Russia’s state-owned media RBC (Rossiyskaya Gazeta) reported on August 6 that due to financial problems, the state-owned Vympel Shipyard in Rybinsk, Yaroslavl Oblast, western Russia, has begun laying off employees.
Vympel Shipyard, part of Russia’s largest shipbuilding group, United Shipbuilding Corporation (USC), faces a funding gap of more than $12.4 billion, according to the Russian Ministry of Finance.
Sources within the shipyard have confirmed that as of July 1, at least 33 of Vympel Shipyard’s 950 employees have received layoff notices. While the exact scale of the layoffs has not yet been determined, it is expected that the layoffs will primarily target non-technical staff, while production staff will retain their positions. The layoffs are expected to be implemented in phases until the end of the year.
Vympel shipyard attributed the layoffs to insufficient orders and the need to optimize spending. Senior management at the shipyard stated, “The decision to lay off staff was based on insufficient production volume and the need to match staffing levels to the current workload.”
The leadership of USC and Vympel Shipyard has pledged to offer laid-off employees suitable positions within other USC companies that match their qualifications and experience, and to fulfill all social security and compensation obligations.
It is reported that Vympel Shipyard mainly manufactures small and medium-sized vessels, including small missile boats for the Russian military, patrol boats and anti-sabotage boats for the border guard service of the Federal Security Service of the Russian Federation, as well as hydrographic survey ships for the Russian Navy. The shipyard has previously delivered at least five “Comet” 120M hydrofoil boats, which once served Russian regular routes in the Azov Sea and the Black Sea.
USC, operated by VTB Bank (VTB), was established in March 2007. It has over 40 affiliated enterprises, covering design institutes, research centers, shipyards, ship repair yards, and machinery manufacturing plants. The corporation has integrated most of Russia’s domestic shipbuilding resources, employing 95,000 people, with its products including merchant ships, nuclear submarines, aircraft carriers, and other naval vessels.
In addition, according to relevant news, there were reports in late July that the Russian Ministry of Industry and Trade proposed to cut the funding for Russia’s civil fleet modernization project by more than 40%, from $2.8 billion to $1.6 billion. The cut comes as the National Welfare Fund (NWF) of Russia has been depleted and due to budgetary issues, with one-third of the federal budget currently being allocated to the Russia-Ukraine conflict.
According to a report from the Russian Ministry of Industry and Trade, the proposal means that 69 vessels will be canceled from modernization programs. Initially, Russian authorities planned to launch more than 260 commercial, fishing, and cruise vessels between 2023 and 2027. RBC reported that the plan would primarily affect cargo vessels, fishing vessels and dredgers.
Oleg Sutyrin, partner at SBS Consulting, pointed out: “While spending cuts are necessary, this runs counter to the goal of modernizing the fleet, as the average age of the fleet is 40 years old. Russia needs to launch at least 200 to 220 new vessels each year to avoid an increase in the risk of accidents due to aging fleets.”