Implementation of priorities in the real sector of the economy

The main goal of industrial policy is the creation of a modern industrial complex of the city, integrated into world production, capable of self-development, which meets domestic needs and exports.

Industry is one of the leading sectors of the region's economy, which has a stable tendency to increase production volumes and provides half of the region's gross product. Under the conditions of structural restructuring, the diversified industrial sector has been fully preserved.

In the city, 50 enterprises are engaged in the production of industrial products, and the number of people employed in industry is 15.0 thousand people.

The average monthly wage is UAH 512.

For the fourth year already, industrial production volumes have been growing.

During 2003, positive dynamics of increasing industrial production volumes continued in industry (diagram 3.1).

It was possible to stabilize the situation in almost all branches of industry. In 2003, more than half of the enterprises achieved an increase in production volumes. More than 96 percent of mutual settlements were carried out in monetary form.

In recent years, the structure of industrial production has changed significantly.

Now more than half (58%) of the production volumes of the regional center is concentrated at 6 enterprises (open joint-stock companies "Lutsk Automobile Plant", "Bearing Plant", "Lutsk-Foods", "Cardboard-Ruberoid Combine", "Elektrotermometriya", and the enterprise "Ukrkrystalmet").

The main share of products (94.3%) falls on the manufacturing industry. In particular, products of machine-building enterprises account for 38.3%, food industry - 26.8%, chemical and petrochemical - 7.8 percent.

The stable operation of enterprises was ensured, in particular, by attracted foreign investments.

In this sector, thanks to a larger volume of investments, the introduction of modern technologies, and the renewal of the product range, a course was taken toward a significant improvement in product quality, an increase in export potential, the improvement of methods of working with raw material suppliers, and the displacement from the domestic market of low-quality food products of imported origin.

An important branch of industry is machine building, which in 2003 increased production volumes by 13.5%. The stable operation of enterprises in the sector was ensured, in particular, by attracted foreign investments. Investments by the Swedish company SKF in the amount of 14.7 million US dollars allowed OJSC "Lutsk Bearing Plant" to significantly improve product quality, master the production of bearing components, and ensure an increase in production volumes. Innovations were also actively introduced at OJSC "Lutsk Automobile Plant". The enterprise received investments in the amount of UAH 165 million and is finalizing an investment program for the production of trucks and buses at OJSC "LUAZ".

The adoption of this program would have made it possible for the plant to work much more efficiently, and most importantly, to begin its implementation, focusing attention on the reconstruction of the enterprise, the construction of a painting complex, and the development of new types of products.

The number of enterprises engaged in innovative activity increased by 36.8% (26 industrial enterprises (in 2002 - 19)

The number of introduced new progressive technologies doubled compared to the previous year - from 10 to 20 (including from 6 to 10 - low-waste, resource-saving). Machine-building enterprises introduced 9 technologies, or 45% of the total.

At four enterprises, 15 new technologies were purchased, including 9 rights to patents and licenses for the use of industrial property objects.

The most widespread direction of innovation activity is the creation and development of new or significantly improved types of products. 58% of innovation-active enterprises were engaged in this. They mastered the production of 63 new types of products compared to 266 in 2002 (due to changes of a methodological nature), which constitutes 40% of those mastered in the region. On average, there are 4 product names per enterprise that created and introduced new products. Light industry enterprises mastered 32 new types of products (51% of the total number mastered), food industry - 21 (33 percent).

The volume of innovative products manufactured amounted to UAH 140.7 million, which is 17% of total output in the city and 97% of innovative products in the region. The main part (90%) of these products was produced by machine-building enterprises.

Produced under the Volyn brand: 62% of the nationwide production of cold water meters, every fourth car and every fourth bearing.

On favorable terms, the state block of shares of OJSC "Lutsk Automobile Plant" was sold, and at the plant's production facilities, using investments from the new owner, assembly of VAZ and UAZ vehicles was organized.

In the woodworking industry, a World Bank project on low-cost restructuring of enterprises is being implemented, involving OJSC "Lutsk Furniture Combine".

The situation has improved in the construction materials industry and in most enterprises of the chemical and woodworking industries. Thus, growth of 18.9 percent was ensured, including 14.1% for soft roofing materials, which constitutes two-thirds of the nationwide output produced in the city.

Intensification of product range work and increased competitiveness of products in both foreign and domestic markets became an effective step toward restoring consumer confidence in domestic goods.

The volume of production of consumer goods is increasing annually. Thus, in 2003, across the city as a whole, growth in consumer goods of 26 percent was ensured; total goods worth UAH 262.7 million were produced.

The largest part (75%) is accounted for by food products, non-food products - 19%, alcoholic beverages - 6 percent.

Main problems of industrial policy:

• high interest rates (the high cost of domestic credit resources);
• completion of the financial rehabilitation process of OJSC "Voltex";
• the absence in the state of a long-term lending system, which is extremely necessary for industries with a long production cycle;
• creation of conditions for expanding production and sales of products of domestic enterprises, protection of the domestic market from uncontrolled imports of foreign goods;
• the existing tax and customs system is imperfect, as it "washes out" working capital from producers;
• underdeveloped markets for technologies, licenses, patents, scientific research, design projects and other intellectual products;
• lack of a fully functional monitoring system and marketing research of domestic and foreign markets for industrial goods.

The main goals and priority tasks for 2004 will be:

• development and implementation of measures to stimulate the renewal of fixed assets and technical re-equipment of industrial production;
• ensuring competitive industrial products in the domestic and foreign markets, above all products with a high degree of processing;
• creation of economic conditions and expansion of demand for products of machine-building enterprises;
• development of market infrastructure, increasing production and enhancing the competitiveness of food and processing industry products on the foreign market;
• development of the production of highly liquid and export-capable types of products;
• mastering the production of products that ensure the city's strategic independence from imports, improving the assortment and raising the quality of all types of goods;
• ensuring structural transformations in the mechanical engineering sector and introducing modern technologies for expansion;
• development of chemical production and processing sectors of the agro-industrial complex;
• reducing the number of loss-making enterprises;
• reducing wage arrears;
• expanding the assortment and increasing the production of chemical products and socially oriented materials (chemical fibers and yarns, household chemical goods);
• introduction of new resource- and energy-saving technologies;
• decommissioning environmentally harmful production facilities and energy-intensive, morally and physically obsolete technologies and equipment;
• developing management and expanding product sales markets, promoting the development of the domestic market, increasing the competitiveness of light industry goods in terms of both price and consumer properties;
• development of the domestic market for light industry goods;
• restoration of the dominant positions of Ukrainian non-food consumer goods on the domestic market;
• expanding product sales markets and building up the export potential of industry, taking effective measures to promote Ukrainian light industry goods, primarily to the EU and CIS countries.

In mechanical engineering

Modernization of technological equipment at OJSC "Lutsk Bearing Plant" will continue. Using the technology of the plants of SKF Corporation (Sweden), it is planned to introduce channels (lines) for bearing production.

It is planned to complete the restructuring of OJSC "Bearing Plant". It is forecast that the production of roller and tapered bearings will grow by almost 6 percent.

In instrument making (the main manufacturer is OJSC "Elektrotermometriya"), the main attention will be paid to expanding and improving the production of modern metering devices for hot and cold water consumption, gas pressure regulators, and contact thermometry instruments.]

The implementation of the investment project "Expansion of production of household metering devices" at OJSC "Elektrotermometriya" will make it possible to increase production volumes of new-generation metering instruments. Capacity expansion is envisaged with the introduction of new advanced technologies, primarily in die-casting of non-ferrous metals and its mechanical processing.

OJSC "Automobile Plant" will operate in the mode of increasing production volumes. Work continues on the implementation of the innovative project "Development and introduction into production of high-cross-country-capability LUAZ-1301 cargo-passenger vehicles".

OJSC "Lutsk Automobile Plant" will improve cooperation with enterprises of the Russian Federation, where in 2003 work continues on introducing serial production of the LUAZ vehicle, for which an assembly line is being installed. In 2003, it is planned to assemble more than 12 thousand passenger cars.

In the chemical and petrochemical industry

In 2004, an increase in production volumes in the chemical industry is forecast. The industry's main priorities will be based on expanding the range and increasing the production of chemical products and socially oriented goods. OJSC "Lutskplastmas," JV CJSC "Lutskkhim," and OJSC "Spektr" will work on this. The basis for expanding the production of capacitor film, which is widely used in the electrical industry, will be its supply, in addition to European and Asian countries, to the Russian Federation; the sales area in Ukraine will also expand.

Other enterprises in the industry will also work on increasing the competitiveness of products, replenishing the market with plastic goods, household chemicals, varnishes and paints, and rubber technical products.

In the production of wood and the manufacture of products from it

In the woodworking industry, the consolidation of positions and the further development of trends toward growth in production volumes will continue. The efforts of workers in this sector will be directed toward fuller use of production potential and the improvement and enhancement of product competitiveness. This will be facilitated by the implementation in the region of a World Bank project on low-cost restructuring of enterprises, in which the joint-stock company "Lutsk Furniture Combine" is involved.

In light industry

The financial situation of light industry enterprises, which in 2003 operate mainly on tolling raw materials, remains difficult. However, they too will pay considerable attention to increasing the competitiveness and exportability of their products.

Given the growing demand for fabrics with flax fiber additives, next year OJSC "Lutsk Silk Combine" will develop new types of such fabrics with an increased content of natural raw materials.

The development of new types of technical and suit fabrics with added linen and increasing their production to 3.5 million linear metres, as well as the development of new clothing models at garment manufacturing enterprises, will make it possible to ensure a nine-percent increase in output in the light industry.

An analysis of the activities of OJSC "Volyn Silk Combine" gives grounds to hope for an improvement in its positions in the domestic and foreign markets. The enterprise will work on developing a new collection of cotton fabrics, analogues of which do not exist in Ukraine. The assortment of dress-and-suit fabrics containing linen will be expanded; they will win the market not only in Ukraine but also in Russia, the USA, Hungary, the Czech Republic, Poland, France, and Greece. The enterprise's suit fabrics have been highly rated at many exhibitions. Among its latest achievements are the titles of laureates and the receipt of gold and silver diplomas at the First Festival "Textiles and Fashion - 2003". The enterprise plans to master the production of suit and furniture fabrics from a new type of fiber, "nitron".

Further growth in production volumes and expansion of the product range is planned at the enterprise OJSC "Cardboard and Ruberoid Plant" (development of Euro-ruberoid production). It is planned to introduce a new technology for manufacturing containers for packaging food products (butter, margarine).

In the food industry

In the food industry, which will continue to account for the largest share of total industrial output and has the highest growth rates, primary attention will be paid to meeting the population's needs for high-quality food products, increasing export potential, and creating a modern material and technical production base through the introduction of scientific and technological achievements. Increased attention will be paid to ensuring growth in the production volumes of baby food products. As part of the implementation of the program "Improving the provision of children with adequate nutrition and products of the children's range, and supporting domestic production of these goods," an increase in the production volumes of fermented milk and meat products, canned juices, purees, etc. is forecast.

Other branches of industry will also continue to develop, and particular attention will be paid to the use of secondary resources and environmental protection.

The main goals and priority tasks in industry for 2004 are:

• increase in production volumes by 8%;
• to carry out financial rehabilitation and restructuring of enterprises in industrial sectors and increase their investment attractiveness;
• increase in tax revenues to budgets of all levels;
• Implement measures of local and regional development programs with the aim of creating and introducing the latest technologies, equipment, and technical means in industrial sectors;
• comply with the requirements of the concept for regulating the automobile market;
• ensure the systematic development of the mechanical engineering industry, including the creation, production, branded servicing and market monitoring, with the identification and implementation of priority areas for the development of this industry;
• implement a set of energy-saving measures at enterprises;
• carry out reconstruction of production capacities and local energy networks at enterprises in order to reduce energy consumption, lower production costs, and increase product profitability;
• promote the creation of a modern highly efficient chemical complex based on energy saving, competitiveness and environmental safety, as the basis for reliably meeting the economy's needs in the chemical sector;
• in 2004, an increase in the volume of mechanical engineering output by 3% is projected, and its share in total industrial output is to be brought to 40%;
• in the light industry - creating conditions for the resumption of operations of industrial enterprises (OJSC "Lutsk Silk Combine"), their technical re-equipment, and an increase in the production of competitive goods.