Russia Looks To Consolidate Space Industry

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The Russian government is close to endorsing an ambitious plan drafted by the Federal Space Agency (Roskosmos) that calls for consolidation across the nation’s space industry and nearly doubling Russia’s share of the international market for space hardware and services.

The Russian cabinet endorsed the 2015 Strategy of Development of the Rocket and Space Industry in principle July 6, but Russian Premier Mikhail Fradkov told Roskosmos and the Ministry of Trade and Economic Development to jointly polish the plan further before it can be given a final nod.

Reached by phone July 25, Roskosmos spokesman Igor Panarin declined to comment on the changes sought by Fradkov. He said the budget required to implement the strategy would be disclosed after the plan is finalized.

The strategy calls for 60 percent of the space industry’s 112 enterprises — including design and manufacturing bureaus — to be consolidated into six large holdings initially, and eventually into three or four. The strategy also calls a new wave of capital investment across the industry , according to Roskosmos director Anatoly Perminov.

The planned reforms are designed to facilitate annual growth of 8 percent across the industry, which employs some 250,000 workers, and help bridge the space-technology gap between Russia and the West . Fradkov stressed during the cabinet session that “we must do everything to preserve and develop” Russia’s space technologies, according a press release posted July 6 on the government’s official Web site.

Speaking with reporters after the session , Perminov said the percentage of Russian space products and services that “correspond with international standards” would grow from 41 today to 100, according to a transcript of his remarks. This should help Russia increase its share of the international market from 11 percent to 21 percent by 2015, he said.

In his remarks, Perminov valued the international space market at $22 billion per year.

The reforms also should help increase the share of civil and commercial versus military hardware produced by Russian industry from the current 20 percent to 30 percent, Perminov said. “This requires great efforts for improving the competitiveness of (the Russian space industry) on the world market of space services,” he said.

During the cabinet session, Fradkov called on the authors of the strategy to identify specific investments and prospective international cooperative projects for Russia’s space industry. The strategy also needs to explain how ownership of the consolidated industrial holdings would be divided between the public and private sectors as well as how these two sectors will interact, according to the government press release.

Foreign participation in efforts to improve Russia’s competitiveness will be limited, said Panarin, the Roskosmos spokesman. Under Russian law, foreign ownership is capped at 25 percent for some defense-related companies and barred altogether for others.

Fradkin also encouraged Roskosmos to continue diversifying beyond launch vehicles and human spaceflight projects.

“Space activity is not just about the launches, not just about the man in space. It is also about development of a broad spectrum of industries, about ensuring the defense capabilities and security of the country, about Earth-probing, and production of the modern equipment that could be used in all sectors of the economy,” Fradkov said . “Not everything is being done.”

Three of the initial six industrial holdings called for in the draft strategy already are being set up. Russian President Vladimir Putin on June 9 ordered the merger of several space companies into a single entity focused on satellite manufacturing. The core asset of the newly created Information Satellite Systems (ISS) holding is the Academician Mikhail Reshetnev Scientific Production Association of Applied Mechanics (NPO PM), which is located in Zheleznogorosk, Krasnoyarsky Krai.

Roskosmos also has set up a holding whose core asset is the Scientific Research Institute of Space Device Engineering in Moscow, Panarin said in a phone interview June 29. The third holding is being built around the Scientific Production Association of the Machine-Building in Reutovo, Panarin said.

An official with one of Russia’s top space companies said in a July 25 phone interview that the planned consolidation “would allow [Russia] to more rationally use production and R&D potential of the industry and optimize placement of orders.”

Asked to comment on the potential involvement of foreign companies in improving Russian technology, the official said Russia is on par with the West in launch vehicles and manned space exploration and is self sufficient in the production of Earth-observation and navigation satellites. However, Russian producers of telecommunications satellites will continue to rely on foreign payloads, including transponders, said the official, who requested anonymity.

The official also said it makes sense to keep foreign companies involved in marketing Russian launch services. “There is a well-established market there and it may be difficult to win a place under the sun by entering it as a new supplier,” the official said.

Story by Simon Saradzhyan