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Representative terms from entire chapter:
serial production
Page 157
Steps Taken by the Sarov City
Administration and Most Important Organizations in Support of Small
Innovative Businesses
Aleksandr V.Belugin, Yelena S.Dyakova, Vladimir I.Zhigalov,
P.G.Smirnov, and Olga N.Arkhipkina *
All-Russian Scientific-Research Institute of Experimental Physics
INTRODUCTION
The city of Sarov is one of the leading defense centers of
Russia, with its economy being largely based on the Russian
Federal Nuclear Center All-Russian Scientific-Research Center of
Experimental Physics (VNIIEF) and the Avangard Electromechanical
Plant. For more than half a century, the city has accumulated
the research and production potential needed to handle the most
challenging scientific-technical tasks involved in developing,
manufacturing, and testing various types of nuclear weapons.
Cutbacks in defense-related work at VNIIEF and Avangard over the
past decade have brought about a need to intensify
civilian-oriented activities. However, growth in this area has
not been as fast as expected. This has occurred for two reasons:
(1) the insufficient funding of defense conversion from the
federal budget and (2) the continuing low number of solvent
customers for high-tech products in Russia. As a result, the
accumulated scientific-technical potential of local collectives
is not being used to its full capacity, and there is a constant
threat of layoffs. This is a point of concern for the population
because of the limited opportunities for finding alternative
jobs for a large number of specialists.
* Translated from the Russian by Kelly
Robbins.
Page 158
Solving these problems requires attracting investments to new
conversion-oriented production enterprises. The Sarov City
Administration and the management of the city-forming
enterprises—VNIIEF and Avangard—are working to support
conversion enterprises by means of several targeted programs. The
measures included in these programs are aimed at achieving a number of
goals, namely,
creating and developing conversion-oriented production
facilities
increasing output volumes for high-tech and
science-intensive civilian products and commercializing
technological developments
expanding job opportunities for employees displaced from
the defense sector
creating a favorable business climate to aid in attracting
investments
To achieve these goals, the following objectives should be addressed:
stabilizing and creating conditions for the city's
economic development
modernizing existing production facilities and creating
new ones in the civilian sector
ensuring employment for the population and creating new
jobs
improving and developing the production and innovation
infrastructure
preserving and developing the social infrastructure
This report covers the activities of the Sarov City Administration and
the management of the city-forming enterprises in support of small
innovative businesses and conversion-oriented production facilities.
It cites data on investments and describes the concept of the
Innovative Technology Center being established in the city as a key
element in the innovation infrastructure.
TAXPRIVILEGES GRANTED BY THE CITY
ADMINISTRATION TO SMALL INNOVATIVE FIRMS
The Sarov City Duma grants certain taxation privileges to
enterprises and other institutional taxpayers having community
development-oriented investment projects and owing no tax debts as
of the date of filing their tax declarations. This action is taken
to provide incentives for business activity, attract additional
funds on the revenue side of the Sarov city budget, preserve
existing jobs and create new ones, and implement welfare programs
in the Sarov closed administrative zone. The privileges are granted
in accordance with the provisions of Articles 1 and 56 of the
Page 159
Russian Federation Tax Code; Paragraph 3, Article 64 of the Budget
Code; Paragraph 3, Part 1, Article 5 of Russian Federation Law
3297–1 On Closed Administrative-Territorial Zones, dated July
14, 1992 (revised version, Law 67-FZ, dated April 2, 1999); Article 52
of Law 150-FZ On the Federal Budget for 2001, dated December 27, 2000;
and Articles 2, 5, and 6 of Law 2116–1 On Profits Taxes for
Enterprises and Organizations, dated December 27, 1991 (revised
version, Law 118-FZ, dated August 5, 2000). The privileges granted are
the following:
Profits taxes are reduced by 90 percent of the rate
normally paid to the city of Sarov.
Property taxes are reduced by 100 percent of the rate
normally paid to the city of Sarov.
ATTRACTING INVESTMENTS FOR SMALL INNOVATIVE
FIRMS FROM THE CITY, MINATOM, AND INTERNATIONAL FOUNDATIONS
Defense conversion projects are typically funded from several
sources. Funding sources and amounts are shown in Table 1.
Following are brief descriptions of the projects being implemented
that have managed to attract investments.
Pilot Projects of the Innovative
Technology Center
Project goal: developing design documentation and test samples
of high-tech equipment under several pilot projects and seeking
orders and potentially promising contracts. Basic products
include
functional models and test samples of original
machines and devices for widely varied applications
design and technology development work in response
to technical specifications provided by outside
customers
refinement of manufacturing technologies and
production of test samples of high-tech equipment
using customer-provided design documentation
Potential customers: domestic and foreign manufacturing
enterprises, design organizations, and tuning companies.
Economic and social indicators: planned annual turnover,
$500,000 to $3 million, depending on type of orders; expected
number of jobs, 10–15 full-time with the possibility of
hiring additional personnel (up to 200 individuals) for work on
each specific order; total project financing, $430,000; payback
time: four years.
Page 160
TABLE 1 Projects Financed (in millions of rubles)
Project title
Total Investments
Minatom
Federal Budget
Fund for Development of Conversion Companies
NCI programs
Pilot projects of Innovative Technology Center
12.0
—
—
6.0
6.0
Design and start-up of serial production of high-voltage switches with SF6 insulation
140.0
90.0
—
20.0
30.0
Development, testing, and production of sensors, devices, and systems for automated control of technological processes at fuel and energy enterprises
27.0
10.83
—
10.17
6.0
Development of a diamond processing facility
72.0
51.5
10
10.5
—
Start-up of small serial production of high-voltage formation devices
2.8
1.4
—
1.4
—
Production of depleted zinc oxide isotopes
185.6
178.1
—
7.5
—
Establishment of Energy Conservation Center
2.16
—
—
2.16
—
Start-up of serial production of super-light and light aircraft
4.04
—
—
4.04
—
Production of special tanks for highly pure substances
0.98
—
—
0.98
—
Establishment of shop to produce current conductors
2.4
—
—
2.4
—
Production of intrusion indicator devices (
*)
0.45
—
—
0.45
—
Start-up of serial production of movable units for ultrasonic rail defect detectors (
*)
1.04
—
—
1.04
—
Development of an industrial model of a 238Pu-based heat source for remote space applications (
*)
1.6
—
—
1.6
—
Start-up of production of disposable dishes (
*)
1.24
—
—
1.24
—
Start-up of serial production of force gear controls for city passenger transport vehicles (
*)
18.4
17.5
—
0.9
—
NOTE: Projects marked with (*) are carried out at the Avangard plant.
Page 161
Start-up of Serial Production of
High-Voltage Switches with SF6 Insulation
Project goal: organizing a conversion enterprise to develop and
manufacture high-voltage electrical devices with SF6
insulation. The project proposes to create the following products
and services:
scientific-technical documentation on high-voltage
switches with SF6 insulation
110-kW circuit breaker switches with SF6
insulation
6(10)-kW switches with SF6 insulation
autonomous hydraulic lines for self-compressing 110-,
220-, 330-, and 550-kW switches with SF6
insulation
distributor device with SF6 insulation
mobile gas equipment for manufacturing and assembly
work on switches with SF6 insulation
Potential customers: Unified Energy Systems of Russia,
Rosenergoatom, Tsentrenergo, Mosenergo, Dalenergo, Kolenergo, and
others.
Economic and social indicators: total number of jobs to be created
over the course of the project, 2,700 (100 in Year 1, 400 in Year
2, 700 in Year 3, 750 in Year 4, and another 750 in Year 5).
Project implementation period: 2001–2003.
Start-up of Production of Mechanical
Vibration Sensors forUse in Compressor Station Gas-Pumping Units
and Other Equipmentfor the Energy Industry
Project goal: organizing serial production of technological
vibration sensors and units for fuel and energy industry
enterprises according to designs created by the VNIIEF-VolgoGaz
Research and Production Association.
Potential customers: Gazprom.
Economic and social indicators: total project cost, 10,174,000
rubles; new jobs to be created during project implementation, 20.
Project implementation period: 1998–2001.
Diamond Processing Factory
Project goal: creating a diamond-cutting and jewelry manufacturing
factory based on effective processing of natural raw diamonds for
applications in jewelry, medicine, electronics, and precision
devices.
Potential customers: 80–90 percent for export and 10–20
percent for the domestic market.
Page 162
Economic and social indicators: output of diamonds in 2000, 5,000
carats, or 111.2 million rubles; expected output in 2002, 24,500
thousand carats, or 565.95 million rubles; expected output in 2005,
59,000 carats, or 1.3629 billion rubles. Anticipated number of
employees once full capacity is reached, 320.
Project implementation period: 1999–2004.
Start-up of Small-Scale Production of
High-Voltage Forming Devices
Project goal: organizing a facility to produce high-voltage forming
devices for ignition systems of ZMZ 406 series motors.
Potential customers: ZMZ plant, retail trade network.
Economic and social indicators: total project cost, 2.8 million
rubles; new jobs created, 90.
Project implementation period: 1998–2002.
Creation of a Plant to Produce Depleted Zinc
Oxide Isotopes
Project goal: expanding existing VNIIEF centrifuge production
capabilities to make depleted zinc oxide isotopes for applications
at nuclear power plants.
Potential customers: nuclear power plants with boiling water
reactors. The potential market is concentrated in several highly
developed countries, primarily the United States, Japan, Sweden,
and Germany.
Economic and social indicators: total project cost, $6.4 million.
Project implementation period: 1998–2003.
Establishment of Energy Conservation
Center
Project goal: implementing energy efficiency projects, creating
automated power consumption monitoring systems, and rendering
services related to energy audits and electrical system changes.
Project description: The Energy Conservation Center will make it
possible to provide the industrial enterprises of Sarov with modern
energy-saving tools and then expand these practices to other
regions. Automated systems for the accounting, control, and
management of energy use in the public utilities sphere can be
introduced in the operations of management agencies of the city
administration. This will give city and regional management
agencies and enterprise managers access to reliable analytical
information on efficient energy consumption (energy audit).
Potential customers: Ministry of Fuel and Energy, oblast and city
governments.
Economic and social indicators: total project cost, 2.16 million
rubles; jobs created, 16.
Page 163
Project implementation period: 1998–2000.
Start-up of Serial Production of Super-Light
and Light Aircraft
Project goal: producing and marketing super-light and light
aircraft for professional applications.
Potential customers: airlines from Commonwealth of Independent
States (CIS) and other foreign countries, excursion and tourism
organizations, agricultural enterprises, Ministry of Health,
Ministry of Emergency Situations, Ministry of Defense, Ministry of
Internal Affairs, Unified Power Systems of Russia, Gazprom,
research organizations, flight training schools, amateur flying
clubs.
Economic and social indicators: total project cost, 4.04 million
rubles; jobs created, 16.
Project implementation period: 1999–2004.
Production of Special Tanks for Very Pure
Substances
Project goal: developing a unified technological process from the
purchase of precursor materials to the production of tanks to the
sales of the end product to the consumer.
Project description: During 1999–2000, VNIIEF worked in a
focused manner to create special tanks and accessories (valves, gas
reducing gears, etc.) to be made from stainless steel intended for
such purposes. As a result, the technology for manufacturing tanks
with a capacity of up to 40 liters was developed and refined. The
tanks have a working pressure of up to 300 bars with high-quality
internal surfaces that contact the substances stored. The design
features that were developed make it possible to eliminate the main
problems typically found in tanks manufactured with traditional
technologies both domestically and abroad.
Potential customers: microelectronics industry enterprises, fiber
optics manufacturers, producers of very pure substances, including
Minatom enterprises, metrology organizations, and Gazprom.
Economic and social indicators: total project cost, 975,000 rubles;
jobs created, 19.
Project implementation period: 2000–2003.
Creation of a Shop to Produce Current
Conductors
Project goal: launching serial production of current conductors.
Project description: Plans call for using explosive welding to join
all types of metals and alloys along entire contact surfaces
regardless of the configuration and size of the parts involved.
Page 164
Potential customers: nonferrous metallurgical enterprises, a number of
foreign firms (Finland, Chile, Canada, Kazakhstan).
Economic and social indicators: total project cost, 2.4 million
rubles; jobs created, 18.
Project implementation period: 2000–2005.
Production of Tampering and Intrusion
Indicator Devices
Project goal: launching production of originally designed tampering
and intrusion indicator devices using the production capabilities
of the Avangard plant.
Project description: Activities and consultations at Minatom
enterprises have shown the need to improve the current system for
sealing containers and the like. The main aspect of the new sealing
program at Minatom enterprises will be the introduction of new seal
types with improved characteristics.
Potential customers: According to a market analysis conducted by
specialists from Rosenergoatom and VNIIEF, it can be confidently
expected that Minatom enterprises and other organizations would
purchase the indicator devices to be produced by the new
TechnoControl firm. In particular the Ministry for Railway
Communications, banks, and law enforcement agencies have also
expressed interest.
Economic and social indicators: total project cost, 450,000 rubles;
jobs created, 12.
Project implementation period: 1999–2002.
Start-up of Serial Production of Mobile
Units for Ultrasonic Detection of Rail Defects
Project goal: modernizing the serially produced POISK-10E rail
defect detector and developing computer-aided tools for rail defect
detection in order to upgrade the reliability of railway
diagnostics and facilitate long-term forecasting of rail
conditions.
Potential customers: Russian Federation Ministry for Railway
Communications.
Economic and social indicators: total project cost, 1.04 million
rubles; jobs created, about 50.
Project implementation period: 1999–2001.
Development of an Industrial Sample of a
238Pu Heat Source for Remote Space Applications
Project goal: developing an industrial sample of a 238Pu
radionuclide heat source for remote spacecraft applications.
Page 165
Potential customers: S.A.Lavochkin Research and Production
Association, Russian Academy of Sciences Institute of Space Research.
Economic and social indicators: total project cost, 1.6 million
rubles; jobs preserved, about 23.
Project implementation period: 1998–2001.
Start-up of Production of Disposable
Dishware
Project goal: establishing the production of disposable dishware
(tea and coffee spoons, forks, knives, coffee cups, other plastic
cups).
Potential customers: wholesale and retail traders.
Economic and social indicators: total project cost, 1.24 million
rubles; jobs created, 49.
Project implementation period: 1999–2001.
Start-up of Serial Production of Force Gear
Controls for City Passenger Transport
Project goal: launching production of electronic devices providing
for enhanced reliability of the electrical components of subway
cars.
Potential customers: Dinamo (Moscow), MetroVagonMash Plant
(Mytyshi), subway systems.
Economic and social indicators: total project cost, 890,000 rubles;
jobs created, 60.
Project implementation period: 1998–2001.
ESTABLISHMENT OF THE INNOVATIVE TECHNOLOGY
CENTER: A STEP IN AIDING SMALL INNOVATIVE FIRMS
Several years ago, VNIIEF, Minatom, and the Sarov City
Administration jointly founded the open joint-stock company
VNIIEF-Conversion. The goal of creating this subsidiary was to set
up a holding company that would manage defense conversion projects
that had matured enough to operate as independent legal entities.
At present the holding company manages 10 broadly diversified
affiliated companies and monitors the implementation of other
conversion projects that have received loans from the Fund for the
Development of Conversion Companies. In cooperation with the VNIIEF
Investments Department, VNIIEF-Conversion is involved in developing
an information-analytical system that will facilitate monitoring of
the financial condition of the various projects.
The creation of the Innovative Technology Center (ITC) marks a new
stage in the development of VNIIEF-Conversion. Relying on
technologies available at VNIIEF, the ITC will have a specialized
infrastructure designed for facilitating the creation, growth, and
development of newly
Page 166
emerging companies. It will also stimulate innovation activity in the
city of Sarov, facilitate cooperation between researchers and
industry, provide services to science-intensive companies in
information support and management training, and accelerate real
economic development based on creating regional and international
networks for information exchange and cooperation among firms.
Much is already being done in this regard. VNIIEF-Conversion in
involved in the Russian Marketing Network and is a coauthor of a Tacis
project proposal on establishing a connection to the European
information network. The economic and legal departments of
VNIIEF-Conversion also provide consulting services, and the company
collaborates with the Sarov Branch of the LINK International Institute
of Management, which provides training in management and innovation.
In 2000 LINK provided professional training on the commercialization
of research results for 25 VNIIEF and Avangard employees involved in
International Science and Technology Center (ISTC) projects. In 2001
the Sarov Branch of LINK is working with the University of South
Carolina to fulfill a contract funded by the Nuclear Cities Initiative
(NCI) to train 40 managers and specialists involved in conversion
projects at VNIIEF and the Avangard plant.
At present the ITC is still in the process of being established under
the auspices of VNIIEF-Conversion. The ITC concept has not yet been
fully refined, and the technical audit of small innovative firms is
not yet complete. Another Tacis project developed in cooperation with
the Lahti Regional Educational Consortium (Finland) is devoted to
accomplishing these tasks. The expected outcome of this project will
be a development plan for ITC that will allow it to offer a
comprehensive package of services to the small innovative firms that
will be its clients. A very widespread problem in the first stage of
ITC's development has been the very limited range of services that
is offered, that is, secretarial services, reception and mailing of
postal correspondence, word processing, and telephone answering
services, among others. The goal of the Tacis project will be to
provide a rather full range of services from the moment that ITC's
building is ready for full operation, as well as to create a positive
public image for the ITC by ensuring that expectations are met. We
hope the ITC will avoid the destiny of a company that trades
unrealistic ideas.
