"IzhMash": the situation around bankruptcy
Recently, there have been many rumors and speculations in the Internet about the bankruptcy of the largest producer of small weapons in the country - concern "IzhMash". It is worth noting that the rumors about the untimely death of the largest enterprise are somewhat exaggerated. The bankruptcy of the company was the result of ill-considered policies and poor management of the concern throughout almost the entire post-Soviet period of its existence. However, the program of financial recovery of the enterprise carried out in the past few years is already bearing fruit. The plant is selected from the crisis in which it remained for many years.
Under the leadership of the previous management team, the company was mired in debt, including to its own employees, and it worked at a loss. All the assets of the group were divided between 32 legal entities, some of which became unprofitable almost immediately after its creation. All of them formed a very complex organizational structure with high overheads, as well as duplication of a number of functions. All this led to the fact that by the end of 2010, the debts of all enterprises of the concern to creditors reached 13,7 billion rubles, and the net loss was equal to 1,7 billion rubles. The situation at the plant required urgent and decisive action.
As a result, anti-crisis management was introduced at the plant, and Maxim Kuzyuk, who already had experience in restructuring the American automobile giant General Motors, became manager. Kuzyuk decided to use in Izhevsk a scheme similar to the American one. Dedicated to individual legal entities of the company were carried out through bankruptcy proceedings, and all their assets and unliquidated obligations were transferred to the ownership of the newly created “Scientific and Production Association“ IzhMash ”. For the modernization and restructuring of the enterprise, Rostekhnologii attracted funds. 20 April 2012, the state corporation “Russian Technologies” announced the completion of the main phase of measures for the resuscitation of the country's largest weapon enterprise. All the production enterprises of the concern were consolidated into one NPO IzhMash, which by 100% is a “daughter” of the state corporation Russian Technologies.
The anti-crisis measures carried out in 2011 have led to a threefold increase in operating profit and a reduction in enterprise expenses by 10%. The complex program implemented at the enterprise brought him 310 million rubles of operating profit. In 2011, IzhMash's revenue increased by 40% primarily due to the expansion of product sales markets. The volume of shipments to the USA increased by 50%, the revenue only from this line of activity of IzhMash was a record for the 444 plant, million rubles. The plant supplies more than 50 000 small arms to the United States, which is in demand not only among civilians, but also the police. New contracts allowed the company to increase the load of the existing modern equipment to 70%, whereas at the end of 2010, this figure did not even reach 20%.
Prior to the start of the reorganization procedure, the cost of maintaining top management personnel only was about 7% of the total gross expenditures. As a result of structural changes, the number of managerial personnel in the company was reduced by 25%, while all workplaces for specialists were saved. The issue of wage arrears to the workers was resolved. The average wage of workers at the plant is still rather low, but over 2011, we managed to increase it from 12 to 14,6 thousand rubles, following the results of 2012, the company will try to increase it to 16 thousand rubles.
At present, IzhMash NPO plans to sell and lease up to 30% of its production areas, the company's general director Maxim Kuzyuk told in an interview with Izvestia. According to him, now IzhMash already signs documents with IzhAvto. The plant also began to sell unused equipment, both new and used. According to Maxim Kuzyuk, the production capacity of the plant is 60 times the state defense order for 2012 a year, for this reason a large number of production areas remain unclaimed. All workshops and equipment that will be used directly in production are concentrated in the NPO IzhMash, everything else will be sold on the market. Free areas were formed because the enterprise acquired numerically-controlled machine tools in 2008, which require approximately 20 times less space, however, they only began to fully use them last year. According to the CEO, new multi-axis machines are able to process a part in the 1 or 2-3 aisle, whereas the same part on the old equipment went through 120 operations.
The financial resources that IzhMash will help out from the sale and rental of unnecessary space will be used to repay loans. Under the guarantee of Russian Technologies, the plant has already taken more than 2 billion rubles from Sberbank. According to Maxim Kuzyuk, first of all, the areas on which special equipment was produced were freed up, and instrumental and weapon production worked. At the same time, the famous Kalashnikov assault rifles and “Saiga-12” hunting rifles will be produced in the previous workshops. Currently, the plant is engaged in the transfer of production to free shops, in which the equipment will be placed more compactly. Production of high-precision weapons and special equipment is planned to be located in the building where the motorcycle factory (MSK) used to be, and in the shops where the machines were made, they will also be engaged in the manufacture of tools.
Already through 2-3 of the year, according to the general director of IzhMash, for which they are planning to modernize production and achieve an increase in order, the company will again need to increase space. At the same time, both for ensuring the current production and for the growth in the volume of orders, the remaining areas are quite sufficient. In "Russian Technologies" said that the elimination of excess space - is a necessary measure for the plant. Having got rid of excess shops, an enterprise will be able to significantly increase its efficiency: it will not have to pay for the maintenance of these objects, spend money on heating and lighting. Only the cost of electricity in the enterprise plan to reduce 10 times.
The chief editor of the Arsenal magazine, Viktor Murakhovsky, believes that the sale of excess shops will help IzhMash to become one of the participants in the federal target program for the development of the defense industry, within which the renewal of the machine park of defense enterprises will be financed from the country's budget. Izhmash has already applied for participation in this program, but until the enterprise is optimized and put in order, it will not receive money, the expert believes.
In turn, the president of the Russian Institute of Strategic Assessment, Alexander Konovalov, believes that the desire to profit from the sale of production space is a common trend for the domestic defense industry. For example, in the largest assembly shop of the Almaz-Antey enterprise, where it was planned to assemble anti-aircraft missile systems, there is currently a nightclub with the longest bar in Europe. These were the laws of the market.
The main hopes in the enterprise are connected with the AK-12 new development. The main complaints about the Kalashnikov assault rifles were poor ergonomics and the inability to install additional accessories and instruments - tactical lights, scopes, range finders, target indicators. In the AK-12, all this was taken into account, it has improved tactical and technical characteristics. Currently, the machine has been tested in a number of special units, from where not only positive feedback was received, but also recommendations for possible improvements, work on the machine continues. They pin their hopes on the enterprise on the return to the market of high-precision weapons: guided missiles and mines. By 2015, at IzhMash, government purchases are expected to grow in this very direction. Also, the company will continue to work in the field of international cooperation. Currently, negotiations are underway with India on the possible sale of a license to manufacture Kalashnikov assault rifles.
According to Maxim Kuzyuk, Director General of OAN NPO IzhMash, this year the company expects to invest about 200 million rubles in the automation of its production. Money for modernization is allocated by the Russian Technologies State Corporation. According to the official commentary on the bankruptcy situation published on the Izhmash website, the company intends to increase its product sales by 2012-15% following the results of 20, which should lead to an increase in revenue to about 5,333 billion rubles (including 3,756 billion rubles at the expense of military products and 1,568 billion rubles at the expense of civilian products). The research and production association expects to finish the current year with a profit of 32 million rubles, while last year IzhMash ended up with a loss of 6,4 million rubles. Already, it is quite obvious that thanks to timely measures taken and state funding, the Izhevsk gunsmiths managed to preserve valuable scientific personnel, production base and well-known global brand.
Sources used:
www.vz.ru/economy/2012/4/20/575339.html
www.izvestia.ru/news/522663
www.mk.ru/politics/article/2012/04/20/695821-kalashnikov-ostanetsya-v-armii.html
www.metalinfo.ru/ru/news/55741
www.izhmash.ru/rus/news/100412.shtml
www.wek.ru/obshestvo/79714-izhmash--bankrotstvo-proshlo-po-planu.html
Under the leadership of the previous management team, the company was mired in debt, including to its own employees, and it worked at a loss. All the assets of the group were divided between 32 legal entities, some of which became unprofitable almost immediately after its creation. All of them formed a very complex organizational structure with high overheads, as well as duplication of a number of functions. All this led to the fact that by the end of 2010, the debts of all enterprises of the concern to creditors reached 13,7 billion rubles, and the net loss was equal to 1,7 billion rubles. The situation at the plant required urgent and decisive action.
As a result, anti-crisis management was introduced at the plant, and Maxim Kuzyuk, who already had experience in restructuring the American automobile giant General Motors, became manager. Kuzyuk decided to use in Izhevsk a scheme similar to the American one. Dedicated to individual legal entities of the company were carried out through bankruptcy proceedings, and all their assets and unliquidated obligations were transferred to the ownership of the newly created “Scientific and Production Association“ IzhMash ”. For the modernization and restructuring of the enterprise, Rostekhnologii attracted funds. 20 April 2012, the state corporation “Russian Technologies” announced the completion of the main phase of measures for the resuscitation of the country's largest weapon enterprise. All the production enterprises of the concern were consolidated into one NPO IzhMash, which by 100% is a “daughter” of the state corporation Russian Technologies.
The anti-crisis measures carried out in 2011 have led to a threefold increase in operating profit and a reduction in enterprise expenses by 10%. The complex program implemented at the enterprise brought him 310 million rubles of operating profit. In 2011, IzhMash's revenue increased by 40% primarily due to the expansion of product sales markets. The volume of shipments to the USA increased by 50%, the revenue only from this line of activity of IzhMash was a record for the 444 plant, million rubles. The plant supplies more than 50 000 small arms to the United States, which is in demand not only among civilians, but also the police. New contracts allowed the company to increase the load of the existing modern equipment to 70%, whereas at the end of 2010, this figure did not even reach 20%.
Prior to the start of the reorganization procedure, the cost of maintaining top management personnel only was about 7% of the total gross expenditures. As a result of structural changes, the number of managerial personnel in the company was reduced by 25%, while all workplaces for specialists were saved. The issue of wage arrears to the workers was resolved. The average wage of workers at the plant is still rather low, but over 2011, we managed to increase it from 12 to 14,6 thousand rubles, following the results of 2012, the company will try to increase it to 16 thousand rubles.
At present, IzhMash NPO plans to sell and lease up to 30% of its production areas, the company's general director Maxim Kuzyuk told in an interview with Izvestia. According to him, now IzhMash already signs documents with IzhAvto. The plant also began to sell unused equipment, both new and used. According to Maxim Kuzyuk, the production capacity of the plant is 60 times the state defense order for 2012 a year, for this reason a large number of production areas remain unclaimed. All workshops and equipment that will be used directly in production are concentrated in the NPO IzhMash, everything else will be sold on the market. Free areas were formed because the enterprise acquired numerically-controlled machine tools in 2008, which require approximately 20 times less space, however, they only began to fully use them last year. According to the CEO, new multi-axis machines are able to process a part in the 1 or 2-3 aisle, whereas the same part on the old equipment went through 120 operations.
The financial resources that IzhMash will help out from the sale and rental of unnecessary space will be used to repay loans. Under the guarantee of Russian Technologies, the plant has already taken more than 2 billion rubles from Sberbank. According to Maxim Kuzyuk, first of all, the areas on which special equipment was produced were freed up, and instrumental and weapon production worked. At the same time, the famous Kalashnikov assault rifles and “Saiga-12” hunting rifles will be produced in the previous workshops. Currently, the plant is engaged in the transfer of production to free shops, in which the equipment will be placed more compactly. Production of high-precision weapons and special equipment is planned to be located in the building where the motorcycle factory (MSK) used to be, and in the shops where the machines were made, they will also be engaged in the manufacture of tools.
Already through 2-3 of the year, according to the general director of IzhMash, for which they are planning to modernize production and achieve an increase in order, the company will again need to increase space. At the same time, both for ensuring the current production and for the growth in the volume of orders, the remaining areas are quite sufficient. In "Russian Technologies" said that the elimination of excess space - is a necessary measure for the plant. Having got rid of excess shops, an enterprise will be able to significantly increase its efficiency: it will not have to pay for the maintenance of these objects, spend money on heating and lighting. Only the cost of electricity in the enterprise plan to reduce 10 times.
The chief editor of the Arsenal magazine, Viktor Murakhovsky, believes that the sale of excess shops will help IzhMash to become one of the participants in the federal target program for the development of the defense industry, within which the renewal of the machine park of defense enterprises will be financed from the country's budget. Izhmash has already applied for participation in this program, but until the enterprise is optimized and put in order, it will not receive money, the expert believes.
In turn, the president of the Russian Institute of Strategic Assessment, Alexander Konovalov, believes that the desire to profit from the sale of production space is a common trend for the domestic defense industry. For example, in the largest assembly shop of the Almaz-Antey enterprise, where it was planned to assemble anti-aircraft missile systems, there is currently a nightclub with the longest bar in Europe. These were the laws of the market.
The main hopes in the enterprise are connected with the AK-12 new development. The main complaints about the Kalashnikov assault rifles were poor ergonomics and the inability to install additional accessories and instruments - tactical lights, scopes, range finders, target indicators. In the AK-12, all this was taken into account, it has improved tactical and technical characteristics. Currently, the machine has been tested in a number of special units, from where not only positive feedback was received, but also recommendations for possible improvements, work on the machine continues. They pin their hopes on the enterprise on the return to the market of high-precision weapons: guided missiles and mines. By 2015, at IzhMash, government purchases are expected to grow in this very direction. Also, the company will continue to work in the field of international cooperation. Currently, negotiations are underway with India on the possible sale of a license to manufacture Kalashnikov assault rifles.
According to Maxim Kuzyuk, Director General of OAN NPO IzhMash, this year the company expects to invest about 200 million rubles in the automation of its production. Money for modernization is allocated by the Russian Technologies State Corporation. According to the official commentary on the bankruptcy situation published on the Izhmash website, the company intends to increase its product sales by 2012-15% following the results of 20, which should lead to an increase in revenue to about 5,333 billion rubles (including 3,756 billion rubles at the expense of military products and 1,568 billion rubles at the expense of civilian products). The research and production association expects to finish the current year with a profit of 32 million rubles, while last year IzhMash ended up with a loss of 6,4 million rubles. Already, it is quite obvious that thanks to timely measures taken and state funding, the Izhevsk gunsmiths managed to preserve valuable scientific personnel, production base and well-known global brand.
Sources used:
www.vz.ru/economy/2012/4/20/575339.html
www.izvestia.ru/news/522663
www.mk.ru/politics/article/2012/04/20/695821-kalashnikov-ostanetsya-v-armii.html
www.metalinfo.ru/ru/news/55741
www.izhmash.ru/rus/news/100412.shtml
www.wek.ru/obshestvo/79714-izhmash--bankrotstvo-proshlo-po-planu.html
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