At Budker Institute of Nuclear Physics in Novosibirsk
Photo: ITAR-TASS
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Driven by Research
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Having passed through a period a rapid development and then the decline of a powerful defense complex, Novosibirsk Region has preserved its unique scientific potential. The current administration of the region is counting on it still.
Logistics Activity
Before the Revolution, the economic development of what is now Novosibirsk region was helped along by two factors. The first of those was the convenient location of the city of Novonikolaevsk at the intersection of two major transportation routes, which encouraged the development of trade. The second was the moderate continental climate that favored agriculture.
In Soviet times, priorities changed. Under the third five-year plan for the Soviet economic, Novonikolaevsk, then already a regional center known as Novosibirsk, was to be industrialized by 1937. Armaments were to be the priority. Four plants were put into action in that time, among them the Chkalov Plant for military aviation (No. 153) and Plant No. 179, which was the country's largest producer of ammunition during the war. (After the war, it became Sibselmash.) Construction of an aircraft engine plant was begun in 1939.
World War II was decisive in the transformation of the region's economy. In the 1940s, 31 factories belonging to four People's Commissariats – those of ammunition, weaponry and the electrical and aviation industries – were moved here from Moscow, Leningrad and Tula, Voronezh and Rostov Regions. Along with them, 300,000 specialists and four scientific research institutes, design organizations and construction trusts came to Novosibirsk. The city's strategically convenient location played a key role in its being chosen for these purposes. If war broke out on two fronts (with Germany and Japan), it guaranteed ties with the raw materials base of the Urals and uninterrupted supplies of ammunition and military hardware.
Academic Boom
The war, the scientific and technical potential of the military-industrial complex continued to grow. In 1957, the Siberian Division of the Academy of Sciences was opened here. A group of scientists headed by Academic Mikhail Lavrentyev, Sergey Sobolev and Sergey Khristianovich moved to Novosibirsk to conduct a experiment to found a scientific think tank. Thus, Akademgorodok sprang up outside Novosibirsk as a unique breeding ground for scientific personnel.
The academics were faced with the task uniting science and production by setting up an “implementation belt” around their institutes – various organizational methods for realizing their scientific developments through industry. The best-known of these is the Fakel company. Theoretical and experimental research in the natural sciences and development of the economic potential of the Russian Far East and Siberia was a second priority. By 1975, there were 47 scientific institutions in Novosibirsk, which included 15 physics and mathematical institutes, seven for chemistry, eight for biology and eight for geology and geophysics. Almost all sectors of the defense complex were represented as well – the atomic industry, aviation, rocketry, radar, applied chemistry, and others. At the beginning of 1992, the defense complex included 23 industrial enterprises and 14 research, testing and design organizations. About 60 percent of the region's industrial production was defense-related and 54 percent of the industrial workforce was occupied with defense.
Defense Defenseless
With the crumbling of the Soviet system, the entire immense military industrial complex there, which was supported by state orders, went into decline. During the liberal reforms, the volume of production and the number of workers in the industry shrank by more than half. In 1999, defense accounted for only 15 percent of the region's total production. While massive privatization of industrial giants was going in most regions, defense industries were slowly dying, since their privatization was prohibited. Many of them went bankrupt.
The same fate awaited other industrial plants in the region. Their relatively small capacity at the time of the redivision of property was of little interest to large financial-industrial groups. Most Novosibirsk industries ended up in the hands of local businessmen. Later, when big capital entered the Novosibirsk market, they were able to take the remaining unprivatized industries (which were mainly bankrupt) easily. Thus there is a unique situation on the market. The division between Novosibirsk and Moscow businessmen is such that it is hard to say which side dominates.
In 1999, the regional administration finally began to address the problems of the defense industry. Several plans were made for its renewal.
The first plan involved refitting factories. The Novosibirsk synthetic fibers plant, for instance, began making household chemicals and perfume, plastic goods, furniture and even food. The Komintern Plant began making tow trucks using Ural and KamAZ trucks and home radio-electronic devices.
The second plan was to support production by giving it government status, that is, the state financed the plant fully, even if it was not working at capacity. The Kuibyshev Chemicals Plant the Novosibirsk Experimental Plant for Measuring Devices received government status.
There is a third plan as well. That is to fulfill one-time, usually export, orders. That is how the Chkalov Novosibirsk Aviation Production Association works. It produces civil An-38 aircraft for local airlines on orders from the Russian Ministry of Defense and exports Su-34 fighter planes.
The Brain Market
In spite of the crisis in the defense industry, Novosibirsk has successfully maintained its scientific potential. A socio-economic analysis made by the Arthur Andersen consulting firm in 1998 showed that Novosibirsk's most attractive assets are its scientific research potential, its hi-tech and traditional industrial complex, the abundance of highly qualified personnel and its educational system. Those are the resources that local authorities are trying to develop and use to attract investment.
They are concentrating mainly on traditional science-intensive industries – biotechnology, information technology and precision instrument making. Novosibirsk is a world center for biology and high-level research is conducted there in chemistry and genetics. Particular hope is being placed in the Vektor State Scientific Center for Virusology and Biotechnology, where vaccines and diagnostic preparations are developed using the last accomplishments of genetic engineering.
Novosibirsk State University has been turning out information technology specialists for over 30 years. Today, there are about 2000 Novosibirsk IT specialists in the software business and engaged in offshore programming. The region is creating a technology park in the specialized science town of Koltsovo with an eye to the interest of foreign investors in local programmers. That project is to run until 2025 and is estimated at 46 billion rubles, 2.2 billion rubles of which will come from government financing, and the rest from private investment. To increase the attractiveness of the project, the regional administration filed an application this October to participate in the competition to establish special economic zones. The status of special economic zone provides investors with significant tax and customs advantages. In addition, the region has passed a local law “On Tax Benefits for Investors Implementing Projects Selected by Competition,” which provides a total of 160.9 million rubles in benefits.
There are also plans to set up technology parks near Tolmachevo Airport and outside Berdsk, near Akademgorodok.
Tax benefits and the high quality of the personnel pool have attracted major Russian and international players from a number of industries to Novosibirsk. In the spring of 2006, Russian Aluminum will begin construction of a plant to produce aluminum cans. The Ekaterinburg Maxi Group holding has decided to build an electrical smelter to produce rolled steel. The German VEKA AG has constructed a plant to make plastic parts for doors and windows and IKEA will enter the Novosibirsk market after lengthy negotiations.
Akademgorodok
A unique experiment to create a scientific research hotbed on the Siberian taiga. It was created by Nikita Khrushchev in 1957 around the newly opened Siberian Division of the Academy of Sciences. Today, more than 40 scientific institutes are concentrated there. Due to the high demand for Akademgorodok IT specialists, the local offshore programming district is referred to as the Silicon Taiga.
The Novosibirsk State Opera and Ballet Theater
The largest theater in the country. It opened on May 12, 1945. It is topped by a dome 55 meters in diameter and a small division of armored vehicles will fit on its stage. After winning three Golden Mask awards for Schnittke's Life with an Idiot in 2004 and three Golden Masks in 2005 for Verdi's Aida, it has come to be seen as the trendsetter of Russian opera houses.
Siberian Shore
Maker of the popular Kirieshki. Aggressive marketing made it the top Russian snack food producer six years after it was set up. The television ad for its Beerka snacks won a Golden Lion at the advertising festival in Cannes.
Nidan Foods
Maker of My Family, Champion and Yes! juices. The leading juice producer in Siberia was founded in Novosibirsk in 1998. It occupies 14 percent of the Russian market. One of its ads contained the memorable phrase “Just pour and go away.”
Golden Crown
The Interbank payment system is the largest in Russia. Its services are used by 215 banks and thousands of other organizations in Russia, Ukraine, Belarus, Kyrgyzstan, Kazakhstan and China. The system was launched in 1994. The company has issued more than 2.5 million plastic cards.
A unique collection of viruses has been built up at the Vektor Institute over the last 20 years. They range from mumps to anthrax. It is one of only two institutes in the world that holds natural smallpox strains. Vaccines and diagnostic preparations are developed there that have no analogs elsewhere in the world.
Siberia Airlines is Russia's second-largest air carrier (after Aeroflot). Its planes made about 30,000 flights in 2004, carrying 3.75 million passengers and 23,000 metric tons of freight. In 2004, Siberia Air won the international Air Transport World prize more market leadership.
&Who Novosibirsk region Belongs To
Novosibirskneftegaz. Refines oil from the Verkh-Tarkskoe field in the north of the region. Production in 2004 was around 1 million tons. TNK-BR owns 99 percent of its stock.
Kuzmin Novosibirsk Metals Plant. Produces steel pipe, rolled steel and band steel. Its projected capacity is 1 million tons. Russian Coal owns the controlling stock package in it.
The Novosibirsk Chemical Concentrates Plant. Produces fuel for atomic electric generating plants. It production in 2004 was worth 5.172 billion rubles. TVEL Co. owns 65.12 percent of its stock.
The Novosibirsk Electrode Plant. Supplies electrodes to most of Russia's aluminum plants. Its income in 2004 was 2.2 billion rubles. More than half of its stock belongs to the Moscow Energoprom Co.
Iskitimtsement. One of the two largest cement producers in the Asian part of Russia. Production in 2004 totaled 1086 tons. It is part of the Novosibirsk RATM industrial group.
Novosibirskenergo. Novosibirsk entrepreneur Korney Gibert's Sibirenergo owns 20.68 percent of it and RAO UES of Russia owns about 14 percent.
Novosibirsk Tin Combine. Has a monopoly on tin production in Russia. Its production in 2004 amounts to 3025 tons and accounted for 75 percent of the Russian market. For almost 20 years, it has been under the control of Novosibirsk businessman Alexander Dugelny, who began as the plant's general director and later became its owner.
All the Article in Russian as of Nov. 28, 2005
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