One of the ways to promote development is to create «growth points» to stimulate innovative development, first of all in industries with the highest return on investment. State investment will not only help the real sector and create tens of thousands of new jobs but will also form the basis for the improved competitiveness of the Russian economy. One of the growth points is rail transport.

The President of the Russian Federation Dmitry Medvedyev in his message to the Federal Assembly on November 12th of 2009 set a mission of system-based, integrated modernization and technological updating both of production industry and the country’s economy at large.

The previous year 2009 has become the first year in the recent history of the Russian railway engineering when the demand for the sector production decreased. The production volumes in natural units dropped by 35% if compared to 2008, which has been unheard-of since the mid 1990-s. In this situation, one of the key factors for the industry was the size of RZD’s investment programme for 2010 as RZD is the major buyer of industry production.

In 2009, the Russian economy faced effects of the economic crisis — decline in the demand and manufacturing industry, decrease in the freight and passenger transportation volumes, unemployment growth. These events have inevitably affected the railway engineering as well, as the demand for the industry production directly depends on the financial capabilities of the railway companies, including the volumes of freight transportation by rail. We may make one conclusion right away – the year 2009 has become the first year of the drastic decline in the railway engineering for the last decade. How did the industry react to the crisis, what changes did the industry undergo compared to the production sector in general, what perspectives will the sector companies have during the current year? This overview will outline all of the above.

At the time of an economic crisis, the promptness, reliability and fullness of information on the state of economy play pivotal role for the governmental authorities and business in making efficient decisions, especially on applying anti-crisis measures and their key parameters.

Innovative-based development is the resultant vector and an essential condition of Russia’s economic progress in the 21st century. It is reflected in President Medvedev’s Annual Address and in the Government Long-term Social and Economic Development Strategy of Russia up to 2020. As it is specified in the Strategy by 2020 the innovative sector should constitute 18% of the country’s GDP.

Much has been done in the last few years for production quality improvement at Russian railway engineering companies, and its level has noticeably risen. If we were to single out only two main components: design of products with higher quality and introduction of quality management systems, we could give lots of examples. Thus, realisation of innovative development strategy contributed to introduction of new technologies and improved quality production in Russian railway engineering plants.

The purpose of technical regulation in legislation is to avoid operating a product which is dangerous for human life and health, or can damage the environment. At the same time it should avoid any excessive (unnecessary from the security point of view) intrusion into the market processes associated with product manufacturing, shipping, operating, storage and recovery, as well as to provide unobstructed product turnover without excessive technical barriers.

Nowadays pricing of various types of rolling stock purchased by RZD is carried out on «costs plus» principle, in other words assuming the cost of this rolling stock manufacture with allowance for manufacturer’s profitability. This pricing method is inadequate primarily because it does not imply any stimulus for the manufacturer to increase quality and/or decrease the production cost. Manufacturers do not feel it necessity to make additional investments in this area because they are not very likely to change their profit margin. Besides with the cost-plus pricing the buyer has no instruments necessary to analyze the expediency of purchasing rolling stock with particular specifications which in fact define the rolling stock price in cost-plus pricing. Practical advantages of using the purchased rolling stock may not be significant enough to justify the price which the buyer had paid for it. However today within the framework of pricing it is impossible to analyze this issue.

For decades the equipment technical parameters were a decisive factor for its purchase in all branches of Russian economy including rail transport. In these conditions until recently prices for new equipment have been set on cost-basis calculated by manufacturers. Transition to market economy urged railway equipment manufacturers to come up with new, innovative, qualitative equipment with lower production and maintenance cost.

Having appeared at the end of 1960s in a war industry, the life cycle cost concept (LCC) has been introduced into other areas. In the railway industry the LCC concept has appeared at the beginning of 1990s: at first in tendered calls from Scandinavian countries and subsequently it became one of the most important concepts of all West-European tenders connected with rolling stock. Over fifteen years of this existing practice, requests and data application have been classified and further developed.

In reality, a rolling stock manufacturer can predetermine life cycle cost both by means of productivity (through capacity, coefficient of efficiency, etc), and by means of reliability, availability and maintainability. These equipment qualities are determined at the design stage by the selection of engineering solutions. For example, Alstom mentions the following specifications for a locomotive: power capacity, traction effort, ecological parameters, weight, speed, clearance and width. Besides, other factors can be defined by specific needs of the client and infrastructure requirements, for example, fuel tank capacity, air pump productivity, traction mode (alternating current/direct current), harmful emissions, noise, EMI/EMC (electromagnetic interference / electromagnetic compatibility), etc.

The Non-Commercial Partnership «Union of Industries of Railway Equipment» (UIRE) was founded on April 28, 2007. One of the main tasks set forth by the Partnership’s Charter is creating up-to-date normative and technical basis for improving the products quality, raising their competitiveness and contributing to competition development. The Charter also lays out operations aimed at developing certification systems, establishing requirements for product quality, quality management and personnel certification systems; it is also carried out on the basis of respective normative documents.

All statistical data, provided in this section, are based on official information of federal executive bodies, ajusted in accordance with the data of Russian Railways and manufacturers.

The efficiency and competitiveness of the rail transport largely depends on the speed and intensity of train traffic. With increased speed and intensity of train traffic, safety requirements are also increased. To meet these requirements, new improved and more sophisticated technologies and principles of control systems designing and train traffic safety should be applied. The most important task of control systems and train traffic safety is to determine the location of a train and its speed.

Quite a bit has been written in the media about the recent record runs of the GT1 gas turbine locomotive. Nothing however was said about the hard work done of its designers. They were the first in the world to come up with an idea to power a gas turbine locomotive engine with liquefied natural gas (LNG). A similar engine, however, was used before: on April 15, 1988 the world's first Tu-155 airliner made its first flight equipped with the experimental engine NK-88 designed by the Kuznetsov Design Bureau. The engine consumed alternative fuels (liquefied hydrogen and liquefied natural gas). Therefore, quite naturally, the gas turbine locomotive project developers commissioned the Kuznetsov Samara R&D Center with the gas turbine engine design, even though they considered several types of such engines offered by various developers.

The changes that have occurred in the railway industry in recent years — improvement of the infrastructure, introduction of new information technology management and safety of the transportation process, introduction of modern standards in service and logistics, increased competition among transport operators, growing innovative capabilities of manufacturers of railway engineering components — are a powerful incentive to the creation of a new electric rolling stock that meets the modern technical and economic standards.