The Chelyabinsk Region is building industry of the future

14.03.2012 — Analysis

The Chelyabinsk Region's governor Mikhail Yurevich set an ambitious goal: to build innovation-driven economy. It will be spearheaded by regional research and centers and defense enterprises that have been developing future generation technologies for a few years. The RusBusinessNews columnists have found out that the South Ural innovators will need support of the federal center to implement the new strategy: Russia has no markets for innovative products and their building implies reduction of administrative and economic risks nationwide.

Moving into diversification of the regional economy that is deep rooted in metallurgy, the Chelyabinsk regional government decided to focus their efforts on development of innovation infrastructure, financial support of long-term growth promising enterprises and promotion of their products on international and domestic markets. The regional authorities realized that the work was going to be enormous.

"The process will be slow; it may take many years. We have a lot of innovators and good raw material resources; by and large, the economy must become more open and competitive. However, we are lagging far behind. It is especially noticeable when we meet with representatives of foreign companies and are shown around their production facilities," says Mikhail Yurevich, the governor of the Chelyabinsk Region. In his opinion, Chelyabinsk companies should take full advantage of world leaders' experience. "We are heading for upgrading of technologies and for investment generation - and our business is recovering. It has drawn lessons from the crisis," noted the head of the region.

There have been some tangible achievements in terms of innovations: The efforts made within few years in the South Urals resulted in business incubators, innovation centers and technological parks. The region has three technological parks - the Novator Technopark, LLC, as well as innovation technoparks of the Chelyabinsk Plant of Technological Accessories, CJSC, and the Miass Machine-Building Plant, OJSC. With reference to the data of the Ministry for Economic Development of the Chelyabinsk Region, more than 400 people work in manufacturing of advanced products. And that's just the beginning.

The financing of several projects such as Russian Quartz and Kyshtym Mining and Processing Plant have been approved by the Rusnano State Corporation. The corporation's head Anatoly Chubais highly appreciated the unique potential of the South Urals in the sector of innovations, putting emphasis on importance of the project management system that needs further improvement.

The Chelyabinsk Region's governor Mikhail Yurevich thinks that the region is willing and ready to take the challenge for leadership in future-targeted technologies. The institutions of higher education are developing their own innovation infrastructure: For example, the Chelyabinsk State University opened the High-End Technology Multiple-Access Center. The National Research University at the South Ural State University launched a number of research and educational centers operating in development of nano-materials.

The Chelyabinsk Region can boast its first achievements. By the end of 2012 the Magnitogorsk Hardware and Sizing Plant (MMK-METIZ) will start manufacturing new generation steel reinforcement for sleepers of high-speed railroads. Mikhail Chukin, the director of the Nano-Steel Research Institute, a professor of the Magnitogorsk State Technological University, has told RusBusinessNews that the industrial prototype based on nano-structuring technology has already been developed. The RF Education and Science Ministry allocated 178 million rubles for implementation of the project. The similar amount will be invested by MMK-METIZ in equipment. The economic benefit is expected to be so significant that the project participants decided to keep silent about it.

However, most of the promising innovations are still at the starting point and it will take time to achieve tangible results. Dmitry Zherebtsov, an engineer of the Nano-Technologies Research and Educational Center at the South Ural State University, points out that, for example, the task aimed at development of fuel cells for future applications is very difficult and can be fulfilled only through joint efforts of several research groups. At the moment, the Nano-Technology Center developing high-conductivity electrode material is trying to move to an international scientific level. Without this level the center is not able to obtain new technology and, consequently, a pilot product: Investors are willing to invest capital in technologies of the future only after the innovation has been recognized by scientists.

Recognition may take years: For example, scientists started working on blue light-emitting diodes in 1982 and are still doing research. The same situation is true about fuel elements: Until never-dying catalysts that will allow giving up conventional batteries are created, scientists will keep on doing research.

Scientists state that in addition to scientific problems they have to face purely economic difficulties that they are unlikely to overcome without consistent government policy. It is best evidenced by operation of the cluster in manufacturing and application of nano-diamonds; the cluster is composed of five innovative enterprises based in Chelyabinsk, Kopeisk and Snezhinsk.

The technology of manufacturing nano-diamonds was developed by the Russian Federal Nuclear Center - Zababakhin All-Russian Research Institute of Technical Physics. The innovation promises impressive results: Lubricant additives based on ultradispersed diamonds decrease substantially friction of components and parts in mechanisms, thus improving their performance efficiency. Ample opportunities will be available to the health care sector: Nano-diamonds are very effective in battling cancer. However, manufacturers, as it is stated by Boris Vodolaga, the deputy general director of the Nuclear Center, have rejected the novelty due to the absence of a solvent market.

The Kopeisk-based Factory of Plastic Products invested about 100 million rubles in equipment and in 2010 launched industrial-scale production of feed stock - the primary product for manufacturing of nano-diamonds. According to Vladimir Druzhinin, the deputy general director of the factory, their product is one of the best products in the world, but they have no consumers: The factory can reach the output of 10 thousand tons a year, while only 30 kilograms were used in Russia in 2011.

Feed stock can be exported to other countries after its thorough treatment. The SKN Company decided to do the job and agreed to buy the primary product from the Kopeisk factory at the price not higher than 200 US dollars per kilogram. The offered price is much lower than the price expected by the manufacturers. The high production cost of semi-finished products is explained by high prices for trinitrotoluene and hexogen, which are the basic products to feed stock using explosion techniques, and by sizeable overheads of the enterprise.

Igor Petrov, the director of SKN, LLC, explained to RusBusinessNews that the company could not increase the purchasing price; otherwise it would lose the competition to its foreign rivals due to unequal conditions. After establishment of the Customs Union of Russia, Belarus and Kazakhstan, nano-diamonds were equated to precious stones that must go through customs formalities. SKN pays for each customs clearance 100 thousand rubles, whereas foreign manufacturers, according to I. Petrov, do not pay anything for exporting of nano-diamonds.

The experts are sure that today the destiny of innovation-driven economy depends heavily on politicians rather than on scientists and entrepreneurs. Funds to finance future-targeted innovations can be found, but private investors are still cautious about industrial application of nano-technologies due to the existing administrative and other risks. Therefore, in the opinion of Vladimir Druzhinin, the federal government authorities should take a firm hold of the process. The innovation market can be formed in different ways: For example, the authorities can enact regulations that will require that wear-resisting parts (pump rods, etc.) must be coated with a nanodiamond-based protective layer.

The successful experience of the Chelyabinsk Region in manufacturing of nano-structured reinforcement for sleepers shows that success can be attained when business and science are equally interested in promotion of innovative technologies on the market. And most importantly - if a promising innovation is sought after by a definite customer represented by the government.

Valentina Mazharova, Vladimir Terletsky