Every third Russian monotown (settlement with one key enterprise) has faced problems as a result of anti-Russian sanctions. This is reported by RBC with reference to the report of the Center for Strategic Research (CSR) "Risks 2022: city-forming organizations and single-industry towns."
Experts note that as a result of sanctions pressure, a total of 134 city-forming enterprises, which employ 551,000 people, have suffered. About 38 businesses have experienced indirect problems, and about 50 have been able to capitalize on the current situation and adapt to the restrictions. The CSR argues that single-industry towns will suffer from restrictions: most of them are simply prohibited from supplying their products to foreign markets, and finding alternative customers takes time and money.
All this will inevitably lead to problems with the remuneration of workers, with the expansion of business and threaten with large-scale layoffs in the field. The enterprises of the timber industry, metallurgy and transport engineering have suffered the most from the sanctions. The CSR notes that a situation close to critical is observed in 16 companies that employ about 182,000 people.
The timber industry faced difficulties in finding alternative sales markets, since its main capacities were previously directed to "unfriendly countries". Metallurgists have faced similar problems, in addition to being hit by a reduction in demand at home due to a sharp decline in investment activity and an excessive strengthening of the ruble, which made Russian products uncompetitive abroad. The CSR admits that due to problems, some metallurgical enterprises will be completely stopped.
“Further deterioration of the situation in the metallurgy may increase risks and negatively affect the dynamics of employment and incomes in a number of large single-industry towns, such as Magnitogorsk, Chelyabinsk, Novokuznetsk, Kamensk-Uralsky,” the study says.
Mechanical engineering is faced with a shortage of parts, which is why large companies are forced to drastically reduce production and look for some alternative supplies. All this affects the incomes of workers who go to part-time work weeks, or even go to downtime. A vivid example is Naberezhnye Chelny and KamAZ located in it, where 7.4 thousand people switched to part-time work due to the suspension of work of a foreign partner.
Car builders have similar problems, which, after the departure of foreign bearing manufacturers, faced a shortage of parts and were forced to cut production. The CSR notes that all foreign players have left the country, while there is no replacement for foreign companies – the production of bearings in the country has not been established. Because of this, Uralvagonzavod (Nizhny Tagil) and Ruzhkhimmash (Ruzaevka) have sharply reduced the production of railcars, and Altaivagon (Novoaltaisk) is forced to work part-time.
In total, the CSR classifies 321 settlements with city-forming enterprises as single-industry towns. About 12.7 million people, or 8.7% of the total population of the country, live in such settlements. Of these, 70 enterprises are in the field of mechanical engineering, 64 – in the extraction of minerals, 38 – in the forest industry, the rest – in other areas.
“The main negative consequences for the socio-economic situation of the country’s single-industry towns will begin to appear in the third and fourth quarters of 2022. They can be expressed in the reduction of workers in the most affected industries, wage cuts, reduced output and the closure of enterprises that will not find options to adapt to the new conditions,” the study says.
Alexander Puzanov, director of the Institute for Urban Economics Foundation, said that enterprises will continue to retain employees for part-time work for part-time wages and will delay layoffs and closing enterprises for as long as possible. However, this does not solve the problems of single-industry towns, but only increases the burden on the state, which will have to spend additional resources on them.
It also follows from the report that about 50 single-industry towns were in an advantageous position and were able to quickly adapt to new conditions. The beneficiaries of the sanctions were organizations of the military-industrial complex, as well as manufacturers of auto components – analogues of foreign parts, for which there is now an increased demand. As an example, the CSR cited the Osvar plant (Vyazniki), which increased the supply of headlights to domestic automakers, even despite the fact that they are much inferior in quality to foreign counterparts.
Single-industry towns are traditionally considered "socially explosive" during periods of economic crisis. The most famous case of single-industry towns in Russia occurred in 2008, when the structures of Oleg Deripaska's company temporarily stopped the work of the Pikalevsky alumina refinery. The billionaire’s decision caused a road closure and mass rallies in the city, and as a result, the then Prime Minister Vladimir Putin had to solve the problem, who independently arrived in the city and chastised Deripaska, after which the plant resumed its work.