Russian industrialists come up with matrix principle of defense industry reform

MOSCOW. May 18 (Interfax-AVN) - Heads of Russia's leading defense industry enterprises suggest that the defense industry reform be effected on a matrix principle.

Holding companies of two types should be established during the defense industry reform, Vice President of the League in Support of Defense Industry Enterprises Givi Dzhandzhgava, who is also director of the Tekhnokompleks research and production center, told Interfax-Military News Agency on Saturday.

Companies with vertical integration having a common end product such as tanks, air defense systems or aircraft should constitute the first type, while companies with horizontal integration having a common technology sphere such as optics and electronics, radio location or lasers should pertain to the second type, he said.

"Application of the matrix principle to the national defense industry restructuring is motivated by lack of time and funds," Dzhandzhgava said. "We spent a decade not going anywhere, while the world's leading nations were making headway in development of technologies and knowledge-intensive products. Russia had a few national programs over that period dealing with the defense industry restructuring, conversion, establishment of financial and industrial groups, etc., but none of them was implemented," the industrialist noted.

According to Dzhandzhgva, the integrated companies being established at present should not unite enterprises of one industry, but rather enterprises working on a common end product.

He said personnel was extremely important for preservation and development of the defense industry. More than 80 percent of the industry's enterprises are suffering from a lack of engineers and qualified workers. They lack specialists that were abundant a few years ago, such as operators of mechanized tools. "There are no people to operate new tools. There are no assemblers, no welders, let alone programmers," Dzhandzhgava stressed.