Prime Minister Vladimir Putin lashed out at manufacturing titans late Wednesday for the industry’s poor competitiveness and low quality products, saying protectionism and subsidized loans were no substitute for a high-quality product.
“You know better than anyone the problems that have accumulated over the years. … But we have to recognize that this is all the result of a lack of a clearly defined strategy for development,” Putin said at a meeting with the Machine Engineers Union.
“This is the reason behind the low competitiveness of the mechanical industry and the low level of technological innovation,” he said in comments posted on the government web site.
Putin said while companies throughout the world were also experiencing production cuts and a shrinking market, domestic firms should use government funds and trade preferences to fix their production methods and increase the quality of their products.
The country’s manufacturing sector has contracted for 11 straight months, with most major carmakers shutting down for extended periods to reduce inventories after automobile sales plummeted more than 50 percent from the year earlier.
“Today, no one is in a position to make the consumer buy uncompetitive or out-of-date goods. No kind of persuasion, or even trade barriers or customs tariffs will help,” he said. “At best, they will only have a short-term effect.”
But Russian Technologies chief Sergei Chemezov, a member of the bureau, defended tariffs that were introduced last year to help carmakers including AvtoVAZ, in which Russian Technologies owns a blocking stake.
Speaking in an interview on Vesti-24 late Wednesday, Chemezov said that if tariffs on foreign cars had not been raised, Russian producers would have lost their leading position on the market.
“[The Machine Engineers Union] and the automotive industry in general proposed defending our domestic market by raising tariffs on commercial and consumer cars. … Lada now occupies first place on the domestic market,” Chemezov said.
The Lada is produced by AvtoVAZ.
Chemezov said that while some people may not be satisfied with the quality of the Lada, “most people buy these cars in particular.”
He also said that while the government does offer to subsidize loans to automakers, it’s difficult to fill out all the documents required and there are few companies who can do it.
Putin said at the meeting that the government was asking the Machine Engineers Union for help as a last-ditch effort to try to modernize the industry.
The union’s leadership includes prominent businessmen, politicians and academics, including former AvtoVAZ president Boris Alyoshin, United Aircraft Corporation president Alexei Fyodorov and KamAZ chief executive Sergei Kogogin.
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