“A hunted horse is extremely difficult to reanimate”
In September, Prime Minister Vladimir Putin promised that the state would invest more than $ 2 billion in NPK Uralvagonzavod. The company will receive unprecedented state support for the industry amid a dramatic improvement in the wagons market that provides it with the main revenue stream. Where the money will go, how long NPK is counting on skimming off the railcar building and what it will do when the market starts to fall, OLEG SIENKO, general director of Uralvagonzavod, told Kommersant.
- The amount promised to the plant by the prime minister is comparable only with the crisis support from AvtoVAZ, and even then the auto plant received a loan. What scheme will be allocated funds "Uralvagonzavod"?
- It is about financing within the framework of the Federal Target Program “Development of the DIC before 2020 of the Year”, and it has a completely different goal. The funds that AvtoVAZ received were allocated to support the company during the crisis. We are talking about money for the modernization and creation of new industries. This is a federal program that is developed and approved by the Ministry of Industry and Trade with the Ministry of Economy and the military industrial complex, and is also coordinated with the Ministry of Defense and approved by the government. In addition to state funds, we must invest some of our own.
- What share of the total amount of financing for the Federal Program will be exactly budget money?
- About 60% of 64 billion rubles. will allocate the state. Until 40% will be own funds - from the profits or raised as long-term loans. This is the requirement of any federal program.
- Which banks are planning to take loans?
- We traditionally work with the top five leading banks in Russia, for Uralvagonzavod there are serious credit limits. Of course, you can expand the list of creditors, but we are quite conservative in choosing financial partners.
- How will investments be distributed between the military and civilian divisions?
- Development program development is not yet complete, but soon we must approve it. After that, it will be possible to say how the money will be distributed. Our desire is to make a greater bias within the corporation towards civilian products, we believe that its production brings a steady income. With regard to the military division, we understand that it is necessary to carry out the LG-2020 (state program of armaments up to 2020 of the year. - “Kommersant”). This is a long-term program, a lot of money is allocated for it, and we would like to confidently master these investments.
- Recently, the plant has consolidated 80% of the shares of the Chelyabinsk plant “CTZ-Uraltrak”. This company will be the core of the civil division?
- Not certainly in that way. The civilian division will not have one core. ChTZ-Uraltrak will become a center for the production of road-building equipment and engine-building. But in general, we will develop civilian products in several enterprises. The main volume will be in Nizhny Tagil, which will become the center of car building, this is the main segment. Uraltransmash will launch a large-scale production of trams, including low-ash trams. Rubtsovsk machine-building plant will continue to produce fire equipment. Although later we will make the center of fire equipment either in Chelyabinsk or in Nizhny Tagil.
- It was planned to invest 13 billion rubles in the modernization of ChTZ-Uraltrak. This money will be allocated from the funds received under the federal target program?
“Already now, at our own funds, we carried out a partial modernization of the engine production at ChTZ-Uraltrak. We are testing prototypes of engines that will go to the Armata military platform and road construction equipment. Of course, we do not exclude the creation of joint ventures for engines and road-building equipment, we are negotiating with Caterpillar and other manufacturers. If we have the opportunity to not fully invest in the modernization of ChTZ-Uraltrak money, but to attract part of these funds at the expense of our partners who will provide technologies and new developments, then we will go this way or jointly invest in the development of new products. In the extreme case, we will develop new products independently.
- At what stage are the negotiations with Caterpillar?
- We have a working group, there are two ways of development. One is the production of a line of high-powered engines for heavy road-building equipment and locomotives, and the second is related to the repair of cars. Caterpillar in 2006 very successfully bought one of the major car repair companies in the USA (Progress Rail Services Corporation.– “Ъ”), they have a good tradition of tracking the life cycle of the car, the technology for its repair. These competencies attract us, because in the future we plan to fully manage the life cycle of our cars, that is, to carry out their full service, and not just supply them with spare parts as needed.
- So with Caterpillar, is a joint venture to produce engines and repair cars?
- This option is being considered.
- What will be the volume of investment in the joint venture?
- This is still under discussion. We began to discuss the creation of working groups in the second half of the year, so there is no need to wait for instant results. But the path of development is planned.
- By the date of the launch of the joint venture already have benchmarks?
- Date is a serious thing. After all, we recently became the sovereign owners of ChTZ-Uraltrak, before we had nothing at all there. It is necessary to understand what is happening at the enterprise in general, to optimize all the streams, because now ChTZ-Uraltrak is a large piece of fine-cut chips. There is a lot of work to streamline all assets. And only after optimization of production it will be possible to produce modern products on the basis of the plant. Over time, Caterpillar plans to localize part of its European products there.
- About 20% “CTZ-Uraltrak” is owned by the Chelyabinsk region. Are you planning to buy the package?
- There is an agreement that this will happen before the end of the year, the scheme has also been approved. We need to get rid of part of non-core industries and social facilities. We plan to transfer them to the regional government - for example, as we will do with medical institutions. All these objects will be evaluated and exchanged for shares.
- How will ChTZ-Uraltrac develop?
- There is a very good forging production, which does not even require modernization, we simply optimize the load flows. We will precisely rebuild the assembly lines, since all the capacities were designed for 56 thousand operating, this number, apparently, will never happen again at the plant. The market today dictates something completely different to us. We will modernize and develop the production of heavy bulldozers on road-building machinery - we are one of the European market leaders in this segment. The second aspect is the production of pipe-laying machines, and cooperation with Caterpillar as a world leader is being planned here. The rest of the line of road construction equipment will continue. We will transfer part of the production of utility machines to ChTZ-Uraltrak from Nizhny Tagil, it is of limited production and occupies too large areas there. Ultimately, our task is to create a single production complex at ChTZ-Uraltrak, which will produce the products that the market needs.
- Is it possible to say that ChTZ-Uraltrak was bought specifically for a joint venture with a foreign manufacturer?
- Not only for this. ChTZ-Uraltrak manufactures engines for our military vehicles.
- Modernization of other enterprises, in particular the production of trams, is also supposed to be carried out in the framework of a joint venture with partners?
- The joint venture is not an end in itself. The joint ventures are good when there is a living market segment, and we do not have the technology for production. By tram we are negotiating with Bombardier. But we have our own strategy - we are moving not from production to market, but from market to production. The Moscow government has adopted a large-scale development program for the city tram to increase passenger traffic. She is under the personal control of Mayor Sergei Sobyanin. The program is very positive - we also claim to participate in it. In addition, the Universiade starts in Kazan in 2013, in the 2018 year - the World Cup, the state should invest a lot of money in infrastructure. Of course, we can not miss this segment.
- It has been said more than once that the so-called second Uralvagonzavod is being built in Nizhny Tagil. What is the planned timeline for the project?
“At the end of the year, we will choose designers by divisional principle. But, of course, there will be a parent company that will distribute subcontracts for technical items. In the 2012 year, we will begin to let down communications. This is a huge project, because you need to re-build energy. We are planning to install a power plant that will power the entire production. I think the construction will take about three years and in 2014, the plant will work.
- Will the plant produce mainly defense products?
- Both defense and civil engineering, first of all cars.
- In the spring you said that Uralvagonzavod was interested in the military and wagon divisions of the Tractor Plants concern (KTZ), which owed VEB 15 billion rubles. NPC has applied for a competition for the selection of the KTZ management team. But in the end, VEB decided to retain the old KTZ management until 2012. Will you continue to fight for control over the concern?
“In the spring, together with partners from Russian Machines, we offered our services to VEB in bringing KTZ out of a difficult financial situation. Developed a crisis business plan. They said that they are ready to give a shoulder, we have experience, finances, people and everything that is necessary to save the two segments of the concern - the production of military equipment and car building. But, unfortunately, we were not heard. Therefore, we have removed this topic from the agenda, let the previous management deal with all the problems of KTZ. He does this, apparently, not very well. So if they drown, let them drown themselves. And let financial institutions, lenders make conclusions. If they are satisfied with the write-off of losses, then let them leave everything as it is now. Uralvagonzavod, for example, gives all the money to banks precisely and on time.
- Nevertheless, you still have an interest in KTZ?
- I will say this. A hunted horse is extremely difficult to reanimate. It is also impossible to make fresh milk from sour milk. In fact, we are not an ambulance, not the rescuers of what will be ruined. In the end, we should stop treating us like a magic wand. And without this many problems.
- But in 2012, will you again turn to VEB or the current management with proposals, for example, on the purchase of specific assets?
- If people are drowning and they are offered 20 once a helping hand, the possibility of preserving production, and in response silence, hope at random, well, maybe it may be interested in saving them. We have all exhausted our proposals. If someone has exotic thoughts to do sadomasochism in economics, then please. But it seems to us that the situation with KTZ has already gone too far. Everything that happens with the concern is the responsibility of those financial institutions that issued KTZ loans. It would not be difficult for VEB to change the situation in the concern, to provide support with the help of companies such as Russian Machines or Uralvagonzavod, which proved in practice that they could work. But this did not happen, and if everything that is happening now suits the banks, then this is probably their position for which they themselves are responsible. In the end, if KTZ can get out of the crisis, pay off its debts, then thank the managers of the concern, the same Mikhail Bolotin, who will prove that he is a professional. We treat it with respect. And we will treat it with more respect. And if this does not happen, then it is not our fault, but the fault of those whom we warned that the situation could end in disastrous.
- The Alliance "Uralvagonzavod" with a competitor in the face of "Russian cars" was unexpected - you initially competed for KTZ. Have partners become a single project or does the alliance have a future in the market?
- Alliance was created for this project. In the spring, we decided that the alliance is a symbiosis of our capabilities in order to pull this problematic asset out of the crisis. But, as experience shows, alliances created non-artificially continue life. We consider Russian Machines to be our partners, we support each other on many issues. We have parallel assets in the car-building business and the production of special equipment, and we are trying to help each other. It is possible that in the future we will have a joint venture based on the symbiosis of our enterprises.
- By carriage segment?
- Not only. We are friends with them in the military sector. We have certain ideas, we very often meet, discuss, advise. Therefore, I will not run ahead, but we should have something.
- Since 2010, sales in Russia of wagons, including yours, are increasing dramatically. But buyers say that the market is close to saturation and may soon collapse. Who is buying cars now?
- We have traditionally the main buyer - JSC Russian Railways in the person of the First Freight Company. Through TD RZD, we concluded a long-term contract for a very large volume. We plan to conclude the same contract for the Second Freight Company. There are among the buyers and the largest independent transport companies. We tried to dilute our market, because we don’t want a repetition of 2009 of the year, when during the crisis the purchases of railroad cars of Russian Railways were almost not carried out under signed contracts. But we always believe that the priority of our relationship is JSC Russian Railways, since they are also state-owned.
- On what conditions do you supply wagons to subsidiaries of Russian Railways?
- We traditionally supply the best quality cars at the lowest prices. We believe that this is our priority, there is nothing terrible here - after all, we spend our own and state money on the state enterprise too.
- And what about the numerous complaints about the quality, which were heard more than once against your cars?
- In 2006 – 2008, Russian Railways, together with the designers of Uralvagonzavod, invented a new trolley. As they then seemed, more progressive and high quality. Here are just a margin of safety in its details was with the coefficient 1,8. Of course, she just started breaking. For three years, a sufficient amount of parts was produced, consumers have any complaints about quality. This happened before my arrival, and all the breakdowns, all sins were blamed on the Uralvagonzavod, I had to clear it up. We, of course, changed the situation and no longer produce these cast parts, increased the strength factor from 1,8 to 2,4. After we changed the cart, not a single detail broke. Wines should be shared among all its developers, but unfortunately only Uralvagonzavod pays for this mistake. We already more 1 billion rubles. spent just to replace and maintain. With the debts that we had at the end of the crisis, believe me, this is quite a serious burden. But this is the price of mistakes. Unfortunately, the joint.
- How many cars will you sell in 2011?
- We plan about 25 thousand. Next year we hope to add a little bit, since we have big programs with Russian Railways. There is a program with oilmen. Unfortunately, we can not yet produce as many cars as we want to buy.
- So you consider the opinion that the car market is oversaturated?
- Of course, the market is not rubber, but we understand that there is a certain descent of cars that need to be written off. When there is a shortage, of course, try to stretch the life of the cars. But, when many new cars are produced, there must be high demands on the concept of road safety, here regulators must clearly track this. Now the life cycle of the cars lasts for the year 32. We hope that it will be less, because it is no longer possible to look at the state of the products that follow the paths of general following.
And second, there are many third-party manufacturers walking in our market. This is not very acceptable, and we do not protect the market from these problems at all. At the same time, the most stringent demands are placed on our rolling stock production conditions, and everything that comes from abroad, from other states, is just some carts that break, but for some unknown reason, continue to flow further.
- Where do low quality cars come from?
- It is mainly Ukraine, because they are the largest manufacturers. More than 95% of the export of Ukrainian cars to Russia is of very dubious quality.
- What is the market potential after 2012 of the year?
- The growth rate will decline, of course.
- And what do you plan to do about it?
- We have extremely narrowed market space - they are not. No, for example, the Ukrainian market, because there is overproduction. We hope that regulators will preserve and protect our market, since it is time to do this. We have long-term contracts. But we do not want to overclock the large production of cars - now we have adopted a strategy for quality. On it, with the 2012 of the year, we will begin to switch to a new car, to a new bogie - with a large overhaul mileage due to another axle load. We will focus on car repair and will develop a repair program along with the production of new cars. Soon there will be a need for a large number of spare parts.
- What is your forecast for market volumes after 2012 of the year?
- We believe that the maximum indicator should make 2012 – 80 thousand cars in 90, by the 2013 – 2014 years the market will stabilize at the level of 50 – 60 thousand - and this is the maximum.
- And yet you are building a large-scale production in Nizhny Tagil ...
- This is not a large-scale production. This is normal production, with normal volumes. We want to repurpose the old plant in Nizhny Tagil - the capacities will be used for the production of spare parts and components. We see nothing wrong with that. We don’t want to create crazy volumes at the new plant, it’s dangerous. But being in the market leaders is our task. So the maximum capacity will be about 20 thousand cars per year. But this power will not be determined by human resources, but by the speed of automated production. There was a sad experience in the crisis, when 20, with over 1,000 employees of Uralvagonzavod, found themselves on the street. Now we have revised our strategy completely. The basic principle is energy saving, minimal overhead, minimal internal costs. And most importantly, automated lines, where the quantity of products should not be regulated by human flows, but by the speed of the automated line.
- One of the key problems in the production of cars remains a shortage of casting. This year, through the TD Railways "Uralvagonzavod" gained access to the Chinese cast. On what terms?
- Today, Chinese casting is an objective need of Russian car builders. We issued licenses to a Chinese plant in Rouge and four other manufacturers. Three of them supply products through Russian Railways TD, two are independent suppliers, now we certify them. For the time being, deliveries are coming from one factory in Rouge. Casting in Russia is not enough, we hoped to the last that the foundry capacity would be increased by the Tikhvin Carriage Works to supply around 80 thousand car sets, that the foundry would work on Ruzayevka (VKM Russian Machines holding. - “Kommersant”) and we will pull up its power. But, unfortunately, this did not happen. Therefore, I think that we will use Chinese casting for the entire 2012 year, and starting with 2013, we will gradually begin to move away from it. We have determined that the Russian Railways TD will be the main contractor who will supply the products of Chinese factories for their own needs and in part for manufacturers who do not have their own foundry.
- What is the quality of Chinese casting?
- We have brought the quality of the products supplied to us to the proper level. Of course, this casting is worse than ours, but better than the Ukrainian one.
- Only Uralvagonzavod gets Chinese casting?
- Why? A number of Russian factories - as far as possible. There are test procedures, certification, which is conducted by Roszheldor. This is not done quickly, and the cars must be released every day. But in the end, we hope that we will leave Chinese casting within two to three years. By the way, we have our own production in France, it is also very long certified, by November, I hope, we will finish this process.
- Do you plan to buy new assets in car building?
- We will buy where there will be a new technology and new products.
- Maybe they are interested in enterprises in Ukraine?
- We are not planning yet.
- Which companies can buy the plant in the carriage and road-building segments?
- In the carriage segment, we believe you need to buy a manufacturer in an emerging market in order to give up your technology. As for engine-building, this is our priority; here we would like to participate in purchases that allow us to make a technological breakthrough and expand our line. It is time for us to turn into a full liner and open service centers along the full line of engines.
- But are you negotiating with someone specifically now?
- We negotiate every day. I will not say more. We do not know what tomorrow will be. We hope that there will be stability. There will be no economic upheavals for which there are prerequisites in the world today. It is possible that in the foreseeable future we will acquire some kind of asset or enter into the acquisition process, because in any case it takes from six to nine months.
- The Ministry of Defense in terms of orders and the revenue they bring, is in second place among your customers after JSC RZD?
- The Ministry of Defense ... I do not think that they will enter the top five.
- The latest developments in the field of state defense orders-2011 (GOZ) are very disappointing: the Defense Ministry admitted that it is impossible to conclude contracts with a number of suppliers. How is your contract situation?
“Our situation is more or less normal.” At least all contracts are signed, and now they are being executed. We are talking about the modernization of the T-72 tanks, just before December 2011, we must pass the order of 70 units of equipment.
- Have you already considered the applications for GOZ-2012 from the Ministry of Defense?
- We have orders for many enterprises that are part of Uralvagonzavod. Basically it is, of course, the modernization of existing machines that come from the location of the parts. In 2012, we plan to increase the volume of upgraded products, as it was provided for by our agreement with the Ministry of Defense. Therefore, there is hope that this contract will also not only be considered, but signed in the foreseeable time. So that did not work out like this year: the contract was signed only in April, so we lost almost four months, which we could spend, subject to timely financing, to manufacture many parts for the final product. In the remaining time we have to test everything, deliver and assemble. This is a difficult task.
- When did the money really get into the account?
- The money came in May, but we never had any problems with financing from the Ministry of Defense.
- What difficulties arose?
- It was our first experience. Until this year, we have never been engaged in large-scale modernization of tanks, and we did not carry out repair work in such a volume - tank-repair factories were engaged in all this before. For GOZ-2011 we specifically developed technical documentation, and immediately went from repair to the ball from the ship to the ball. In fact, immediately we started a major overhaul of the equipment provided to us.
- You said that four months were lost. There are no concerns that due to this delay you will not have time to complete the amount of work on GOZ-2011 in time?
“We always had these concerns when we were creating new products. The reason is simple - we have for each unit of weapons there are different level collectors who supply us with spare parts and equipment. For each tank, we need more than 9 thousand of such parts, but it may happen that even one part will not be delivered on time. In this case, we are physically unable to do everything, because we are obliged to pass the final product. Some parts had to be ordered at the beginning of the year - their production cycle is more than long, not a month or even two. We were carried in 2010 year - then we could not get a radio station for the T-72 tank until December. We cannot turn in a tank without a radio station. In the end, sat and waited. And only by December 24 were able to pass the car. Regarding this year, I can say for sure: packers already on a larger scale, rather than in previous years, do not have time to deliver their products in time. And fears not to pass the final product in terms of GOZ-2011, we do not leave the agenda.
- In general, is the load on the HPV-2020 large?
- It is sufficient, not only in the LG-2020, but also in the line of Rosoboronexport, which are now in the first place. The basic load on the HPV-2020 begins rather late - approximately, from the year 2015. By that moment, the entire tank model line will change, the main priority will be given to the single combat platform. This requires, of course, tremendous training, because it will be necessary to completely change the preparation of workshops for the manufacture of final products that are not in any way in contact with previous models.
- Do you mean the development of the Armat cipher platform?
- This is a fundamentally new car. We are creating a universal combat platform on which all other types of weapons associated with tracked vehicles will be placed. These are heavy armor, an armored personnel carrier, a heavy tank, and a heavy infantry fighting vehicle, that is, a platform on which different types of weapons are placed - up to those trucks that provide for the delivery of fuel, food, evacuation, medical aid, fire fighting: practically for all that is used for combat support. This is a whole lineup. The most important thing, in my opinion, is that the single combat platform is very maintainable.
—That is, you finally abandoned the development of the T-95 tank?
- Our customer is the Ministry of Defense, and we, unfortunately, cannot influence their concept of development, as well as the doctrines they preach. Our task is to produce high-quality products according to the technical specifications of the military. They say that we have to release a fundamentally new car or a new range of cars - we are striving for this. The development of T-95 will be carried out or it will not be - is still unknown. If we set the task, we will do it, if there is no such task, then we will move on to developing a new model.
- Recently, at the arms exhibition in Nizhny Tagil, the modernized T-90C tank was demonstrated for the first time. How is it fundamentally different from the previous modification?
- In December, 2009 was a meeting in Nizhny Tagil, which was conducted by Prime Minister Vladimir Putin. We were criticized by the military for the quality of products - it was said that our products did not meet the stated parameters. We paid attention to this, wrote down all the claims, then analyzed them. And they decided that we should create a car based on the comments that were presented to us. And they did it not only on their own initiative, but also at their own expense - the Ministry of Defense did not allocate anything to the development of the T-90C.
- What kind of claims were made?
- First of all, there were claims on the unsatisfactory state of the gun, on a very weak engine, on the lack of an automatic transmission, on the inconvenient location of the crew inside the tank, on the weak defense of the tower. We took this into account and on the modernized T-90С we changed everything to almost 50%: we installed a more powerful engine, laid a different construct to protect the machine. Those who were inside, noted that she had a very comfortable cabin. In addition, almost the entire software and hardware complex was redesigned, which now makes it possible to accurately and quickly carry out a tip to the target. We and the combat capabilities of the tank demonstrated: it is capable of hitting a target at a distance of 5 km, the target of a helicopter at an exhibition in Nizhny Tagil at a distance of 4220 m hit the tank the first time.
- And who is the manufacturer of an automatic transmission? Foreign company?
- This transmission is being done at our subsidiary. Information about this is not particularly disclosed, since we work in an industry in which many developments are conducted under the stamp of secret.
- How is the situation with the purchase of imported parts? Is it generally produced?
- We do not believe that our parts, which we use in our cars, can somehow be replaced. I agree with some things that we have very little progress with regard to the automatic box. It's clear. Accordingly, the automatic transmission, even which is produced abroad, it rather simplifies the management of the tank. As for imported parts, we only buy French thermal imagers for tanks. We do the rest at our enterprises.
- The engine is also your development?
- The engine is also our subsidiary - Chelyabinsk Tractor Plant. We seriously conducted his test tests. We checked the declared values of the Ministry of Defense - they unconditionally correspond.
- And then what was the criticism of the First Deputy Minister - Chief of the General Staff Nikolai Makarov against the new car? He also said that the tank has a lot of flaws, and only its tower is of high quality.
- In order to talk like that, you should at least get into this tank. Although to look from the inside, and not to stand nearby. We are always for the criticism of the military, but just do not do it indiscriminately. We all look through binoculars over long distances. But someone looks at it from one side, and someone turns the binoculars to the other side and sees a completely different picture. Which side the military are looking at lately, I can not understand. Criticism of the Ministry of Defense always stimulates us, but still there are some limits.
- Can you name the cost of the tank T-90С?
- I can only say by comparison - approximately two to three times cheaper than Western counterparts.
- Previously, the cost of the T-90 tank was at the level of 98 million rubles, later it grew to 118 million. Now, according to our data, it is almost 140 million ...
“We never got that kind of money.” Unfortunately. If we are paid that kind of money, we will be extremely happy - our profitability in machine building will be exorbitant! This is the only thing I can tell you exactly. If suddenly there will be at least one contract for such a payment, then we are ready to supply the remaining three years with all tanks for free. I can tell you that we are delivering a tank today at the price level of the Kurganmashzavod infantry fighting vehicle. But these are not comparable machines at all.
- Now in the Ministry of Defense there are approximately 10 thousand tanks. To what extent can and should they be modernized?
—We have a modernization plan, according to which we install certain complexes, practically we change everything inside, leaving only iron. We completely disassemble the product and actually make a new tank only when using the old metal. This, according to experts, is a big mistake: after all, Bronestal, which was used before 2000, is significantly different in quality from the one we use today. Not for the better.
- In your opinion, what is the limit for upgrading the T-72 tank?
- This machine is very good in its own way - otherwise it would not be the most massive tank. It is very maintainable. But each machine and each product has an age limit according to its characteristics. No wonder the tank was born T-90C - because this is the next generation. You must admit that it is impossible today to put all the details that are produced for the Lada Priory in the “Zhiguli”. Are these cars different or not? Yes, they differ, of course! Metal has elements of aging, age, corrosion. Therefore, everything new is always better than the good old.
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