Russian Production of Large-Diameter Pipes Organization: The Context, Results, and Prospects

Abstract

On the example of one of the successful sectors of the Russian industry — the production of large diameter pipes (LDP) for trunk pipelines, the relationship between corporate governance and industry development is explored. At present, the specificity aspects of corporate governance in Russia leads to a short planning horizon, the high role of informal rules and the strong dependence of the company development vector on the controlling shareholders (company owners) interests. The owners of LDP companies decide to increase investment and production capacity under the conditions of demand drop for LDP. At the same time, the LDP demand drop poses a problem of significant underloading of capacities, which as a result may lead to a dropin the level of pipes production competencies and the industry product quality level reduction from achieved in 2014–2015 point. The article considers the configuration of key aspects of the Russian LDP production: corporate governance, capacity utilization, which determines the accumulation and loss of competencies, as well as the product quality.