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Friday, June 4, 2004
Boeing may pull back on Russian investments
The Boeing Co., one of the largest foreign investors in Russia, said it may hire fewer engineers and information technology specialists as the former Soviet state refuses to lower tariffs on the company's planes.
Boeing, which has pumped more than $1.3 billion into Russia's economy since the fall of the Soviet Union, has been struggling over the past 15 years to sell its planes inside the country because of a 40 percent tax on imported planes.
"It is more and more difficult for us to consider more investment and more work over here, creating thousands of new jobs, helping the government to limit emigration of the best minds at a time when we cannot sell over here," Sergey Kravchenko, head of Boeing for Russia, said yesterday.
Russia's aerospace industry, which rivaled that of the United States during the Cold War, has suffered since the fall of the Soviet Union as the state couldn't financially support plane makers.
The country, which produced about a dozen regional and long-distance commercial planes last year compared with about 150 during Soviet times, has imposed high tariffs to protect its domestic industry.
More than 750 engineers work at Chicago-based Boeing's research centers around Russia on contract. The company also has about 100 employees in the country.
Russia's demand for planes is growing amid surging economic growth and aging planes. Russia's air-transport market grew by 12 percent in the first quarter, outpacing the country's 8 percent economic growth, according to Renaissance Capital, a Moscow-based brokerage.
Most Russian airlines have been unable to buy foreign planes because the tariffs make them too expensive.
"We are disappointed that we have not been able to sell more civil aircraft in Russia, and this is in large part due to high tariffs," said Thomas Pickering, senior vice president of international relations at Boeing and a former ambassador to Russia.
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