Russian Economy General News: #13

higurashihougi wrote:

Automaton and application of machines always coupled with labour shedding effect and structural unemployment, which is a tough nut to crack in the current model of profit-driven business that are inherently hostile to government coordination efforts.

IMHO this all boils down to horizon. Business is focused on a next financial balance reporting and the government should be on long term strategy. If the balance between both correct business is going to stay profitable (and pay taxes) and people get a proper education/reskilling.

If all it took to solve a labour shortage was automation then we should have solved that problem forever back when the tractors and combines started to replace peasants in the fields.
For every job that became obsolete the economy ultimately came up with new jobs and new products and new services and new specialties.

While on a more immediate timescale - as unemployment drops and the cost of your manpower goes up relative to what that labour is actually producing, the more benefit you can get from introducing computization/machinery/automation/etc...
But the more you do that the more the cost of the automation rises as you get into more complex and less reliable solutions, limited as everything is - by the technology of the day - and it starts to make economic sense to simply hire more people instead.

In reality what it takes to solve a labour shortage is one of two things. A naturally growing population. Or immigration above replacement levels. Both of those amount to the same thing - an expanding labour force.
Sorry but the raw fact is that Russia's birthrate is now at its lowest point in decades.

My point was that labour intensive jobs and dangerous jobs and also physical labour type work can often be made easier and safer with automation and technology.

People at a factory become monitors and managers rather than labourers... and production capacity is increased.

You can hire more shifts so you can run a factory 24/7 by running three 8 hour shifts per day, so each of the three shifts will be working 8 x 7 hours a week... which is 56, which is not ideal, so maybe three shifts a day monday to thursday for a 32 hour week, and perhaps three shifts working friday to sunday working 24 hours a week in three 8 hour shifts.

Being flexible is a good thing.

Well that's nice, but that's the entire history of human society and technology anyway

Inventing things or organizing processes to decrease the physical effort and time taken to do something

And none of it solves the problem of a lack of labour force.
Any other country can automate their factories same as Russia can, only they may have the luxury of a surplus of labour too - so it's actually they that have more flexibility.

Food production in Russia in January — August 2024 increased by 4.4% compared to the same period in 2023, beverage production — by 10.2%, according to Rosstat materials.

Over the same period, the production of cattle meat, pork, lamb, goat meat and horse meat increased by 3.5% to 2.5 million tons, meat and offal of poultry — by 2.2% to 3.5 million tons, sausage products — by 2.6% to 1.7 million tons. At the same time, the production of processed and canned fish decreased by 6% to 2.9 million tons.

In addition, the production of processed potatoes in January — August 2024 increased by 18% compared to the same period in 2023, to 318 thousand tons.

Milk production, except raw, increased by 4.8% to 4 million tons over the same period, margarine — by 1.5% to 291 thousand tons, cheeses — by 7.4% to 560 thousand tons, cottage cheese — by 6.1% to 317 thousand tons, fermented dairy products — by 4.7%, up to 1.5 million tons. At the same time, butter production decreased by 1.7% to 221 thousand tons.

According to statistics, the production of wheat and wheat-rye flour in January—August increased by 5.3%, to 6 million tons, cereals — by 4%, to 1.2 million tons, white beet sugar — by 23.1%, to 1.4 million tons, confectionery — by 5.6%, to 2.7 million tons. At the same time, the production of bakery products of short-term storage decreased by 2.4%, to 3.3 million tons.

https://tass.ru/ekonomika/21956725

flamming_python wrote:While on a more immediate timescale - as unemployment drops and the cost of your manpower goes up relative to what that labour is actually producing, the more benefit you can get from introducing computization/machinery/automation/etc...
But the more you do that the more the cost of the automation rises as you get into more complex and less reliable solutions, limited as everything is - by the technology of the day - and it starts to make economic sense to simply hire more people instead.

Summary: the tendency of the rate of profit to fall.      

And investment capital run away from the business when profitability drop to the critical level       unless the state hold the financial and authority leverage on the economy.

GarryB wrote:My point was that labour intensive jobs and dangerous jobs and also physical labour type work can often be made easier and safer with automation and technology.

People at a factory become monitors and managers rather than labourers... and production capacity is increased.

The problem is the menial workers "freed" from physical jobs do not have management, monitor and machine expertise skills from the beginning, you have to re-skill and re-train them.

Everybody can learn and can improve themselves if they have time and access to education - but under most current regimes, they have none due to being marginalized.

And from my experience the self-proclaimed "job creators" do not want to spend money to re-train the workers, they just want to push the burden to the government, or they simply smuggle immigrants...

As a result we have structural unemployment while employers at the same time aggressively seek imported labourers to dump down wages.

The problem is the menial workers "freed" from physical jobs do not have management, monitor and machine expertise skills from the beginning, you have to re-skill and re-train them.

Of course you do, but someone working in a factory has a better idea of how cars and trucks are made than some tosser straight from university with a degree but no clue what the real world is all about.

They are already testing unmanned trucks from St Petersburg to Moscow and back and of course you can reduce the number of truck drivers you need by using trains for internal transport too.

There are lots of ways to reduce the amount of manual labour you need for a lot of things and each time you apply such solutions lots of menial and boring or difficult or dangerous jobs disappear and new jobs are created.

You can't tell me replacing 50 guys loading concrete bags onto a pallet being replaced by a robot that is monitored by one person, who also sweeps up and has a few other duties when the robot is working properly and efficiently is a bad thing.

It does not save money in the short term because that robot will be expensive... except if a branch of your company also makes robots...

But the guy who stacks the bags already knows how the job should be done and he will see if the robot is not doing it right.

Some guy from university who knows everything about the robot might not notice the bag stack is not straight or is too high etc etc.

We already have automated farm systems for milking cows operating here in New Zealand... many of the processes in crop farming have already done away with thousands of peasants with scythes and good strong backs, and use all sorts of vehicles and machinery.... John Deere make a good living ripping off American farmers by filling their new vehicles and equipment with specialist electronics that will prevent the equipment from being used if there is the tiniest fault and of course they charge thousands of dollars per hour to fix them even though connecting a laptop with the right software can solve 90% of the problems in a few minutes for themselves.

Everybody can learn and can improve themselves if they have time and access to education - but under most current regimes, they have none due to being marginalized.

When there are plenty of workers around most companies want fully qualified and trained and experienced workers and they can generally get them... when there is a severe shortage of workers then not only do they offer apprentiships and training but also better salaries and support packages.

Every once in a while Australia will come here looking for police staff or nurses or teachers and offer all sorts of incentives like 20K cash to help you move to Australia, and fast tracked citizenship, and obviously the claims of a better climate. They don't mention the poisonous locals... and I am not talking about the spiders and snakes, and of course the wages are higher but the prices are higher too... unless you are working in the mines getting really good money, it is often just a waste of time.... and of course when there is no offer of a job in New Zealand with 20K to help you move back sometimes you end up essentially trapped over there...

And from my experience the self-proclaimed "job creators" do not want to spend money to re-train the workers, they just want to push the burden to the government, or they simply smuggle immigrants...

Employers that like immigrants include the fishing industry or fruit pickers where the work is labour intensive and often needs to continue even in bad weather to get the job done. They often hire large groups of people so if they can hire them as cheap as possible all the better.

Many have temporary accommodation which they use to pad the salary, so you get paid minimum wage but part of that is rent and possibly food as well.

When they can't get migrants often they will turn to teenagers and children... it is just the way things are.

MOSCOW, September 30. /TASS/. The Russian government submitted the draft federal budget for 2025 and the planned period of 2026-2027 to the State Duma, the lower house of the Russian legislative assembly.

The document was posted in the electronic database of the chamber. The State Duma is to review the draft budget within 60 days.

Budget changes

The federal budget deficit will total 1.7% of GDP as of 2024 year-end. The deficit will not be above 1% annually in the next three years, according to the explanatory note to the federal budget.

The Russian internal state debt is capped at 29.39 trillion rubles ($3.23 trillion) as of January 1, 2026, according to the draft federal budget. The foreign debt limit is set at $61.1 bln as of January 1, 2026.

The National Welfare Fund will be replenished by 38.8 bln rubles ($41 mln) in 2024, by 1.64 trillion rubles ($18.4 bln) in 2025, 1.895 trillion rubles ($20.8 bln) in 2026, and 1.275 trillion rubles ($14 bln) in 2027.

Society

The draft budget provides for implementation of the social policy segment 6.4 trillion rubles ($70.4 bln) in 2025, 7.19 trillion rubles ($79.1 bln) in 2026, and 7.24 trillion rubles ($79.6 bln) in 2027.

Allocations for the development of the pension system in Russia will stand at 2.2 trillion rubles ($24.2 bln) in 2025, 2.6 trillion rubles ($28.6 bln) in 2026, and 2.5 trillion rubles ($27.5 bln) in 2027.

Financial support for implementation of the Youth and Children National Project is planned at 458.4 bln rubles ($5 bln) in 2025, 547.4 bln rubles ($6.3 bln) in 2026, and 550.3 bln rubles ($6.1 bln) in 2027.

About 938.7 bln rubles ($10.3 bln) will be allocated for the Long and Active Life National Project. More than eight trillion rubles ($88 bln) will be directed to the Family National Project in 2025-2027.

Education and healthcare

Education will be financed in the amount of more than 1.5 trillion rubles ($16.5 bln) in 2025, 1.68 trillion rubles ($18.5 bln) in 2026, and 1.75 trillion rubles ($19.3 bln) in 2027. The draft Russian budget for 2025-2027 provides for healthcare funding in the amount of 1.86 trillion rubles ($20.5 bln) in each of 2025 and 2026 and 1.91 trillion rubles ($21 bln) in 2027," the Russian Finance Ministry said.

Technology and energy sector

Allocations for development of radio-and micro-electronics sectors in Russia will stand at 175.3 bln rubles ($1.9 bln) in 2025-2027. Plans are to direct 112.1 bln rubles ($1.2 bln) to the Unmanned Aerial Systems National Project in 2025-2027. The draft budget provides for allocating 942.3 bln rubles ($10.3 bln) for space activities in 2025-2027.

Defense

Budget allocations under the National Defense section will total 13.5 trillion rubles in 2025, 12,.8 trillion rubles ($140.8 bln) in 2026, and 13.1 trillion rubles ($144.1 bln) in 2027. Over 14 bln rubles ($154 mln) will be provided annually to maintain the mobilization reserve of the Russian Armed Forces.

The State Duma can discuss the draft federal budget in the first reading on October 24, parliament member Andrey Makarov said.

https://tass.com/economy/1850091

Russia has gained turbine independence, by Olga Samofalova for VZGLYAD. 10.11.2024.

Russia's energy sector has achieved technological independence from the West.

Russia has made a huge step towards liberation from critical dependence on Western high-power gas turbines. For the first time, a thermal power plant with such a turbine, developed entirely in Russia, was launched. This is a unique technological achievement of the country, which seemed simply impossible until recently. After all, for so many decades we bought turbines from the Germans and Americans.

Russia has launched the first domestically produced high-power gas turbine GTD-110M. It was installed in the third power unit of the new Udarnaya thermal power plant, which was commissioned in the Krymsk region of Krasnodar Krai with the participation of Russian President Vladimir Putin.

Before this, Russia bought gas turbines of such power from foreign manufacturers. But Western manufacturers left our market – and we were left without such turbines.

“The fact that we are developing new production facilities and that we are becoming independent and technologically sovereign in this segment is very important,” said Vladimir Putin.

Rostec notes that the distinctive features of the high-power gas turbine GTD-110M, compared to foreign analogues, are its smaller weight and dimensions, as well as high fuel efficiency. Its production uses advanced developments and innovative technologies, including the manufacture of combustion chamber parts using the additive method.

The engine will be used in gas turbine power plants and combined cycle power plants with an electrical capacity of 115 MW. Previously, turbines of similar capacity had to be purchased from Western companies, in particular from Siemens, GE and Alstom, which were forced to leave the country due to the conflict in Ukraine.

The first such turbine was delivered to the Udarnaya TPP. The next three GTD-110M turbines will be manufactured and delivered in 2025-2026 for the modernization of the Novocherkassk GRES. Production plans provide for the release of two such turbines per year. However, from 2028, UEC (part of Rostec) plans to double serial production to four power plants per year. This will be possible thanks to the construction of a new mechanical assembly complex in Rybinsk.

HSE experts calculated that Russia's dependence on gas turbine imports in 2022 was more than 90%, which is a critical dependence. But after 2022, the main suppliers Siemens and General Electric stopped working with Russia and withdrew from joint ventures.


Therefore, the task of import substitution of high-power gas turbines has become even more urgent. Russia itself could only make low-power turbines, and attempts to create its own high-power gas turbine had not been successful before.

"The problem of the lack of high-power gas turbines has been recognized for quite a long time, and work in this direction was carried out until 2022. Some of this work was carried out together with our Western partners, in particular with Siemens.

It was decided to use the technology and experience of the German company. As subsequent events showed, this path turned out to be a dead end. However, our own developments were also carried out, and now we see one of their results," says Alexander Frolov, Deputy Director General of the Institute of National Energy, Editor-in-Chief of the industry media InfoTEK.

In addition to Rostec, there are also Power Machines projects to create 65 MW and 170 MW gas turbines. "Rostec's turbine is relatively small. And for the tasks facing the industry, such power should not be limited," Frolov believes.

Because, in his opinion, the demand for such turbines in Russia will be very high in the next 25 years at least. Many power plants in Russia are old, they require modernization or complete replacement, while the growing demand for electricity creates the need to build new gas power plants.

"The installed capacity of all power plants in Russia (not just gas ones) is about 263 Gb. Of this capacity, 30 Gb were built from the early 90s to the early 2010s, and another 50 Gb since the early 2010s. All other power plants are older, many of them were built in the 1960s and 1970s of the last century, some of them need to be updated," says Alexander Frolov. In general, the service life of power plants is very long and is designed for more than one decade.

"By 2030, we need to sort out the 100 Gb power plants. This does not mean that they need to be replaced, but we need to pay maximum attention to them. These are quite old power plants, and we need to understand which of them can be modernized, which can continue to operate smoothly, and which require replacement. Let's say that half or 2/3 of them can still operate until 2030, but by the 2040s and 2050s, they will clearly require replacement. It is clear that these are not only gas power plants, there are also nuclear and coal power plants, but gas power plants dominate here," says Frolov.

At the same time, the demand for electric energy in Russia is not decreasing, but growing and will most likely grow to 1100-1200 billion kilowatt-hours by the end of the decade, the expert adds. This means that in addition to replacing turbines at old stations, it will be necessary to build new power plants. Therefore, there is a risk that the capacity of serial production of such turbines will not be enough to meet all existing demand.

Only eight such turbines will be assembled in four years in 2028 – two per year. From 2028, assembly will increase to four units per year. That is, 18 high-power turbines will be produced by 2030. At the same time, Russia's need for such turbines may amount to more than 40 units.


This is the exact number of turbines that was named in 2022, when Russia agreed to purchase them from Iran.

"There are plans to modernize power plants, and there are plans to produce new gas turbines. If a Russian manufacturer can produce the necessary equipment only in 15 years, then we will have to look for someone else, for example, in Iran and China. Most likely, there will be a shortage of gas turbines in Russia even with our own production. The Russian market is quite large, there will be many who want to sell us their turbines. The same Siemens, which was effectively forced to leave Russia, is not at all delighted with what is happening," says Alexander Frolov.

To understand: there are about 310 gas turbine units operating in Russia, and each of them will require replacement at some point. At the same time, one such turbine can cost 3-4 billion rubles. That is, this market can bring the turbine supplier billions of dollars, not counting the cost of spare parts and scheduled repairs.

Russia needs to learn to build and produce turbines of even greater capacity, the expert believes. In the spring of 2022, before concluding an agreement to purchase 40 gas turbines from Iran, the import duty on MGT-70 gas turbines manufactured by Iranian Mapna was lifted. This suggests that Russia clearly needs such turbines. And the Iranian turbine has more capacity than the Russian GTD-110M - 185 MW versus 115 MW for the Russian turbine.

At the same time, Siemens gas turbines (which caused a scandal in the German concern) of even greater capacity were installed in Crimea. Power Machines has a project for a GTE-170 gas turbine with a capacity of 170 MW, and they have already manufactured the first serial model. In addition, plans are being considered for organizing serial production of gas turbines with a capacity of 300-400 MW, said First Deputy Prime Minister of the Russian Federation Denis Manturov in September.

"A gas turbine is a large object, the size of a small house, which can meet the energy needs of an entire, albeit small, city. The news that Rostec has released the first Russian serial high-power turbine - GTE 110M, is very important. Now we can talk not only about replacing Western products, but also about potential competition with Western analogues. This is an achievement of a qualitatively different order - technological. It is technology that generates economic growth of the country," says Pavel Sevostyanov, Acting State Advisor of the Russian Federation, Associate Professor of the Department of Political Analysis and Socio-Psychological Processes at the Plekhanov Russian University of Economics.

In the long term, Russia has the potential to export its high-power gas turbines. "We have the post-Soviet space, other countries also want to strengthen their energy security. These turbines can become an export product, but this is already a more distant prospect," Frolov concludes.

https://vz.ru/economy/2024/10/11/1291837.html

Russia's external debt has fallen below $300 billion for the first time since 2006: as of October 1, it was $293.4 billion, down 7.7% since the beginning of the current year, according to Central Bank data.

https://x.com/Zlatti_71/status/1844768439556005927

Kiko wrote:"The installed capacity of all power plants in Russia (not just gas ones) is about 263 Gb. Of this capacity, 30 Gb were built from the early 90s to the early 2010s, and another 50 Gb since the early 2010s. All other power plants are older, many of them were built in the 1960s and 1970s of the last century, some of them need to be updated," says Alexander Frolov. In general, the service life of power plants is very long and is designed for more than one decade.

You can see a video commentary about the current energy situation here. Alexander Frolov also speaks in this channel.

Kiko wrote:"By 2030, we need to sort out the 100 Gb power plants. This does not mean that they need to be replaced, but we need to pay maximum attention to them. These are quite old power plants, and we need to understand which of them can be modernized, which can continue to operate smoothly, and which require replacement. Let's say that half or 2/3 of them can still operate until 2030, but by the 2040s and 2050s, they will clearly require replacement. It is clear that these are not only gas power plants, there are also nuclear and coal power plants, but gas power plants dominate here," says Frolov.

They already started doing it. For example they built four new nuclear power plants. Two in Novovorezh and two in Leningrad. And they are building another four. Two in Kursk, and two in Leningrad. They are also in the process of ground preparation to build two reactors at Smolensk.

They are in the process of replacing several several steam turbines at several gas power plants. For example.
https://www.gem.wiki/Kostromskaya_GRES_power_station

Steam turbines are less efficient than gas turbines at converting energy into electricity but it is not like Russia has a shortage of gas.

There is also a problem that there might be issues with keeping imported Western gas turbines operational. Some of those might also need to be replaced eventually. I suspect they will find some way to maintain the most numerous gas turbines by making their own parts. At least at one of these power plants they already replaced the control systems with Russian ones. But some of the rarer and larger installations with H-class turbines might need to be replaced altogether.

Kiko wrote:it will be necessary to build new power plants. Therefore, there is a risk that the capacity of serial production of such turbines will not be enough to meet all existing demand.

Between gas turbines, steam turbines, nuclear power plants, etc there will be a lot of supply.

Kiko wrote:If a Russian manufacturer can produce the necessary equipment only in 15 years, then we will have to look for someone else, for example, in Iran and China. Most likely, there will be a shortage of gas turbines in Russia even with our own production.

The Iranians produce several Siemens gas turbine clones. And China also has its own F-class gas turbines.
http://www.china.org.cn/business/2024-10/09/content_117472513.htm

What the Chinese still lack is their own H-class turbine production. Historically the Chinese did not use a lot of gas for electric generation since they lacked enough of their resource. Historically the Chinese were also lagging behind in turbine technology. So it will take time for this to change.

Kiko wrote:In addition, plans are being considered for organizing serial production of gas turbines with a capacity of 300-400 MW, said First Deputy Prime Minister of the Russian Federation Denis Manturov in September.

This is highly necessary since Russia is a major gas user and even the 170 MW class turbines by Power Machines will not be powerful enough to replace the major installations which mostly still run on steam turbines.

The ruble has become the main currency for settlements with Asian countries for the first time, 10.15.2024.

Central Bank: Ruble Becomes Main Currency for Payments for Imports from Asia for the First Time.

MOSCOW, 15 Oct — RIA Novosti. The ruble became the main currency for payments for imports of goods and services from Asian countries for the first time in August, according to RIA Novosti’s analysis of data from the Bank of Russia.

At the end of summer, its share in payments reached a record 43.6% against 42.9% a month earlier. At the same time, the share of the ruble exceeded the currencies of friendly countries in August by 0.6 percentage points, which allowed the Russian currency to become the main one for paying for deliveries.

The last time the ruble exceeded the share of friendly currencies in imports from Asian countries was in February 2022, but then the main settlements were made in "toxic" currencies.

The ruble also took a record share in payments for African goods, increasing by 0.5 percentage points to 69.9%, as well as for deliveries from Oceania, where it is used to pay for 84.3%.

Overall, the Russian currency began to be used in imports slightly less in August — 44.7% against 45.9% in July. At the same time, the share of friendly currencies also decreased — by 2.2 percentage points, to 31.2%. But the main beneficiaries were the "toxic" currencies, which began to pay for 24.1% of Russian imports against 20.7% a month earlier.

This was mainly due to an increase in the share of unfriendly currencies in payments for imports from Asia (+1.1 percentage points, 13.3%), America (+8.3 percentage points, 71%) and Europe (+6.9 percentage points, 49.3%).

https://ria.ru/20241015/rubl-1978210545.html