DEVELOPMENT STRATEGY
UDC 339.9 (470.55) LBC 65.050.22(2Rus-4Chel) © Myakota Ye.А., Vorobiev A.G., Putilov A.V. Assessment of economic potential of the Chelyabinsk Oblast: state and development prospects The article presents the results of economic activities in the Chelyabinsk Oblast for the last years, main indicators of improving regional investment policy, perspectives on implementation of regional economic projects. It provides economic indicators of the development of the Chelyabinsk Oblast industry potential in the case of metallurgical, machine-building, nuclear, etc. enterprises. Economic activities, economic indicators, regional investment policy, industrial production index, investment projects.
Yekaterina A. MYAKOTA Senior Lecturer of the Economics Department, National Research Nuclear University ‘MEPhI’ [email protected]
Aleksandr G. VOROBIEV Professor, Doctor of Economics, Head of Economics Department, National Research Nuclear University ‘MEPhI’ [email protected]
Aleksandr V. PUTILOV Professor, Doctor of Technical Sciences, Dean of the Faculty of Management and Economics of High Technologies, National Research Nuclear University ‘MEPhI’ [email protected]
Introduction the leading industrial regions. The significance The goal and objective of the paper is to of the regional economic potential research provide an overall analysis of the regional is determined by the necessity of elaborating economic situation in the post-crisis period proposals on its innovation development. in the case of the Chelyabinsk Oblast, one of The analysis should obviously be commenced
Economic and social changes: facts, trends, forecast 2 (26) 2013 33 Assessment of economic potential of the Chelyabinsk Oblast: state and development prospects
with the most industrially developed regions. the oblast’s generating enterprises are included Several approaches to regional economic into the system of Urals unified energy ring analysis are described in literature [1, 2, 3, 4]. and the Unified energy system, electricity The Chelyabinsk Oblast is economically shortage is recouped by power purchased in one of the largest subjects of the Russian the wholesale electricity and capacity market. Federation. A considerable industrial poten- 1. State and prospects of regional economy. tial, comprising metallurgical, machine- The socio-political situation in the Che- building, military-industrial and nuclear lyabinsk Oblast is stable and manageable, the enterprises is largely determined here, as well economy has been developing quite success- as throughout the Southern Urals, by the level fully. A certain threat to the maintenance of of economy. Several leading universities, three economic stability comes from low level of subdivisions (branch) of National Research the population’s income, growth in the prices Nuclear University ‘MEPhI’ are situated for goods and housing and communal servi- in the Chelyabinsk Oblast; the educational ces, environmental problems. Diversification potential of the region is rather large, therefore of economy, support of small and medium the innovation direction of development businesses, innovation sectors, the development is preferable. Moreover, the Chelyabinsk of agrarian-industrial complex are the priority Oblast is one of the most energy-intensive directions of the local authorities’ economic oblasts in the Russian Federation: electricity policy (table). Particular attention has been consumption makes more than 32 billion kWh given to attracting investments in the economy. per year. Chelyabinsk power system ranked The key task facing all municipalities comprises 3rd in the Ural Federal District and 12th in search for investors, site preparation for Russia in electricity yield in 2010 and 2011 investment projects, elaboration and promotion [5]. Power plants provide about 78% of the of new brands in the Russian and foreign total electricity demand in the region. Since markets [6].
Key indicators of the Chelyabinsk Oblast economic development in 2012 Indicator value Region’s location Indicator in in the federal in the Russian in the federal in the Russian the region district (FD) Federation district (FD) Federation Industrial production index by types of economic 102.7 100.8 102.9 2 45 activity including, %: - mining 107.9 97.9 101.0 2 26 - manufacturing 102.8 106.8 104.5 3 49 - production and distribution of electricity, gas, water 99.3 101.3 101.3 6 48-50 Oblast’s share in the total volume of FD own production 14.3 ---- shipped, % Total volume of own production shipped in manufac- 424.7 852.8 380.4 5 24 turing (per one employer), thousand rubles Oblast’s share in agricultural production of the RF, % 1.7 - - - 18 Volume growth of ‘construction’ work, % 89.4 100.2 101.9 6 73 Housing growth, % 127.5 107.4 102.7 2 12 Fixed-asset investment growth, % 105.1 116.4 111.6 5 59 Foreign investments (total), million U.S. dollars 1193.8 3726.4 74789.0 2 7 Share of direct foreign investments in the total volume 1.1 11.6 10.2 6 71 of investments, % Self-sufficiency of consolidated budget, % 83.75 97.04 87.04 5 26
34 2 (26) 2013 Economic and social changes: facts, trends, forecast DEVELOPMENT STRATEGY Ye.А. Myakota, A.G. Vorobiev, A.V. Putilov
In spite of the oblast authorities taking an At the same time, the stagnation in the active stand on attracting investments in world metals markets, since the end of 2011 up January – September of 2012, the volume of to 2012, led to deteriorating operational and foreign investments in the oblast’s economy financial indicators of the region’s basic declined by 33%, as compared with the same metallurgical enterprises, adversely affecting period of 2011, and amounted to 1.799 billion the development of the region’s economy. U.S. dollars. The export volume of investment In January – May of 2012, the region’s eco- capital (1.762 billion dollars in January – nomy was characterized by the slowdown in in- September of 2012) indicates the need further dustrial production growth. Industrial production improve the regional investment policy (fig. 1). index amounted to 104% as compared to Janu- ary – May of 2011, including mining (99.8%), ma- 2. Dynamics of the Chelyabinsk Oblast nufacturing (104.9%), production and distribu- economic indicators. tion of electricity, gas, water (96.6%). The volume Metallurgical industry plays a major role of industrial production reduced by 4% in May of in shaping the economic and financial results 2012 month on month (fig. 2). of the oblast. The global economic recovery, The volume of metallurgical production was accompanied by rising demand and prices observed to increase by 1.2% in January – May for metals in domestic and foreign markets in of 2012, but dropped by 2.2% in May 2012 2010 – 2011, contributed to the growth of month on month. The share of loss-making economic indicators of the region. In 2011 enterprises amounted to 35% (32.9% across the growth of GRP of the Chelyabinsk the RF) in January – April of 2012; the profit Oblast reached 5.8%, growth of industrial of enterprises decreased by 13.9%, as compared production made 6.3% compared to the level with the corresponding period of 2011; the of 2010 [7]. amount of losses increased by 58.1%.
Figure 1. Dynamics of fixed-asset investments index
% 160 152.4 149.6 146.7 150 142.8
140 135.5 144.7 145.6 132.0 140.2 122.6 130 135.5 131.9 116.4
120 111.4 127.4 117.5 110 121.3 102.2 112.3 102.9 102.7 100 103.1
90 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 January - September 2012 Russian Federation Chelyabinsk Oblast
Economic and social changes: facts, trends, forecast 2 (26) 2013 35 Assessment of economic potential of the Chelyabinsk Oblast: state and development prospects
Figure 2. Volume structure of own-production shipped, by types of economic activity
100% 7.8 8.2 6.5 7.1 9.9 8.7 7.6 7.7
80%
60%
90.5 90.1 91.7 91 87.7 89.2 90.3 89.7 40%
20%
1.7 1.7 1.8 1.9 2.4 2.1 2.1 2.6 0% 2005 2006 2007 2008 2009 2010 2011 January - September 2012 Production and distribution of electricity, gas, water Manufacturing Mining
The sales volume decline of 10.3% was OJSC ChTPZ reduced steel pipe output by observed in the foreign economic activity of 20% in comparison with the first quarter of the region in January – April of 2012, as com- 2011; the production of large-diameter pipes pared with the corresponding period of 2011, was cut down by 27% due to the decrease in including 10% drop in export (fig. 3). demand, connected with the completion of Negative economic trends in the region are JSC Gazprom’s large projects. The net loss of related primarily to the slowdown in metal- OJSC ChTPZ in the first quarter of 2012 made lurgical production development since the 1.02 billion rubles. In 2012, the group ChTPZ second half of 2011, caused by worsening was in a difficult financial situation because situation in foreign and domestic markets of the need to repay debt on short-term loans (decrease in demand for metal products, taken in 2008 – 2009 for the financing of large growth in raw materials prices), the profits of investment projects. Total amount of accounts the oblast’s largest metallurgical enterprises payable makes about 107 billion rubles. had considerably reduced by the end of 2011, OJSC MMK increased production volumes, OJSC MMK and OAO Mechel ended the year however, raising production was overshadowed with a loss of 125 million U.S. dollars and 19.674 by falling prices for most products. As a result, billion rubles, respectively. According to the net profit of the enterprise amounted to 3 results of the first quarter of 2012, the financial billion rubles, i.e. 33% less than in the first indicators of the largest metallurgical enterprises quarter of 2011. of the oblast worsened significantly [8]. The fall in nickel price on the world trading Thus, OAO Chelyabinsk metallurgical plant platforms in July of 2012 led to a critical situa- reported a net loss of 103.68 million rubles (in tion in JSC Ufaleynickel (due to depreciation the first quarter of 2011, the income received of fixed assets, the product’s prime cost of the was over 1.85 billion rubles). Product sales enterprise was significantly higher than its decreased by 10%. market value).
36 2 (26) 2013 Economic and social changes: facts, trends, forecast DEVELOPMENT STRATEGY Ye.А. Myakota, A.G. Vorobiev, A.V. Putilov
Figure 3. Dynamics of industrial production index by types of economic activity
% 229.5 230 222.1 208.8 205.1 210 193.5 207.9 190 170.2 182.7 170 145.8 165.1 150 160.8 131.5 151.4 144.0 130 115.6 134.3 128.5 111.6 102.8 110 105.1 95.6 93.9 90 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 January - September 2012 Russian Federation Chelyabinsk Oblast
JSC Ufaleynickel has urgent need for 125.8% in comparison with the corresponding replenishment of working assets. However, period of 2011; the index of electrical equipment banks have withdrawn credits so far, because production was 123.1%. At the same time, of the unstable financial position of the the growth set in machine building was not enterprise and the worsening situation in the maintained in May of 2012. The volume of world economy. machinery and equipment production dropped According to experts, financial indicators by 3.5%, and the production of transport and in metallurgical industry will not improve equipment fell by 7.5%, as compared to the significantly in the near future, due to the prior month [8]. absence of preconditions for the world growing The main problems in machine-building demand in products, falling volume of single industry are the depreciation of basic production orders owing to the completion of Sochi assets, low competitiveness of products, the Olympics facilities construction. shortage of circulating assets for technical The situation in the metallurgical industry re-equipment, high energy tariffs. has a significant influence on the socio- As a result of the insufficient modernization economic situation in the region, as metallur- level of machine-building plants, Russia’s gy remains a basic sector of the oblast’s accession to the WTO may have a negative industry, despite the measures taken by the impact on the region’s machine-building regional government and aimed at economic industry. According to the results of surveys diversification (fig. 4) [9, 10]. conducted by an independent analytical centre Positive trends were observed in machine- WTO-inform, on the consequences of the WTO building on the background of stagnation in the entry for the Russian regions, the Chelyabinsk region’s metallurgical sector in 2012. The index Oblast might incur losses up to 100 million of machinery and equipment production made rubles by 2020; metallurgical sector will be
Economic and social changes: facts, trends, forecast 2 (26) 2013 37 Assessment of economic potential of the Chelyabinsk Oblast: state and development prospects
developing, while other sectors of the industry In the second half of 2012, the financial will practically cease to exist, leading to the state of industrial enterprises was observed to reduction of more than 50 thousand jobs. be deteriorating, due to rising tariffs for natural At the same time, the real mechanisms for monopolies’ services since July, 1, 2012 and protecting enterprises at the level of subjects related to increasing industry costs. At the same are not enough. It is necessary to make time, enterprises will not be able to compensate decisions on support of domestic machine- for the rise in the cost of industrial production building at the level of the Government of the under conditions of low demand as a result of Russian Federation, in particular moving to increase in products prices. long-term orders from the Ministry of Defense, Attracting investors to free facilities is the making it possible to plan the economy of an task of an utmost importance. The possibility enterprise for 3 – 5 years; limiting the growth of implementing projects on the establishment of natural monopolies’ tariffs; reducing bank of modern steel manufacturing (the project of interest rate on loans for the modernization of CJSC KONAR in cooperation with the Italian production; finding solution to the problem company CividaleGroup), as well as hydraulic of railway transportation (the reform of JSC cylinders manufacturing (project of the Ural Russian Railways and the transfer of more than engineering centre) is being considered. 60% of the rolling stock to private ownership The situation remains difficult at the has led to an unjustified growth of tariffs, rail Federal state unitary enterprise Signal and cars shortage, forcing enterprises to shift to the Plastics Plant, as a result of the Russia’s use of their own trucks) [11]. Defence Ministry refusal of 2011 to place
Figure 4. Indices dynamics of physical volume of gross domestic product (GDP) and gross regional product (GRP)
% 158.3 158.7 160 156.0 152.2 158.3 150 145.9 150.4 150.4 138.6 140 144.2
128.1 137.6 136.0 130 120.4 120 124.4 112.3
114.8 110 104.7 109.5 100.9 100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (estimate)
Russian Federation (GDP) Chelyabinsk Oblast (GRP)
38 2 (26) 2013 Economic and social changes: facts, trends, forecast DEVELOPMENT STRATEGY Ye.А. Myakota, A.G. Vorobiev, A.V. Putilov procurement state orders for ammunition and the oblast were among suppliers of the territo- special chemicals up to 2015. The Federal rial order for machine-building products. The state unitary enterprise Signal dismissed 10% electronic database of the oblast enterprises of the employees, and in December of 2011 has been created, containing information on was reorganized into a joint stock company. product range and demand for raw materials, The state has invested 3.4 billion rubles in the as well as information and analytical system of authorized capital of the defense enterprise. support for small and medium manufacturing The change of the legal form will contribute to enterprises (the market of production orders enhancing control over the enterprise activities. and services). In 2012, the number of defense enterprises In 2012 the oblast Ministry of industry held experienced change in ownership: enterprises passportization of modern manufacturing of the defense-industry complex were natio- facilities in order to minimize costs for the nalized, while civil industries plants were startup of new production facilities due to privatized. In this context, the key issue that the intensive development of intraregional is to be settled at the level of Russia’s Defense cooperation. On the whole, it can be stated Ministry is the use of standby mobilization that the economy of the Chelyabinsk Oblast capacities, involving high maintenance costs needs innovation development based on [11, 12]. high technologies. Nuclear technologies, The enterprises significant for the oblast’s being rather significant in the region may development, such as CTZ-Uraltrak LTD., become one of the directions of high-tech OJSC ChTPZ, OJSC MMK, etc., supported development, although such proposals need by the regional authorities were able to attract further consideration, as all the enterprises credit resources. and organizations are located in closed The oblast’s government takes an active administrative territorial units. stand on providing support to the problem 3. Economic situation in one-company enterprises of the region: search for investors, cities of the Chelyabinsk Oblast efficiency control over bankruptcy admi- Eight cities and towns of the Chelyabinsk nistration, resolution of conflicts, which may Oblast (Asha, Verkhny Ufaley, Karabash, lead to rising protest moods among employees, Magnitogorsk, Miass, Satka, Ust-Katav, control over salary arrears. Nyazepetrovsk), as well as three closed Due to financial difficulties of the group administrative territorial units or CATU ChTPZ the oblast’s authorities intend to (Snezhinsk, Tryokhgorny, Ozersk), are provide the necessary support to the company recognized as monocities. All CATU have management in giving state guarantees for separate subdivisions (branches) of National refinancing loans. Research Nuclear University ‘MEPhI’ and Special attention is given to promoting are multi-profile nuclear centres, therefore, goods of local producers on the oblast mar- potential sites of high tech development, ket. In order to increase the loading level of particularly nuclear technologies. It is rea- the enterprises capacities, the oblast govern- sonable to formulate appropriate proposals ment forms annually the territorial indust- on the basis of new developments, Innovation rial production orders. In 2012, the territorial development programme, and modernization order for metal products amounted to 2.267 of the State Corporation Rosatom [3, 4, 5, 6, million tons, for coal to 1.2 million tons, for 7, 8], as regional economic environment allows cement to 496 thousand tons. 49 enterprises of this to be done.
Economic and social changes: facts, trends, forecast 2 (26) 2013 39 Assessment of economic potential of the Chelyabinsk Oblast: state and development prospects
To date, all one-company cities of the In January – May of 2012, the industrial Chelyabinsk Oblast have worked out com- production index in Satkinsky Municipal prehensive investment development plans District made up 89.9%, the level of registered (CIP), however, the pilot projects of only two unemployment accounted for 3.2% of the cities (Satka, Karabash) have been approved at economically active population in 2004. the federal level. The town of Asha became a Investment projects of the town Karabash participant of the UN Development Programme include the following: processing of industrial in Russia (UNDP) [5] production waste, use of natural resources and In January 2012, Heads of such cities and the establishment of enterprises in the sphere towns, as Nyazepetrovsk, Asha, Karabash and of services. It is planned to allocate 10 billion Ust-Katav submitted to Russia’s ministry of rubles for the modernization of local economic Regional Development reports on economic mainstay ZAO Karabashmed, that will increase situation, they also presented the investment the production 2 times, up to 120 thousand tons projects, aimed at the economic diversification of copper per year. In 2011, the total amount of municipalities. All of the presented projects of investments in construction and installation were approved by the Ministry. The possibility of works amounted to 767.2 million rubles, financing the construction start of a mountain- about 3 to 4 billion rubles are to be invested skiing complex in the town of Asha and mining- in the modernization of the production in and-metallurgical integrated works in the town 2012. In 2011, three large investment projects of Nyazepetrovsk for the 2012 – 2013 period were launched (the construction of a clothing was being considered. manufacture, wood-cement panels plant and In 2011 all monoterritories demonstrated fish processing and storage complex), that will industrial output growth, however, they still result in the creation of over 500 jobs. The total depend on the local economic mainstays. projects cost amounts to 1.1 billion rubles. The development strategy of Satkinsky Under the support of the oblast government, Municipal District includes 3 directions: the the investors, willing to make investments in the development of tourism industry; the moder- disposal of ZAO Karabashmed industrial waste, nization of engineering infrastructure facilities; have been found. Ferromet LLC (Chelyabinsk) development of small power engineering; orga- plans to set up fine dust processing facilities on nization of new productions. While imple- the territory of former radio plant (the project menting the projects it is planned to create cost is 450 million rubles). Karabash industrial more than 6 thousand of new working places, complex LLC (Moscow) is going to build a Moreover, it is expected that 5 thousand plant for the processing of metallurgical slags vacancies will contribute to the development of (the project cost is 500 million rubles). tourism in the town of Satka. Satkinsky District In January – May 2012 the industrial was included in the ‘Community Development production index of Karabash urban district Support Programme based on Information made up 91.9%, the level of registered and Communication Technologies in the unemployment was 4.7%. Russian Federation for 2011-2014’. The project The comprehensive investment plan (CIP) ‘Introduction of a soft hardware platform has been developed for Ashinsky urban Dispatcher Centre of Energy Resources settlement under the agreement between the Consumption Monitoring’ is to be financed government of the Chelyabinsk Oblast and the by the Fund ‘Sustainable Development’ with Agency of the United Nations Development the support of Russia’s Ministry of Economic Programme (UNDP). The main activities Development. and investment projects, stipulated by the CIP
40 2 (26) 2013 Economic and social changes: facts, trends, forecast DEVELOPMENT STRATEGY Ye.А. Myakota, A.G. Vorobiev, A.V. Putilov
are the following: the reconstruction of OAO the region’s scientific and educational potential. AMZ steel-rolling mill (the project cost is Due to the fact that several large-scale atomic 11 billion rubles); the construction of a year- industry enterprises, as well as a number of round ski complex ‘Two valleys’ (2012 – 2014); branches of the National Research Nuclear the creation of a multifunctional rehabilita- University ‘MEPhI’ have been functioning tion complex ‘the Urals Gates’ (2011 – 2020); in the Chelyabinsk Oblast, the involvement the implementation of the comprehensive of the existing nuclear and educational programme on Asha municipal services complexes in the monitoring of the regional modernization. economy and power engineering development, In January – May 2012 the industrial pro- and in the formation of a cluster innovation duction index of Ashinsky Municipal District approach to the development of the regional made up 103.1%, the level of registered unem- economy becomes topical for consideration ployment was 4.8%. in the near future. All the trends of the recent A large investment project on the construc- years, presented in figures 1, 3 and 4 show tion of mining-and-metallurgical integrated that the growth rate following the crisis period works with a capacity of 5 million tons per year of 2008 – 2009 even exceeds the rates, charac- in Suroyamsky deposits is to be implemented teristic of the previous period of the Chelyabinsk in Nyazepetrovsky Municipal District. The Oblast development. oblast authorities held a meeting with poten- Based on the research conducted, it is tial investors, i.e. the managements of the com- reasonable to examine the issue concerning panies FlemingFamily-and-Partners (Britain), the nuclear technologies contribution to the KobeSteel (Japan), SunInvestmentPartners oblast economy: new generation nuclear (Hong Kong). Construction of the plant will fuel, radioactive isotopes for medical and allow for creating of over 3 thousand workplaces technological purposes, etc. The implemen- on the monoterritory with the highest level of tation of economic approaches and innova- unemployment throughout the region (9.6% tion projects completion will lead to the for- in May of 2012, with the average oblast ratio mation of a unified innovation and investment of 1.5%) [8]. programme on the Chelyabinsk Oblast’s Conclusion further development, the elaboration of the The term ‘innovation cluster’ has emer- corresponding organizational and economic ged in the Russian economic dictionary. The measures, that, in turn, may contribute to analysis of possibility of creating such clusters attraction of investments into the regional should be based on regional economic trends, economy.
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