Garry < Ehm i think if you order 48 new planes, you need to pay more than 20% to get the production online. But at the end you need to pay the rest.
From what I have read the standard procedure was to pay 14% of total price and offer soft loans from government controlled banks to cover the actual costs of getting ready for production.
Personally I think they need to examine the situation in each case closely as some factories can operate with that sort of payment model because they have had work all these years for export and with export sales the extra profit margin has made retooling and keeping skilled staff easy so they are in a position where such a payment scheme is ok.
For other companies things are not so good... of course if their product is crap and that is why it hasn't sold... because only the Soviets and the former warsaw pact countries bought it because they couldn't use anything else... then the situation is probably to fund development of a newer more useful product, or to change their production to something the Russian military does need... both of which costs money for very little initial return, but results in real gaps in technology or equipment being filled by local companies.
A good example is thermal sights... a T-80 with a brand new Soviet thermal sight in the 1990s could see and kill targets out to 2,100m in total darkness.
The purchase of a licence production agreement means that instead of making that Soviet Thermal Imager they now make the French Catherine Thermal sight, which depending on the conditions allows the tank to see and kill targets out to 5-8km range in total darkness.
Clearly the improvement in performance is well worth the money spent on licence production.
The company licence producing the new sight has been retooled and is working with new materials and new production tooling, so any new Russian or French and Russian developments already have a modern production base to work from.
If you decide to invent a new rifle you don't start with a wooden tube with a flash hole and then work your way up by adding rifling and a lock etc etc.
You start looking at existing new systems and look at the design.
Every design choice is for a reason and each choice has an advantage and a disadvantage.
For instance people look at BMPs and think they are too lightly armoured... they are all less than 20 tons while western IFVs are 50% or more heavier. The simple fact of the matter is that there is a requirement that Russian IFVs are amphibious which the western designers don't have to care about.
It is not that the Russian designers of IFVs don't care about the survival of the soldiers.
Right now they DO have money, and not just small amount of money, but a lot of money. When it comes to retooling.
The problem is that the Russian military don't care about the Russian MICs problems. Their problem is that they need to get x percent of new stuff into service by x date.
When they make an order they don't include extra money for factory upgrades or tooling or staff training. That is the problem of the factory manager and they have to do that out of their own funds.
If the prices paid by the Russian military were covering all the factories costs then there wouldn't be a problem.
Medvedev himself mentioned the problem of attracting investment into the MIC so that Russian military contracts are not the only money the MIC gets. The big profits for the MIC are with export orders so there is plenty of scope for investment as the potential returns are actually pretty attractive with the right products.
Link here: http://en.rian.ru/mlitary_news/20110510/163957676.html
For example for industry automation you need CAM software right? There needs to be a team of programmers to develope it. In Russia for example one hour of programming might be paid by 40$, in USA or Japan it is 60$. The resulting software might be comparable by quality however in USA and japane megacorporations invest tons of money into marketing,and thus it might seem like the russian product is total sh*t.
Except that the industrial robots probably come from Japan and the computers and software to control it probably came as a package deal, but I agree with the point you are trying to make about money being used to market products making them appear better than they are and the lack of such money being spent on Russian products in general.
So the russian company altough with lower price is having difficulties to find customers while the western one is in paradise.
And not just the money invested in marketing... there is a general stigma in many places in the world against Russian products... The west has seen Russia as an enemy for so long this will not change over night and the west is where a lot of money is.
Are the Russian people somehow differrent than the US one so that americans deserve better salary? You know what im pointing at right? So the expensive retooling is expensive not because of the technological complexity, rather because of the capitaistic form of price speculations.
I see where you are going with with this, and I agree... but.
Most people don't realise there are some technologies that are critical to a modern country. Some of these simply don't appear on the surface to be that important but are completely critical to all sorts of things.
One is time keepers. Why is Navstar in its military form so accurate? Because it has the most accurate timekeeping technology available. The more precise the time keeping the more accurate the positioning of the satellites the more accurate they are for navigation.
A second is quality machine tools... some are robots, some are just large machines. The best come from Japan.
In the 1980s Soviet submarines suddenly started to get much quieter... and it was no accident that this occurred just after they got a precision milling machine from Japan.
They knew what shape propeller would make their subs much quieter but they didn't have the machine tools accurate enough to create the correct exact shape to achieve such a shape... till they go a more precise milling machine able to handle lumps of metal that size.
What I am saying is that rather than being able to build T-90AMs what the Russians should be aiming for is to produce the most accurate clocks, the most precise machine tools, powerful supercomputers, etc etc. These are not products in themselves but they can greatly improve the performance of the products you do produce.
In a way they are a force multiplier... like a Thermal sight.
It makes a tank much more effective during the day and makes it effective at night as well. Such technology can be applied to all weapons systems to give night and all weather capability... and even during the day it sees through dust and smoke and light foliage and many primitive types of camouflage... it is not cheap, but gives you a whole new level of capability over those not so well equipped.
If the Russian goverment will sponsor domestic companies (which i believe it is), it is only a matter of time when they will develop broad spectrum of products to cover all the domestic industry market needs and THEN you will see how cheap it might be to equip a factory with modern automation systems.
The last 5-10 years the Russian military and the Russian MIC have been communicating their problems and wishes via the Russian media. If the government was already investing in the Russian MIC the Russian MIC would not need to get articles published to get a response from the Russian military.
How does UVZ plan for the future when it finds out about Russian military orders for tanks in the newspaper?
UVZ has a cold war level production capacity so it could make 1,000 tanks per year, but it is getting orders much smaller than that most years and this year none.
Does the manager close down production capacity and save money and hope there is no sudden order for 1,000 T-90AMs.
If you look elsewhere on this forum you can see articles with interviews with UVZ and they seem as confused as we are about what the Russian military wants or needs.
It seems there is little communication between the Russian military and the MIC and until that changes there will remain problems.
Even just having the UVZ factory manager being told that there wont be orders in 2011 but there are plans to make x number of T-90AMs by 2015, or even we havent decided yet but it will either be we will order nothing till 2015 and then we only want Armata and upgraded T-72s, or we want Armata and T-90AMs as our future tank force at least UVZ could make some long term plans so they will have the tools and materials and skilled workers ready at the right time and not just sitting and waiting for the call to build.
Second thing is... even if the tools are expensive, goverment is still giving support by non-returnable state loans. In other words, if your company/project is promising - state comitee for economic development might approve you this financial injection which you don't have to return. And those are by no means small money.
A non returnable state loan is a Handout and they are getting reduced interest loans.. not handouts.
If they were getting handouts they wouldn't need investment.
Sometimes the best things in life are free.....if you can get slaves to do it.
Slave labour only generally works in areas of relatively low skill that others generally are not interested in... like laying concrete or picking fruit or crops.
Very necessary jobs, but not high paying high return employment.
Not often a cotton picker went on to own the cotton fields he picked when he was younger.