Rostec and UAC – a company too far?

14 December 2017
Vladimir Putin presents Sergei Chemezov with a certificate at the 10th anniversary celebrations of Rostec. Source: Kremlin website

Russian industrial conglomerate Rostec celebrated its 10th anniversary on 7 December, with the company recently expanding to take on a number of new firms. However, the brakes may soon be put on plans for further growth, as Alexander Zudin reports

The champagne flowed, managers received awards, the director gave a triumphant speech – Rostec’s 10th anniversary party seemed the picture of Russian corporate triumphalism. Even President Vladimir Putin attended, and was all smiles as he listed the litany of Rostec’s achievements.

The big party on 7 December was shown on national TV channels, one of which, Rossiya 1, showed Putin making an interesting remark. In his address to the assembled top managers – including Rostec’s director, Sergei Chemezov – Putin said, “The corporation shouldn’t expand endlessly, with no control, and we need to understand precisely what the corporation was founded for, how it should move forward, and within what parameters it should function, so that it works optimally and most profitably.”

Quite what Putin was referring to was not made explicitly clear, but recent reports in the Russian media say the government is at odds over Rostec’s ambitions to take over the country's main aircraft builder, United Aircraft Corporation (UAC). The comment looks like a warning to Chemezov, whom Putin has known since their KGB service in East Germany.

That Chemezov has long had designs on UAC has been an open secret since 2015, but was first openly floated in the spring of 2017, when he said it would be “expedient” – but “not now”. Commenting on Chemezov’s remarks, Trade and Industry Minister Denis Manturov confirmed the topic was under discussion, saying it was a “good trend, but it’s too early to say when it will happen, or if it will happen at all. Definitely not this year”.

Now, a draft presidential order is being prepared for incorporation of UAC into Rostec, according to the business daily Kommersant.

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