please make it better." We will manage if only we have relevant equipment.
Vladimir Putin: But the carriages you are making are high quality, fully up to the standards.
Vladimir Kireyev: All the more, we have heard that a foreign made carriage costs a million dollars, while ours costs a third less with the same quality. So where is the problem?
Vladimir Putin: The problem has got to do with money.
Voice from the audience: Still, we should work better - just by a little degree.
Vladimir Kireyev: But then, who is guaranteed against failures? Come to any television repair shop and look how Japanese televisions are piled up there!
Vladimir Putin: You are perfectly right.
Vladimir Kireyev: The Russian state is a big shareholder. You are the Prime Minister, so you are the state. Can you as a shareholder give our company money?
Vladimir Putin: You are wrong in that regard - all of us makes up the state.
Vladimir Kireyev: The company does not need allocations. At least three of the former Soviet republics were our permanent clients. They need a target loan. They will gain with it, and we will do much better making wagons for Kazakhstan, Ukraine and Belarus.
Vladimir Putin: That's one of the options.
Vladimir Kireyev: A good option!
Vladimir Putin: Yes. As for the former Soviet republics, we are offering them loans. You have mentioned Belarus. Russia has special contacts with this country. We are trying to set up the union state. Russia has lent Belarus more than $3 billion on intergovernmental credits since 2004.
Vladimir Kireyev: What interests me more is a target loan. It would give us an opportunity to make more carriages, and then - come what may.
Vladimir Putin: We are thinking about another loan of $500 million to Belarus. The credit burden on Belarus has reached critical levels.
Vladimir Kireyev: Yes, it's quite a sum!
Vladimir Putin: But we remain partners, all the more so as we are envisaging additional tranches, though they are meant to support the budget. But then, we can talk the matter over with our Belarusian colleagues. I think it's a good idea. I contacted certain colleagues on my way here, and this is what I learned: Kazakhstani and Azerbaijani government railways have in actuality applied to Russia for carriages-twenty for this year and another ten for 2010 for Azerbaijan.
Vladimir Kireyev: It's grain by grain for us.
Vladimir Putin: Yes, grain by grain, and the hen fills her belly. In short, we are beginning the relevant negotiations. They want a loan from Russian banks, and the talks will probably be a success. That's a good prospect.
Vladimir Kireyev: Let us get back to retraining. Here are young people, you see them - but the company has many old workers, too. Some will find other jobs, while others will have to retire.
Vladimir Putin: I don't see old men here - only men in their prime.
Vladimir Kireyev: Vocational training worries us - I mean vocational schools, not technical and engineering colleges. An old joke said there were three systems in the world: socialism, capitalism and vocational training. Now, the latter is dying.
I see the following reason for its decline. Every vocational school was previously attached to a production company, some way or another. Take the local school. Our close contacts with it vanished in the mid-1990s. Now, we are building bridges again. New ties are very close. We even wanted the pupils to train here instead of using their old school treadle lathes. They should see our machines; they are of the latest models. They should stand by our side and look how we are working for the three years they spend at school. Then, they will have a chance to become proper workers who understand the machines and production routine. But we cannot get the plan of action underway - the Law on Education prevents this.
Vladimir Putin: There are today some industrial companies which are working on special programmes, training workers together with vocational schools or even lyceums.
Vladimir Kireyev: Please explain, then, how they are bypassing the Law on Education. It explicitly says that a state municipal educational establishment cannot -
Vladimir Putin: - engage in commerce.
Vladimir Kireyev: I am not referring to commerce. It has no right to work in partnership. Ours is a joint-stock company - which means it's half of a private company. It would be easier if we were a government company - which we are not.
Vladimir Putin: Yes, I agree. There is this problem in hand. We are discussing it actively. The issue is much more extensive than what you say. A law-abiding company should not undertake any activity beyond what the law stipulates. That is why our universities and even secondary schools do not engage in serious research, as far as I know, to say nothing about shop floor worker training. They could be very effective in research but the law does not allow them. Therefore, we are considering a number of appropriate amendments.
As for your instance, many industrial companies have found a loophole. They make corresponding contracts. They do not incorporate schools but make contracts for joint personnel training, invite students for practical sessions, and even choose their future employees in advance.
Vladimir Kireyev (grinder): I think that is how my company is operating. But their teacher is employed at school, not here, and has the smallest possible class. I made an inquiry, and learned that the smallest possible class was 13. A larger group, up to 25 students, requires two teachers. Their monthly salary is 5,200 roubles.
Vladimir Putin: I am sorry, what is your name?
Vladimir Kireyev: My name is Vladimir Kireyev.
Vladimir Putin: I see your difficulty, Mr Kireyev. I think you are right. We can get this kind of work going even now but I think it requires some special efforts to make it effective. But the problem is certainly here for all to see. I promise that we will have a more detailed look at it in terms of the necessary legal amendments.
Vladimir Kireyev: That would be good. When a rumour spread that the vocational school would be incorporated into the Carriage Works with employment prospects, crowds of applicants were swelling - they literally forced open the school doors. But the company made a couple of attempts, and saw it was clashing with the law. Now, here we are - the school is short of pupils. Boys don't want to enrol because they have no idea where they would find a job if the Carriage Works does not take them on.
Vladimir Putin: We shall see and analyse the problem, I promise.
Artur Demenok (electrician): We have another sensitive issue to raise; it relates to contracts. Why not resume government contracts with such companies as ours or aircraft builders? If Russian Railways cannot afford to purchase our wagons now, the state might buy them to lease them to the same Russian Railways. The arrangement will be repaid later.
Vladimir Putin: The crisis makes consumption and shipping operations shrink. That's the difficulty. It concerns a large group of commodities. Steelworkers, for instance, ask us to take their entire produce for the state reserve - but we cannot do so. The same faces many other commodities - we cannot simply buy them and give them away without any idea of when they will pay back. That would torpedo the national budget.
We should try to find the latest methods of supporting production. We are groping for such methods. Our leading banks have affiliated leasing companies. Sberbank has one, VTB and VEB also have such branches, some dealing with railway carriages. But these companies stand idle because shipments and cargoes shrink with every passing month. So it would be hazardous to purchase the entire required stock on a government contract.
Artur Demenok: I am sorry, carriages are not made overnight. It isn't like steelworks, where metal appears as soon as it is smelted. It takes a year to make a railway carriage, so we cannot produce the entire amount in one fell swoop.
Vladimir Putin: We have not yet finished our discussion. New ideas occur to me in the course of the talk. You will receive state support in some form or other, which matters most.
Please go ahead.
Nikolai Sokolov (electric welder): Mr Putin, the company is like a second home to us. My father worked here all his life, and I got a job as soon as I finished the carriage works school. My son works here, too. There are many fathers and sons in the shop I work. The company has many such dynasties as the Ignatyevs.
We were doing what we can for the company. In the Soviet times, we worked for twelve hours a day, Saturdays included, to meet plan targets. We waited for this new carriage model for a very long time. And then, finally, we started its mass production after we manufactured small series-and, all of a sudden, we learned that we were to make a mere 500 wagons. That will ruin the company! The largest European carriage works cannot keep afloat with only 500 wagons. We need at least 900 to survive.
Vladimir Putin: Company managers have said the same-that you need at least another 300 cars. Viktor Koltsov also asserted this point.
Nikolai Sokolov: Yes, 300 at least. This is a must, with the wear and tear of the rolling stock!
Vladimir Putin: 68% of available wagons are beyond repair.
Nikolai Sokolov: Russia will host the Winter Olympics quite soon. What are we to do-buy carriages in China?
Vladimir Putin: Everything you say is to the point. I have ordered not to buy anything in China, whatever our Chinese partners might feel about this.
Nikolai Sokolov: What joy!
Vladimir Putin: We should think first of all about keeping Russian companies active, although the Transport Ministry's intentions are geared towards importing carriages from China-mainly because they are cheaper. The Ministry's plans relate to only freight cars, open goods cars, etc-not passenger cars.
Nikolai Sokolov: Mr Putin, if we come to the comparison of Russian cars with Chinese, allow me to mention the Nevsky Express accident. It showed that we had made a real, outstanding carriage for the train-it saved many lives.
Vladimir Putin: You are making quality carriages. That is evident. And you have done a great amount to modernise production.
Nikolai Sokolov: Let me reiterate again: the company will not last for long if it makes only 500 wagons. We have just talked about personnel training. The company has taken on many lads, trained them, and provided them the latest equipment to work with. How can we fire them now?
Mr Koltsov asked me what was better-a three-day working week or a drastic personnel reduction with higher wages. My shop said we should work for three days but preserve the personnel at all costs.
Vladimir Putin: Russian and Western experts forecast a boom to start next year, at the latest. If they are right, shipments will grow and demands along with them-but it will be difficult to resume the previous production volume with the experienced personnel gone.
Sergei Nikiforov (Grade III facility design and construction engineer): We have invested seven billion roubles-
Vladimir Putin: 6.2 billion.
Sergei Nikiforov: Very well, you receive more precise statistics than we do.
Vladimir Putin: You have been misinformed occasionally.
Sergei Nikiforov: All right, even if it is 6.2 billion, and if we transfer it into the cost of old STO series cars, the sum will suffice for 430 cars-almost half a year's production. This is what our investment in production development amounts to.
Vladimir Putin: We should pay credit to stockholders and company managers-they made the investment in good time.
Sergei Nikiforov: We did it after Russian Railways promised to purchase 25,000 cars from us up to 2030. Regrettably, the agreement was not documented. Western companies with which Russia has contracts are working on them, and Russia has to purchase, let's say, Sapsan trains due to its contract obligations. Why, then, are we doing such things in our home country-making an investment with no documentary information to rely on? So here we are, unable to use our investment.
Vladimir Putin: You see, oral agreements do matter in the business world, to an extent-but they have no legal force, so the company can hardly make a claim on Russian Railways, which is also in dire straits. To ease off the general economic burden, we forbade it to raise tariffs as high as it wanted this year. The tariff growth rate has been halved, believe it or not-so the money inflow to Russian Railways has shrunken.
What's more, the volume of shipments has lessened by a third, so Russian Railways has now fallen on hard times. It cannot afford to purchase everything it needs.
Sergei Nikiforov: I see. I am not accusing our managers; I merely say it for future reference. We are speaking about this year, in which 3.2 billion roubles will be earmarked for us.
Vladimir Putin: 3.1 billion.
Sergei Nikiforov: I just want the sum to be larger.
Vladimir Putin: Good for you!
Sergei Nikiforov: We must know what is in store for us next year and in 2011.
Vladimir Putin: I see.
Sergei Nikiforov: We have mentioned 10,000 employees. The figure is not quite correct. 652 supplier companies based all over Russia are our partners, so the figure is much more than the 10,000 people working for this company alone. My parents work here, and my brother also has contacts with the company-he works at the Tver Institute for Railway Carriage Manufacturing, which tests those cars. So you see how things are? The Tver Railway Carriage Works makes huge deductions to the regional budget. Now, we only have half of the money we had previously. Our wages have been cut, so we pay smaller taxes, and this is a problem for the entire Tver Region.
All these dilemmas cause tremendous levels of social tension for us.
We met with Speaker of the regional legislature Andrei Yepishin on February 25. He said he meant to resolve the Carriage Works' difficulties. Six weeks have elapsed-and decisions made that day (the meeting took place on the eve of the election to the regional legislature) have not been implemented. We told him we needed state support to reschedule our bank loans.
Vladimir Putin: I see. I think it is nothing new that Russia has no bearing at all on what has caused the global economic crisis, so I don't need to repeat it all over again.
When this and other companies were modernised, no one thought the global economy would collapse as it did. I often cite an example from the steel industry, whose outcome has ramifications on all other sectors, shipments being no exception. In some steelworks, 60% of produce was export-oriented, just as 50-60% of coal mining output. But foreign markets can no longer purchase such amounts. They are cutting down on consumption-which means coal, metal and timber shipments are shrinking because this economic field is also experiencing great problems. Here is Mr Yakunin. He can tell you that shipments shrink with every passing month. This is an objective factor, wouldn't you agree?
Even if our debates become even more heated than this, they will not improve the world economy. What we should do today is to invent such ways to keep key industries afloat as to preserve the staff and support production, as Mr Koltsov and others have explained. That is what we should be thinking about.
I see another important point in what you have said-that those who made timely investment and modernisation deserve incentives. This is a heavy burden on your company. The 6.2 billion roubles must be paid back.
I don't know what the regional Duma speaker has promised you. At any rate, regional administrations are unable to support your production in its full volume. Besides, I think the money was also used by other branches of the holding, on which the Tver Region has no direct bearing. However, this is an essential matter, and we will bring it under our consideration.
As the Governor told me, the regional administration can make regional shipment contracts together with Russian Railways-but such contracts cannot be large, unfortunately.
Sergei Nikiforov: I don't think you have understood my point-what I meant was rescheduling our employees' private debts to banks. Our workers have made many loans. This does not concern the company proper.
Vladimir Putin: So you meant consumer credit?
Sergei Nikiforov: That's right. We were promised help but have received none. As for the company, it requested a postponement of tax payments before things get better.
Vladimir Putin: I see.
Sergei Nikiforov: We have also brought our attention to contacts with Tvervodokanal and with electric companies-we want to pay for what we have actually consumed, and put an end to advance payments. I understand the regional administration cannot help us to improve our situation-but, at any rate, it can support the company in such purely regional matters as that.
Vladimir Putin: I see your point. Then, let us divide the two issues. First, employees' consumer and housing credit and second, loans that the holding has made for reconstruction and modernisation.
As for consumer and mortgage loans, I looked through papers before coming here. That is one of the problems. One of the banks has fully rescheduled the loans. As for Sberbank, it is willing to reschedule consumer loans but has never yet mentioned mortgages. I talked to the Sberbank president on my way here. He will give instruction to the Tver Sberbank office today to make full rescheduling of private consumer and mortgage loans for the Tver Region. This will surely concern your company personnel, too.
As to what should be done to help the holding with its modernisation loans, it is a separate matter, and I will talk about it a bit later.
Any more questions?
Anna Serova (Grade II project economist): To promote domestic production is one of the principal anti-crisis measures planned by the Government. Do we need to import speed trains while Russia possesses companies with sufficient intellectual and industrial resources to manufacture their analogues?
Vladimir Putin: You mean German railway carriage imports?
Anna Serova: Exactly.
Vladimir Putin: This is a contract previously signed, which we have to comply with. More than that, such rolling stock is not yet manufactured in Russia. You are making excellent comfortable carriages-but their speed is below the latest standards, so Russian Railways is buying high-speed trains. Railway carriages are not my forte, as you surely realise. I have to trust experts in this field-and they say our industry does not manufacture such trains.
Anna Serova: But we have gifted specialists who can design such carriages.
Vladimir Putin: Yes, that is why we along with our foreign partners have a teamwork programme, which envisages production shifted practically wholly to Russia.
Yury Mikhailov (plumbing assembler): You have come straight from the Udomlya nuclear power plant. It is in the Tver Region, and the region takes part in its operation. Nuclear industry might help the region to bring down tariffs during the crisis because we have made every possible sacrifice to it. Tariffs might be reduced temporarily, as Finance Minister Alexei Kudrin says-for 10-20-50 years. This problem could be solved, and this would help us reduce car production costs, etc.
Vladimir Putin: Mr Kudrin finds himself under much stress today, with great pressure on him, so he is making every effort to prevent greater pressure. I don't think we will ever feel such pressure throughout the next 20 years.
Today, I have visited the Kalinin Nuclear Power Plant. We have discussed the development of the nuclear power industry. I am aware of the problem of growing tariffs, and I think the problem is exaggerated because 25% tariff increases have been approved. We have done this in order to retain the investment.
As far as the energy sector and the nuclear power industry are concerned, one job creates ten other jobs in the region. The nuclear power industry and power grid would gradually fall into disrepair if we deceive investors and if we prevent them from implementing their investment plans.
As far as other tariffs are concerned, I want to repeat that we have discussed this issue with the Governor. I find it hard to understand why water supply and drainage tariffs have gone up by 26%.
All this generates a rather unpleasant combined effect, especially during the current economic crisis marked by dwindling wages.
Speaking of the nuclear power industry and the NPP, can it accomplish something in this sphere? To be frank, everything being created in any specific region, including such ambitious projects as NPPs, is the result of regional efforts and the entire Russian nation. All regions have the right to expect that people will have approximately equal living conditions.
We would simply dismantle the entire national economic space if we forced NPPs to operate in line with different principles and conditions in every region. Consequently, milk prices would be cheaper in one region and more expensive in another. This economically misguided policy can have dire consequences.
I am convinced that we will retain the national energy sector infrastructure and will even continue to expand it, if we implement the plans we discussed at the Kalinin NPP today. Both companies and families will be able to afford to pay the set tariffs if the energy sector infrastructure expands.
Yes, please, go head.
Marina Chesnokova, an accountant: Our enterprise has a number of social assets, namely, a public services company, a cafeteria, the Metallist Cultural Centre and the Planeta gym and swimming pool. In this situation, each of these facilities is forced to pay its own way. Do you envision any state support in this case?
Vladimir Putin: To the best of my knowledge, this is a purely local issue. I can only tell you that the huge ice-skating palace now being built near the main entrance is being financed completely out of the regional budget. Previously, your enterprise was supposed to complete and commission this large facility, which will be primarily used by corporate employees. At present, this project will be completely financed out of the regional budget.
Mikhail Novosyolov, an electric welder: We will find additional shareholders. I also own corporate shares.
Vladimir Putin: This factory's shares?
Mikhail Novosyolov: Yes, that's right.
Vladimir Putin: Maybe you could co-own another plant.
Mikhail Novosyolov: The state owns a 42% stake in the enterprise. Consequently, you are also a shareholder. They are asking us to vote for a loan. They are opening a credit line at TransCreditBank charging exorbitant interest rates.
Vladimir Putin: For the enterprise?
Mikhail Novosyolov: Exactly.
Vladimir Putin: I have talked to your colleague about mortgages and consumer loans. I have read some documents before this meeting. It turns out that TransCreditBank has completely restructured these credit relations with individuals. I want to repeat once again that Sberbank will do the same in the near future. Both banks control the lion's share of all loans.
Naturally, exorbitant corporate loans are affected by inflation. The 13% Central Bank rate of refinancing largely depends on inflation. Commercial bank loans are also linked with its rate of refinancing. Present-day loans carry high interest.
The State Duma has now passed the federal budget in the second and third reading. Consequently, we are able to study the possibility of co-financing two-thirds of the Central Bank's rate of refinancing for civilian-sector subsidies, including those for the transport and engineering sector. We will discuss this issue in the near future.
Remark: Just like with car loans?
Vladimir Putin: Yes, like with private car loans. But this issue concerns corporate loans.
Remark: That's is very good.
Vladimir Putin: If we do some calculations, and if we decide that we can co-finance such volumes, then this will amount to sizeable support. TransMashHolding, a strategic enterprise, has every chance of joining this programme. See for yourself: Two-thirds of the 15% rate is 8.7%. The final rate will therefore total 10-14%.
Remark: That would be nice.
Question: Mr Prime Minister, the situation in the city is very complex. You know the outcome of local elections.
Vladimir Putin: Yes, I've heard about it.
Question: Is it so hard? When I watch TV, I can see that the municipal Duma is just a bunch of clowns in a travelling circus. I think the local United Russia office has let the entire party down after selecting Duma members in such a slipshod manner. Half of them have prison sentences, and corruption is also rife.
Vladimir Putin: You are talking about the previous Duma. For what offenses were they sentenced?
Remark: For accepting bribes.
Vladimir Putin: And for coordinating exorbitant tariff increases.
Remark: That's right. They let the party down completely.
Vladimir Putin: They conspired with enterprises.
Remark: Our elderly women, the most active voters, are all captivated by Vladimir Putin and Dmitry Medvedev. This time, however, they voted against United Russia. You created this power hierarchy. Here is what I suggest. I can see Duma members fighting for the post of the administration's head. Let the Governor appoint the mayor. We should not elect the mayor who must report directly to the Governor because current developments are a shame for the city.
Vladimir Putin: I agree that there is such a problem. Frankly speaking, this is also linked with the level of our overall political culture. However, direct appointments are a problem linked with our international commitments.
The municipal administration level should be closer to people, the prime object of its activities. Everybody believes that the people must know who runs their lives. Nevertheless, present-day legislation provides such opportunities. However, this is a complicated procedure. For instance, a regional capital may be viewed as part of the regional state power system and as a territory of the Russian Federation's constituent entity. For this purpose, the regional legislature must conduct certain proceedings. The deputies themselves must adopt this decision.
Remark: Mr Prime Minister, I support Russian producers. Although I own a VAZ-2114, I cannot drive to work because we don't have enough bridges. They have shut down two bridges inside the city. But they now want to close the eastern bridge.
Remark From The Hall: Yes, this is a huge problem.
Remark: They promised to build a bridge beyond the Volga, but the project has now been shelved.
Vladimir Putin: This year, we are planning to open three bridges over the Volga. Not here but in general. This is a sufficiently large, labour-intensive and capital-intensive project. But we can consider this issue. To be honest, it is not easy to do.
I don't know what kind of a bridge it is. We must take a look. I know nothing about financing volumes. But we are implementing a very ambitious road and bridge construction programme. Although the Ministry of Transport is receiving smaller allocations, this programme is being expanded. As compared to 2008, we are spending more on roads and bridges, although such funding is smaller than planned.
Certainly, we can also examine this request, which must be submitted by the Governor. But I cannot tell you that construction will be launched tomorrow. This is a responsible decision.
Question: Mr Prime Minister, here is another municipal problem which is closely linked with corporate problems. I am talking about day care centres. Young families have been complaining to our trade union committee.
Vladimir Putin: Numerous day care centres were transferred under municipal jurisdiction throughout the 1990s.
Remark: Fifteen day care centres were transferred here.
Vladimir Putin: Former day care centres now house entirely different agencies, which, in fact, can hardly be called agencies.
Remark: That's right.
Vladimir Putin: I can only say that this is a purely municipal and regional task.
Question: You have done right to institute maternity capital. But our trade union committee is also discussing subsequent care for newborns.
Vladimir Putin: I agree, this is a problem.
Remark: We would like to see a clear programme or even several programmes. This implies maternity capital and support for day care centres. Perhaps we don't need major investment in order to expedite this programme. Let's evict those agencies now occupying former day care centres.
Vladimir Putin: It's hard to evict anyone from the renovated premises that must be rebuilt from scratch. We must promote more flexible forms of work with young children, namely, family day care centres, etc. We have the potential for doing this. Quite possibly, we will now start tackling this task.
Remark: Considering the fact that two of our workers are deputies of the municipal Duma.
Vladimir Putin: And you are angry at them.
Remark: We won't let go of this issue. We will tell them to draft this programme and will provide every support.
Vladimir Putin: We can even think about certain co-financing. Of course, there will be no large-scale co-funding, like during the resettlement of people living in rundown buildings. In the past two years, you have spent 1.7 billion roubles on resettling such people from dilapidated housing. This amounts to 40 residential buildings. This year alone, 350 families are scheduled for resettlement. A lot is also being spent on repairs. I may be mistaken, but 112 houses are currently being repaired. The relevant allocations have been channelled into the region.
Question: Perhaps we should contact the business community and company managers? Improved corporate performance could make it possible to channel part of profits into some municipal fund.
Vladimir Putin: Mr Viktor Koltsov, as you are a trade union leader, may I address this question to you? On the whole, it would be better to raise wages and to rid the enterprise of the social burden, so that the city hall and regional authorities could tackle such tasks, and so that people can earn higher wages and pay their way.
AvtoVAZ has already been mentioned here. In fact, we have freed that company of the social burden at its own request. I allocated a tremendous sum of 600 million roubles from the federal budget to take social assets away from them. Instead of expanding production, they are spending exorbitant amounts. However, the quality of services must not get worse.
Question: Mr Prime Minister, I am a design engineer. The need to preserve and maintain workers' occupations was mentioned here. I would like to discuss the occupation of engineer. It is common knowledge that engineering is not the most prestigious and well-paid job in this country.
Vladimir Putin: Nevertheless, wages are being raised. Unlike humanities universities, technical universities now admit more students. There was a time when this country prioritised the training of lawyers, economists and sociologists. The trends are now changing somewhat.
Oleg Zakharov, a design engineer: I graduated last year. Many of my fellow students started working in other fields because engineers are currently underpaid. If we want the economy to remain stable, we must expand competitive production of machinery, motor vehicles and other goods. This is impossible without skilled technical specialists. Should not we preserve engineers and enhance the prestige of their occupation? And if so, what does the Government plan to do?
Vladimir Putin: You must boost product sales, maintain wage levels and raise them.
O. Kononenko, a design engineer: The crisis has hit our enterprise hard. They say the crisis is definitely a negative phenomenon, yet they are also saying that during the crisis enterprises must rally their efforts for a breakthrough to making new equipment, and that this equipment must satisfy the growing requirements of clients.
Currently, the enterprise, including engineers, is working in a three-day regime. A designer's work does not depend on the volume of production. The amount of documents is always the same, be it for one or for 100 railway cars. Our enterprise represents a whole sector in this country, and we must work to capacity even in a three-day working regime, designing new cars, because there are many types of cars and more and more new demands are set for them.
This problem has not been solved at the enterprise, because the crisis will end and we must offer something new to the clients. We must show progress. Today my department, the main design department, is not working in a three-day regime; we work five days a week but are paid only for three days. How can this problem be addressed? The sector cannot be left to its own devices; it must be able to develop.
Vladimir Putin: You have just said [how this problem can be solved]. What are you doing? You are searching for ways to intensify your work. It is not fair that you are being paid for three days when you are working a five-day week. This is not fair, but this is called intensification.
As for your enterprise, the situation here differs from what is happening at other enterprises of the sector. What do we mean when we say that one can emerge from the crisis renewed, and with a development outlook? We mean that in the past years many people became used to big money, which came quickly and left just as quickly. Nobody calculated outlays, and nobody thought about introducing energy-saving technologies, and so on. But now that we must carefully calculate costs, everyone is considering ways to cut outlays, to make production more efficient, and to achieve better results. Many enterprises are doing so. Yours has done much, because 6.2 billion has been invested in modernisation, and that brings us closer to reaching these goals.
Therefore, our task, yours and mine, is to help the holding's managers and owners to restructure debts so that they do not drag production down but give it a chance to develop.
O. Kononenko: May I ask one more question?
Vladimir Putin: Certainly.
O. Kononenko: Let's get back to the figures, the 3.1 billion roubles Russian Railways has promised to provide. The media have reported that 2 billion roubles has been channelled into creating RIC type cars. But this kind of money will not help the enterprise this year, because the cars we can create are the Russian 1BM type cars. The RIC cars are lower; our cars are different size. Even though we have received the money, we cannot now produce such cars because we don't have the design documents or technology for their production. It takes time to get them. These cars also need a European certificate, not a Russian one. Yes, we have the money but this will not solve the enterprise's problems.
Vladimir Putin: Yes, you are right. Part of this work will call for additional efforts, including from professionals such as you. Part of this money should be used to adjust the technology to the production of these cars here, at your enterprise. But another part of the funds should be invested in production. You also have another contract, worth more than 1 billion roubles, for special cars.
O. Kononenko: We don't have the design documents for them either.
From the audience: All of this requires preparation. When the documents arrive and we start working, it will be early 2011 at the best. And we will not receive all of the money. We will receive only 100 million of the 11.1 billion roubles.
Vladimir Putin: Are you in accounting? I know that this cannot be done quickly. I'll get back to this issue later.
Question: The cost of housing per square metre in Tver is very high.
Vladimir Putin: I agree. This is strange; the reason is probably the closeness of the two capitals, as you are situated halfway between Moscow and St Petersburg.
From the audience: Housing is cheaper in the Moscow Region.
Vladimir Putin: Tver must be a good city. You must agree that [housing prices] are not set to order. This is a market economy.
From the audience: We also have Lake Seliger, a natural gem. We used to spend our holidays there in the past, but now it has become very difficult to reach it. The roads to the lake have been closed off by fences surrounding private land. It was all done in accordance with law, with the houses standing a required distance [from the shoreline], but the fences go right into the lake. The same can be said about Lake Kozye.
Vladimir Putin: This is the first time I have heard of this. I agree that there are rules that must be respected. There must be a road to ensure access [to the lake].the gate.
Vladimir Putin: We will check the legality of these fences and guards; we will do it.
From the audience: You have been asked about the bridges; I just want to provide additional information. One of them was built by the French in 1898, can you imagine? And the other, made in St Petersburg, was brought here before the war and mounted after it.
Vladimir Putin: Which war was that? The war of 1812?
From the audience: They brought the bridge parts here before the war and assembled the bridge after the war. And there is also the problem of roads, which are almost impassable. The lucky ones come here by helicopter.
Vladimir Putin: I did.
From the audience: Some of our districts are located 10 kilometres from the plant, and it takes people two or three times longer to get here than those who live 40 km away. We still have the eastern bridge, which was built as an experiment, and it is impossible to think what will happen if it is closed. It will be the end of the city.
Vladimir Putin: Have you demanded that new bridges are built?
Answer: It will take at least 900 million roubles to reconstruct the eastern bridge.
Vladimir Putin: And how long would it take?
Answer: Slightly over a year. Unfortunately, this project is not on this year's agenda, which includes another interchange.
Vladimir Putin: So, there is no way to do it this year. Let's consider putting it on the agenda for 2010.
From the audience: The construction of a block of flats began 500 metres from the plant in 2005. About a hundred people took out mortgages from the plant at 4% annual interest and invested in construction. But the block has not been built to this day.
Vladimir Putin: Who was building it?
From the audience: The RSK developer.
Vladimir Putin: Is it a division of the plant?
From the audience: No, it is just a local developer.
Vladimir Putin: A private developer?
From the audience: Yes, a private developer. And a hundred families are still waiting for their flats.
Vladimir Putin: Is it an operating company?
From the audience: It is, but the project is not progressing.
Vladimir Putin: How long have they been building the block?
From the audience: Since 2005.
Vladimir Putin: This is very strange. It means that they began building it in a favourable economic situation unaffected by the crisis. So, the delay is the company's fault. The Government will look into the problem.
From the audience: We have set an initiative group of 10 people at the trade union committee, representing the 95 people who are waiting for their flats. I personally phone the developer's general director almost every week to inquire about the project. They are not working, but they assure us everything will be alright.
Vladimir Putin: The Governor says everything will be fine.
From the audience: We hope so. If we have any more problems, we will appeal to you.
Vladimir Putin: Do they need any help?
From the audience: No, everything is okay there.
Vladimir Putin: Yes, only it takes a decade to build a block of flats.
From the audience: At first we envied those 93 people who were going to get these flats...
Vladimir Putin: And now they envy you, for saving your money?
Question: I don't know, maybe my question is too big. I want to talk about retail. Our kids go to school with beer and cigarettes, and they come back home with beer and cigarettes. There are kiosks everywhere. Don't they ever check to see what they sell? The younger generation is on the downward path.
Vladimir Putin: I agree that this is a big problem. You have probably noticed that we have started an anti-alcohol campaign, but we also need to improve retail rules. And this largely depends on local governments.
From the audience: The gaming halls, which school kids used to frequent, are being closed now.
Vladimir Putin: But we cannot issue a federal order to close these kiosks.
From the audience: Why not? They don't sell basic necessities.
Vladimir Putin: That's true, but you know that first we must approve decisions prohibiting the placement of kiosks near children's establishments, for example sports centres, so that they would not sell alcohol there.
From the audience: We have kiosks 50 metres from the school.
Vladimir Putin: You have a legislature, let them think about it.
Vladimir Botalov, milling machine operator): Mr Prime Minister, do you have a programme of improving the people's housing conditions?
Vladimir Putin: I have already spoken about it, but I can tell you again. We have a programme, which I initiated several years ago, when the Housing and Utilities Fund was set up. We use it to address two problems: resettle people from rundown housing and repair dilapidated buildings. The Tver Region is working in both spheres, and unlike other regions, it has advanced towards the designated goals. Over the past two years, it has received 1.7 billion roubles. More than 100 residential blocks are being repaired, 350 families will be resettled from dangerous houses. We continue to implement this programme. Last year we allocated 50 billion roubles for all regions, and appropriations this year will be 90 billion despite the economic downturn. We will carry on. The Tver Region has filed two requests for the programme, so it will be continued.
A. Demenok, electrician: Maybe the problem is a bit different... It is impossible to buy a land plot for housing construction.
Vladimir Putin: Why? Too expensive?
A. Demenok: At least 500,000 roubles for a 0.12 hectare plot. Where can I get so much money? And this is for a vacant plot. This leaves me no money to build a house.
Vladimir Putin: We have just spoken about the crisis and their positive and negative consequences. I think that one of the positive issues should be a decrease in prices. Because when incomes and wages fall, prices of land plots cannot remain high.
A. Demenok: The plot cost 500,000 roubles before... it costs less now.
From the audience: The trouble is that we think prices will continue falling everywhere. Some hope the prices of land will fall, and I hope that milk will become cheaper. Milk prices are growing, for some reason. Food prices are growing, while wages are shrinking. This man will buy land now and then they will slap a land tax on him and he will go bust. Do you know how high the land tax has grown this year?
From the audience: The cadastre cost has grown 100-fold, according to our assessment.
From the audience: "Just" 100-fold!
Vladimir Putin: As for foodstuffs, this is a problem, and it is mainly connected with imported foods. There are many of them. You have mentioned milk. It is not directly connected to the issues on our agenda today, but I can say a few words since you mentioned it. I think that we will have to spend money to support dairy producers, because cows are giving more milk now, it happens every year, you know, and processors are buying it at very low prices. I think we should support the milk producers, the farmers. But this is a separate issue, and I will speak about it in Moscow.
G. Smirnova, a crane operator: We have a nuclear power plant in the region. Why then are electricity prices keep growing?
Vladimir Putin: I have already answered this question. You see, we cannot force an enterprise to sell [electricity] at one price in some regions and at other prices in other regions. Prices differ from region to region, but the average price should be the same throughout the country, or else we will undermine the economic space. It is not good that electricity prices have grown. But it is still worse that they have grown disproportionately compared to the average for the country.
We had to permit a 20% increase in tariffs because money has been invested in power generation. We need more money for this investment not to be in vain, to maintain power generation and develop the grid systems. We say that RZD should buy new railway cars. But if we cut the company's tariffs, its income is halved, and it cannot buy these cars from your enterprise.
The same is true about power generation. Had we not allowed the sector to raise the tariffs, it would not have created 10 jobs per each job in nuclear power generation. However, I want to say that the problem could have been approached in a more balanced way. We will discuss the problem with the regional authorities.
I don't understand why prices of water supply and sewage have grown 26%. Why 26%, if electricity prices have grown 25%. And why have prices grown 27% in your region when the country's average is 25%? There are questions we need to answer.
Question: Why are prices falling because of the crisis in other countries but growing in Russia?
Vladimir Putin: Well, they are not falling everywhere. Many countries have suspended social projects, but we haven't.
From the audience: Thank you for that.
Question: Mr Prime Minister, I have one more question about the cadastre cost [of land]. It has grown 100-fold. The elderly people who have orchard plots have not felt the difference yet, but in a month or two they will receive the [land tax] bills and will be shocked. Say, they used to pay 30 roubles, but will have to pay 3,000 roubles now. I am chairman of a horticultural cooperative, which is divided into 70 land plots, and 75% of owners are retired people. I envision a redistribution of property because many members of my cooperative will not be able to pay the tax.
Vladimir Putin: Where does the land tax go?
Answer: To the local budget.
Vladimir Putin: If it goes to the local budget, it means that it is the local authorities who set the tax.
From the audience: So, we will ask Dmitry Zelenin (the Governor of the Tver Region) to help us.
Vladimir Putin: This means that you should consider more carefully everything that is related to the region and the city. I suggest that we return to the question with which we started, the key issue on our agenda. I have listened carefully to everything you had to say and believe that we can and must do the following. What else can be done to maintain a normal operation of enterprises? First - it has been said here - we need additional allocations. As you know, they have been approved at 3.1 billion roubles.
Second, the enterprise has taken quite a few loans. But we cannot blame it for this. It was a wise investment in modernisation, and so we should help the holding to repay these debts. The loans that have been taken to modernise production can be repaid within a programme of subsidies for loan interest repayment amounting to two-thirds of the Central Bank's refinance rate. We will consider this possibility.
I repeat that I spoke about subsidies after the adoption of the budget. It has been approved in the third reading today and will now be forwarded to the Federation Council.
We have one more programme in mind, for subsidising two-thirds of the interest rate against the enterprise's current operation. But this is an item for future consideration.
As for debts, the decisions regarding them have been taken, and the enterprise now should promptly prepare requisite documents.
And one more measure. We will hold talks with our partners regarding the import [of equipment]. We will try to convince them to ensure requisite loans through Russian financial institutions, Russian banks, on the conditions that would be acceptable to them.
And the last thing, probably the most effective and important one. I hope you will be happy: I think that the enterprise merits direct support. Therefore, I will sign a government resolution within 10 days on the allocation of an additional 3 billion roubles to RZD for direct purchases of rolling stock from your enterprise. The plant's managers asked for some 7 billion roubles. You will have 3.1 billion minus the spending on preparation of documents for the programme I have mentioned before. The second element is debt restructuring and a direct allocation of 3 billion roubles, or nearly as much as the plant's owners and managers have asked for.
So your jobs this year will be safe. I wish you success.
From the audience: Mr Prime Minister, thank you. Will you come next year?
Vladimir Putin: Rest assured that I will.
Question: I have attended an international conference in Belarus. They regulate prices of all foods. Can we do the same? All enterprises are trying to raise their prices.
Vladimir Putin: This is not a simple question, and it is a very important one. Price regulation merits careful consideration, because it can lead us too far, as far as stopping production. Prices are made up of many components, such as transportation costs, electricity fees, wages and so on, in each related sector. Well, we can set a certain markup for your cars, while electricity prices have grown 27%, and water and other pries have also grown. So, should we regulate all prices? In this case we should revive the Soviet Union's Planning Committee, and this will ruin your enterprise, force it to a standstill.
From the audience: There are too many intermediaries.
Vladimir Putin: Exactly. Good buy.
