Tag Archives: Kurganmashzavod

Tanks a Lot

gabtu-chief-general-lieutenant-shevchenko

GABTU Chief General-Lieutenant Shevchenko

Some data on Russia’s armor programs appearing in the media prior to Tank Troops’ Day (11 September) didn’t get too much notice.

RIA Novosti interviewed the chief of the MOD’s Main Automotive and Armor Directorate (GABTU), General-Lieutenant Aleksandr Shevchenko on 9 September.

General-Lieutenant Shevchenko noted that the MOD plans to “modernize” new Tigr armored vehicles, and not just by mounting a 30-mm gun.  They will, not surprisingly, go by the name Tigr-2.  But no other details.

Shevchenko confirmed Uralvagonzavod’s announcement that it has delivered more than 1,000 T-72B3 tanks.  He also indicated that the MOD will receive 300 improved T-72B3. The improved T-72B3, he says, will have a better engine and better defensive and targeting systems.

Some number of Russian T-90 tanks nearing the end of their service lives will be modernized under the “Proryv-3” program, according to the GABTU chief.  The resulting tank is supposed to be superior to the original T-90.

Regarding the Armata armored vehicle family, Shevchenko reported that the “experimental” lot of T-14 tanks will conclude initial field trials in 2016 and move into state testing.  This will be completed in 2017 and followed by formal state acceptance of the T-14.

t-14-tanks-enroute-to-red-square-photo-ria-novosti-yevgeniy-biyatov

T-14 tanks en route to Red Square (photo: RIA Novosti / Yevgeniy Biyatov)

Shevchenko added that the Armata BMP (T-15) and BREM, or armored recovery vehicle (T-16) also remain in preliminary testing and will finish state testing next year.

Similarly, the Kurganets family — BMP, BTR, and BREM — from Kurganmashzavod as well as the wheeled Bumerang BTR from Arzamasmashzavod are on the same schedule.

kurganets-bmp

Kurganets BMP

Asked about the impact of Russia’s difficult economic situation and “corrections” in the GOZ on these programs, the GABTU chief said:

“Testing of ‘Armata,’ ‘Kurganets’ and ‘Bumerang’ is fully financed, and we will give it priority because they are the base for the future.”

Of course, paying for testing is one thing.  Ordering a production run is another.  The Russian Army will eventually have to make some choices between these new armored vehicles.  It won’t be able to afford all of them.

Shevchenko added that these vehicles are being tested in arctic, mountain, and desert conditions.  Other army systems (artillery, air defense, etc.) will be mounted on the same chassis.  Robotic armored vehicles are in the works.  He said the MOD doesn’t have a requirement for a wheeled tank.

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Not OK in the OPK

OAO Radiopribor

OAO Radiopribor

Recent news reports indicate all is not well in Russia’s defense-industrial complex (OPK).  This despite several years of budgetary largesse in the form of an ever-increasing state defense order (GOZ).

Exhibit No. 1

Defense plant OAO Radiopribor in Vladivostok is officially bankrupt, but some remnant will be preserved in an 11th hour deal turning the company into a subsidiary of OAO Dubna Machinebuilding Plant (DMZ) in Moscow Oblast. How effectively DMZ can operate a money-losing business 6,500 km to the east is anyone’s guess.

Local press indicates that labor authorities in Primorskiy Kray are already working to place or retrain some Radiopribor employees (i.e. not all of them have a future at the old plant).

The industrial holding company AFK Sistema and its electronics subsidiary OAO RTI own DMZ.  DMZ makes components for military aircraft including external fuel tanks.

Radiopribor’s 1,500 workers hadn’t been paid in eight months, and the enterprise’s wage arrears amounted to 224 million rubles along with general debt of 3.5 billion rubles.

The figures on the salaries are interesting — the average employee may have been making a little more than 18,000 rubles per month. That was probably about two-thirds of average pay in Vladivostok last year.

Exhibit No. 2

Russia’s sole manufacturer of infantry fighting vehicles — BMPs, Kurganmashzavod (KMZ) in the Urals recently defeated a Moscow-based creditor’s attempt to have it declared bankrupt for failing to pay on 41 million rubles of arrears on its leasing contracts.

It defeated the effort because, as a subsidiary of Kontsern Tractor Plants, KMZ is a “strategically important enterprise” and can’t be bankrupt according to a longstanding presidential decree.

KMZ apparently also owes its gas supplier.

It has a state order for 200 BMPs in 2015-17 which should help it some.  It’s been a big supplier of civilian heavy equipment in the past, but that must not be going too well either.

Exhibit No. 3

Press from late March described OAO United Instrument-building Corporation’s effort to come up with an “anti-crisis” plan for its enterprises in Tambov Oblast southeast of Moscow.  OAO OPK is itself part of Rostekh.

OAO OPK’s Revtrud factory has 1 billion rubles worth of debt.  Revtrud’s wage and tax arrears come to about 150 million rubles.  It makes communications and electronic warfare systems.

OAO OPK says it plans to amalgamate affiliates Revtrud, Oktyabr, Tambovapparat, and Efir into a single production complex.  It will spend 4 billion rubles to recapitalize and reequip these enterprises.  Tambovapparat doesn’t seem to be doing too well either. Efir is doing the best; the MOD is buying its Borisoglebsk-2 jamming system.

Exhibit No. 4

On 22 March, TASS quoted Jan Novikov, general director of S-400 maker Almaz-Antey, who indicated he was considering a 30 percent cut in his workforce for economic reasons.  A week later, he walked this back saying savings might come through other means, according to a TASS report of an interview he gave Rossiyskaya gazeta.  Novikov stated that cost-cutting is needed to pay the bills for financing and starting up production at new plants in Nizhegorod and Kirov.  This from what is arguably Russia’s best-performing arms producer.

On top of these reports from various corners of the Russian OPK, we have interesting news from important characters in Moscow.  They seem to agree that the GOZ is turning downward, and taking the fortunes of these companies with it.

On 5 March, Deputy Defense Minister Tatyana Shevtsova, who oversees the military’s budget, said its financing would be trimmed by 5 percent this year, but claimed weapons procurement would be untouched.

A week later, Rostekh Chief Sergey Chemezov told The Wall Street Journal that the GOZ could be slashed by 10 percent in 2016.

On 26 March, Deputy Prime Minister Dmitriy Rogozin — tsar of the arms sector — told TASS that Russia needs “patriots of industry” ready to do everything necessary to renew not just the armed forces but industry too.  He continued:

“Then we won’t depend on the oil and gas needle, because we’ll rely on industry.”

President Putin’s administration chief Sergey Ivanov traveled to Tula on 29 March to preach about a time when the GOZ will decline and defense enterprises will have to diversify.

On 31 March, the chairman of the Federation Council’s Defense and Security Committee Viktor Ozerov admitted there could be problems financing military procurement in 2017, but insisted the Defense Ministry would not abandon its goal of 70 percent modern weapons and equipment by 2020.

At the outset of the armaments program in 2011, more than one or two wise observers said Russia’s industrial obsolescence and its reliance on hydrocarbon rents needed fixing before making heavy investments in defense industry.  Why?  Defense industrial investment has a smaller multiplier effect in the overall economy.  The time and money to make these changes has been wasted, and now is an inauspicious time for them.

Defense News

Some Russian defense news from Tuesday, April 24 . . .

Dmitriy Rogozin (photo: RIA Novosti / Aleksey Druzhinin)

Deputy Prime Minister Dmitriy Rogozin generated a good bit of news during his visit to the Urals last week.  It’s hard to keep up with him.  In a sense, it’d be a real shame if he’s not in the next government.

Krasnaya zvezda published a wrap of his remarks.

Rogozin indicated Russia will demand the best new weapons from its OPK, not “metal hulks” that are soon scrapped.  He laid out his reasons for not buying foreign armaments.  And, he says, Russia doesn’t want to be China, blindly copying foreign models.  But he said his country still wants ideas and technology, if not a lot of hardware, from abroad.

Rogozin blames Russia’s space launch woes of the weakness of its “element” or component base.

RIA Novosti reported his assessment that Russian military electronics lag foreign developments by 5-12 years.  Russia doubled its investment in electronics last year according to Rogozin.

But back to KZ . . . it gave this interesting Rogozin quote:

“Russia must no longer be a hydrocarbon partner, it’s time for us to become an industrial power [hasn’t this time passed?].  We could have become such a power in the last century.  Now it’s important to overcome the gap in Russia’s history.  If business won’t participate in the country’s development, then we won’t achieve anything.”

In some non-Rogozin stories . . .

Militaryparitet.com cited a blog citing Interfaks to the effect that Kurganmashzavod will not be asked to renew production of BMP-3s for the army despite earlier indications it would.  The item notes the President’s polpred in the Urals saying the army has also declined to buy the BMD-4M.

Mil.ru wrote about Ka-52 helo training at Chernigovka army air base in Primorskiy Kray.  More than half the base’s pilots already practiced on the Ka-52 at the Torzhok training center.  Chernigovka will be completely reequipped with the new helo this year, according to the Defense Ministry website.  The “intensity” of flight exercises at the base doubled over the last year and increased 45 percent in the first three months of 2012.

Mil.ru also mentioned the completion of LRA training in the Far East.  There were 40 bomber flights and ten cruise missile launches on the Litovka range according to the Defense Ministry.

Vzglyad citing Interfaks reported on Irkut’s president saying the company will make a combat version of the Yak-130 trainer.  It will have greater thrust and be intended for Russia and for export.

Last, an update on the Belevitin corruption case.  Former GVMU chief, Aleksandr Belevitin faces malfeasance and bribery charges that could net him a total of 22 years in prison.  Pretty harsh by Russian standards.  The state is also seeking 51 million rubles in damages from him.  His defense is still examining the prosecutor’s case against him.  Recall the state believes he and his deputy took bribes in return for procuring overpriced MRI machines from a foreign firm.

Suit, Countersuit Over GOZ

Kurganmashzavod (photo: Nakanune.ru)

This story should be of particular interest to those following the VDV, Ground Troops, and their combat vehicles.  The specific problems of KMZ illustrate general dilemmas of the GOZ.  The GOZ money trail is slippery.  And it explains why modern, or at least new, weapons and equipment aren’t produced or delivered, and the GOZ is only partially fulfilled. 

RIA Novosti (via Vedomosti) reports the Defense Ministry filed suits against Kurganmashzavod (KMZ), of “Tractor Plants” Concern, for breaking GOZ contracts.  KMZ, in turn, entered three countersuits seeking 1.5 billion rubles from the Defense Ministry for violating its contracts.

KMZ claims the Defense Ministry stopped accepting its products in fall 2010, causing the factory to fail to meet its obligations.  RIA Novosti reports First Deputy Defense Minister Aleksandr Sukhorukov said KMZ would be fined 3 billion rubles for breaking its 2010 contract to produce the BMP-3.  Two billion has also been cited.  The first hearing will be next week.

Nakanune.ru indicates KMZ had no GOZ contracts for 2011, during which the plant counted on 12 billion rubles worth of production.  Instead, it produced only 4.7 billion worth for the first eight months of the year.

In May, Main Military Prosecutor Sergey Fridinskiy pointed to KMZ as a prototypical failure of the GOZ.  The factory got an advance of 350 million rubles but, instead of sending money to its sub-contractors, it used it on internal needs.

Academy of Military Sciences Professor and PIR-Center Conventional Arms Program Director Vadim Kozyulin says:

“I understand that the enterprise’s leadership could have its own reasons.  The plant has many problems which could look more important and pressing from a local viewpoint.  But some way or other the resources to fill the order for the supply of armored equipment for the VDV came in, but went for something else.”

Kozyulin says they have the same problem in other enterprises, “but ‘Kurganmashzavod’ fell right under the chop.”  He says it won’t go well for KMZ, and the Defense Ministry may refuse to give the factory future orders. 

Nakanune also cites CAST analyst Dmitriy Vasiliyev who agrees this isn’t just KMZ’s problem, but a problem of the Gosoboronzakaz as a whole.  Igor Korotchenko suggests KMZ has little chance of winning its case, and needs to seek an out-of-court settlement.  But perhaps it’s too late already. 

It may be that KMZ is being made into a convenient example because others want to take it over.  It is an area of the OPK that could stand some consolidation.

Kozyulin suggests troubled KMZ should merge with Uralvagonzavod (UVZ).  UVZ and Russian Machines are apparently after KMZ parent “Tractor Plants” Concern.  They’ve approached Vnezhekonombank, which owns 100 percent of its shares, about managing “Tractor Plants” Concern, but the choice of a managing firm has been put off until 2012.

It certainly sounds like KMZ is headed downhill.  The dueling law suits, the untangling of KMZ’s management, and, at some point, the reorganization and restoration of its production capability will take time.  This means possibly years of delays in filling armored vehicle orders for the VDV and Ground Troops.

You may recall United Russia member Igor Barinov excoriated KMZ earlier this year for its poor handling of GOZ funds.  VDV Commander, General-Lieutenant Vladimir Shamanov also blamed KMZ for delays in getting the first BMD-4Ms for his troops. 

Government Hour (Part II)

There was plenty of interesting media coverage of the Defense Minister’s meeting with the Duma on Wednesday, and plenty of criticism of what he said or didn’t say.  Plenty worth covering in a Part II, especially regarding Serdyukov’s effort to shift the blame for another failing GOZ.

Radio Svoboda quoted KPRF deputy Vladimir Ulas putting all the blame for the army’s current state right at Anatoliy Serdyukov’s feet:

“The public clearly understands that the situation in the Armed Forces is far from favorable.  Constant scandals which rock this department, the morale-psychological situation in which personnel, first and foremost, the officer corps, find themselves, both the material condition, and the lack of modern armaments – all these problems are completely real.  I also hoped to hear answers to questions, how the Defense Ministry intends to solve them, from the minister.  But, to my greatest regret, the biggest, in my view, problem of today’s Armed Forces is the absolutely dense incompetence of the military leadership.  With people like Serdyukov still heading our Armed Forces, and he, unfortunately, is far from the only one, hoping for some kind of positive shifts is absolutely senseless.”

There was plenty more to be said about problems with the GOZ, the OPK, and the VPK and Defense Ministry blaming each other for what looks like a failing GOZ-2011.

KPRF deputy Anatoliy Lokot told Nakanune.ru:

“I have the impression that these sessions are ‘closed’ to hide the bitterness of the questions and negative results of the work of Military-Industrial Commission (VPK) and Defense Ministry leaders.”

United Russia’s Igor Barinov reiterated what he said he told President Medvedev a year ago:

“I noted then that the lack of competition and incomprehensible system of price formation in the VPK is a deadend path.  We’re reaping the fruits of this now.  Judge yourself:  one, well, a maximum of two enterprises produce this or that type of our armament or military equipment.  Meanwhile, enterprises getting money from the federal budget dispose of it as they wish.  Prices simply come from the ceiling.  No one bears any responsibility for quality.  No one invests money in improving types of military equipment, in the end it goes that even in infantry weapons we’ve fallen behind.  Our legendary automatic weapon Kalashnikov, the value of which everyone recognized before, now lags the best Western types in tactical-technical characteristics.  And so it is in almost every area, with rare exceptions in the areas of missiles and some aircraft.”

“The Defense Ministry announced it won’t buy airborne combat vehicles [BMDs] and infantry combat vehicles [BMPs] from ‘Kurganmashzavod.’  This enterprise was one of the guilty in breaking the Gosoboronzakaz.  And here’s the thing in this.  ‘Kurganmashzavod’ is part of the United ‘Tractor Plants’ Corporation.  Budget money is shared out with ‘Kurganmashzavod’ in a targeted way for the purchase of equipment, but the corporation’s directors dispose of it according to their discretion, and, naturally, BMP and BMD production is the last thing of concern for the owners of this holding company.”

“If they understand that they can be deprived of budget resources, then this enterprise will be forced to invest in quality, and in cutting defects, and in the improvement of product types.  In addition, strict supervision is needed.  Money was allocated but no one asked anyone about this money, and the result was zero.”

The KPRF’s Lokot also dwelled on the GOZ:

“It’s obvious that if the Gosoboronzakaz isn’t formed in the first half of the year, then nothing will be accomplished in the remaining part of the time since money will only begin coming in at the end of the year.  Serdyukov acknowledged that today 13.4% of all contracts in the plan have been formed.  Some time ago, Sergey Ivanov gave us other numbers.  But I think that this number juggling was caused by competition between the Defense Minister and the Military-Industrial Commission.  Ivanov lumps all the blame on the Defense Ministry, Serdyukov – on the defense-industrial complex.  He even began his [Duma] speech with this, saying that the military-industrial complex is guilty of everything.  They have poor qualifications, technology losses, poor production and so forth.  But really at a minimum the Defense Ministry itself bears 50% percent of the responsibility for such a situation.”

“I have given the example of Novosibirsk proving the obvious guilt of the Defense Ministry in breaking the order.  One of the enterprises – the Lenin Factory, which puts out very important products for infantry weapons, became a victim of Defense Ministry officials.  In January this year, Serdyukov opened a state order tender with his signature, but closed it in March.  Now half the year is gone, and there are no results.  The enterprise isn’t working, products aren’t coming out, 211 million rubles spent on reequipping won’t bring any returns, and now they’re generally talking about cutting part of the work force.

“Right in Novosibirsk at the Comintern Factory the S-400 surface-to-air missile system is being produced on the enterprise’s own money, and not with government resources.  Serdyukov says:  ‘I don’t see anything terrible in this, let the enterprise do it on its own money.’  But where does it get its capital resources?  What world is Serdyukov living in?”

Vedomosti talked to a former Defense Ministry official who basically said the threat of arms purchases abroad really didn’t scare anyone.  And, according to him, although Serdyukov considers defense industry leaders lazy and prone to stealing, everyone understands imports can never replace domestic production.  Finally, a source close to the PA told the business daily that Serdyukov himself opposes the Mistral acquisition because of the large expenditures required to build its base infrastructure.

Shamanov on the VDV’s GOZ

General-Lieutenant Shamanov (photo: RIA Novosti / Petr Chernov)

Last Thursday VDV Commander, General-Lieutenant Vladimir Shamanov returned to a bit of media spotlight for the first time since returning to duty following serious injuries in a collision with a truck last fall.

Shamanov said the VDV’s part of the state defense order (GOZ) isn’t necessarily proceeding well.  But he claims the BMD-4M was ordered.  He lobbied for a piece of the Arctic defense mission.  And he repeated past calls for his own helicopters.

RIA Novosti and ITAR-TASS reported Shamanov saying he’s satisfied “on the whole” that the rearmament of the VDV:

“. . . is going according to the strict parameters which were established.  First of all, this concerns the modernization of BMD-1 and BMD-2 and ‘Nona’ self-propelled artillery with automation means.”

But he added:

“The issue of fulfilling the 2011 state defense order for 10 BMD-4M and for 10 standardized ‘Rakushka’ armored personnel carriers, built on a BMD-4M base, is not completely resolved.  The thing is Kurganmashzavod didn’t give a guarantee it would produce them.  Presently, Kurganmashzavod’s financial situation is causing concern.  There are no guarantees that, if all the money comes, the order will be met.” 

Last year Shamanov said the firm was developing and producing the first BMD-4M models on its own to the tune of 200 million rubles.

Still he hopes the problem with fulfilling the 2011 GOZ for the VDV will be resolved soon.  He said there are negotiations, and the problem should be resolved in week or two.

The VDV Commander indicated he’s sending the Genshtab a proposal under which his branch would participate in defending Russia’s Arctic shelf jointly with the Ground Troops.

He told journalists he gave his deputy, General-Major Aleksandr Lentsov,  the task of developing options for VDV units to work with the Ground Troops and Navy in the Arctic.  Shamanov invited the commanders of Naval Infantry brigades and Ground Troops’ air-assault brigades to the VDV’s operational conference in Ryazan the week before last.

Shamanov opined that establishment of an inter-service grouping for the Arctic is “fully possible” but how it might happen remains a topic of discussion.

The press services said Shamanov resurfaced his previous calls for a helicopter regiment co-located with the VDV brigade in Ulyanovsk or division in Pskov.  He said he plans to submit two variants of such a proposal to the Genshtab when it is finished.  

Press sources said he requested the same thing at this time last year.  The Ground Troops-dominated Genshtab apparently frowns on an idea that would eat resources and possibly duplicate the capabilities of the army’s own air-assault brigades.  For his part, maybe Shamanov benefits by repeatedly laying down a marker indicating that the VDV lacks something he considers essential.

BMD-4M Update

BMD-4M

An item on pending troop testing of the BMD-4M for VDV . . . .  No, they aren’t in the force yet.  Despite the optimism expressed below, it remains to be seen if the Defense Ministry will actually order the system upon completion of troop testing.  It sounds like the designers and builders have footed the bill — 200 million rubles — for the system’s development thus far.

From this week’s Voyenno-promyshlennyy kuryer:

“Troop testing of the modernized airborne combat vehicle BMD-4M is being conducted in the course of the 98th Airborne-Assault Division’s command-staff exercise (KShU), which will take place from 23 to 28 August near Ivanovo.”

“During the airdrop of military equipment, seven BMD crews will be inside the combat compartment of these vehicles.  Immediately on landing, the crews will move out to fulfill combat missions on unfamiliar terrain in the notional enemy’s rear area.”

“An airdrop of parachute troops and military equipment from aircraft of Military-Transport Aviation will occur in the course of the divisional KShU, which will be directed by VDV Commander General-Lieutenant Vladimir Shamanov.  In all, it’s planned to airdrop 15 pallets with military equipment, including the BMD-4M.”

“After the completion of troop testing of the modernized combat vehicle, development of which Kurganmashzavod, the Volgograd Tractor Plant and other enterprises of the ‘Tractor Plants’ Concern are engaged in, it will be accepted into the arms inventory of the ‘winged infantry’ and included in the state defense order.”

“Development and production of the BMD-4M is being conducted with the agreement of the Defense Ministry at the concern’s expense.  Expenditures on the first test models amounted to nearly 200 million rubles.”