Oleg Deripaska: The UK should rethink how it treats industry

Posted on 22 Jun 2012
Deripaska's industry-focused Basic Element group have strong relations with Russian government.

Russian oligarch Oleg Deripaska has said that the UK Government needs to decide whether it wants to back industry or not.

In a conference call with The Manufacturer’s Tom Moore last week, Mr Deripaska states that the decline of industry in the UK has come about through neglect after being the world’s leader 100 years ago.

“The UK should reconsider how it treats manufacturing and industry,” he says. “The Government policy on taxes and education doesn’t support industry. It should consider whether it views keeping its industrial base is a priority as was decided in Russia seven years ago.”

Oleg Deripaska, CEO of Basic Element
Oleg Deripaska, CEO of Basic Element.

Deripaska’s view through the looking glass reflects the disparate policies throughout UK government that seem to give support with one hand while hindering with the other.

There is a flexibility to politics in Russia that allows changes to be made if legislation does not support industry. In a recent example, Bo Andersson, CEO at GAZ group, explains that his letter to Russian President Vladimir Putin led to a clearance of high import taxes on automotive components  after he explained it was hurting the company’s new strategy of using European components to increase quality.

Such political flexibility is unheard of in the UK, and quite frankly, there doesn’t seem to be the will to personally engage with business, let alone manufacturing.

But while there is strong support for industry in Russia, the state’s heavy influence can be a major problem, with huge social pressure on management from mayors, local communities and President Putin himself.

When quizzed on a recent meeting where execs at Deripaska’s automotive firm Gaz were instructed to significantly raise salaries across the organisation, giving a ballpark figure in the process, Deripaska diplomatically says that “it’s a politician’s job” to say how much workers should be paid.

He gives the recent questioning of banker’s bonuses in the West as a reminder that Russia is not so dissimilar to its Western counterparts despite lingering Soviet stereotypes that seem to shade events such as this.

Speaking on National Russia Day last week, when over 20,000 protestors took to the streets in Moscow, Deripaska says that there is a strong political will for change.

“I don’t believe that we will solve the corruption issue in the next ten years, but people are demanding change. I’m 90% sure that oligarchs will still be around in the next 10 years but there may not be any more oligarchs in Russia in 20 years’ time and it will become truly democratic.”

Click here to view The Manufacturer’s guide on exporting into Russia.