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Russia’s Largest Shipyard to Lay Off Staff Amid 12.4$ Billion Shortfall for Fleet Modernization
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Russia’s largest state-owned shipbuilding company, the Vympel Shipyard in Rybinsk, Yaroslavl region in western Russia, has begun laying off staff due to financial difficulties. The company, which is part of the United Shipbuilding Corporation (USC), Russia’s largest holding for the production of both civilian and military vessels, is facing a significant funding shortfall, reportedly exceeding 12.4$ billion, according to the Russian Ministry of Finance, Russian state media RBC reported on August 6.
Sources within the shipyard confirmed that at least 33 workers had already received layoff notices, with the total workforce at Vympel as of July 1 being 950 employees. The extent of the layoffs remains uncertain, although it is believed that the redundancies will mainly affect auxiliary personnel, with production staff remaining employed. It is also expected that layoffs will occur in multiple stages until the end of the year. The company cited the lack of orders and the need to optimize expenses as the primary reasons for the layoffs, RBC claims.
The management of Vympel Shipyard decided to lay off staff due to “a lack of production volumes at the plant” and the need to align staffing levels with available work. The USC and Vympel’s leadership have pledged to assist laid-off workers by offering alternative positions at other USC enterprises, matching their qualifications and experience. The company assured that all social guarantees and compensation obligations would be fulfilled.
Vympel produces small and medium-sized vessels, including small missile boats for the Russian army, patrol and anti-sabotage boats for the FSB’s border service, and hydrographic vessels for the Navy. The shipyard also produced five "Comet" 120M hydrofoils, which served regular Russian routes in the Azov and Black Seas.
In late July, it became known that the Ministry of Industry and Trade proposed cutting funding for the modernization of Russia’s civil fleet by more than 40%, from 2.8$ billion to 1.6$ billion. This reduction is due to the depletion of the National Welfare Fund (NWF) and budgetary problems, with a third of the federal budget now allocated to the needs of the war in Ukraine.
According to the ministry's presentation, the plan will exclude 69 vessels from the modernization program. Initially, the authorities had planned to launch more than 260 commercial, fishing, and cruise vessels between 2023 and 2027. The program’s main casualties will be cargo, fishing, and dredging vessels, RBC claims.
Oleg Sutyrin, a partner at SBS Consulting, noted that the cutbacks, while necessary, contradict the goal of fleet modernization, as the average age of vessels in the fleet has reached 40 years. He emphasized that Russia needs to launch at least 200-220 new vessels annually to avoid the rising risk of accidents due to an aging fleet, RBC concluded.
Previously, it was reported that the long-delayed overhaul and modernization of the Russian Navy’s large anti-submarine ship Admiral Chabanenko will not be completed in 2025 as previously planned, sources told Russian media Izvestia. The sources were also unable to offer a new target date for the completion of work or the vessel’s return to training operations.
