The Ukrainian state concern "Ukroboronprom" will be liquidated, instead it is planned to create two state holding companies. This was announced by Deputy Prime Minister for Strategic Industries Oleg Urusky during a visit with Prime Minister Denis Shmygal to the Kharkiv State Aviation Production Enterprise.
“We envisage that the transformation of the state concern Ukroboronprom will consist in the fact that we will actually get two state holding companies, one of which will focus on the functions of the defense industries, and we want to transfer aviation together with space to the state holding company Aerospace systems of Ukraine ", - quotes the words of the Deputy Prime Minister" Interfax-Ukraine ".
Urusky said that in the near future it is planned to dismiss the current management of Ukroboronprom and the entire management team that worked in the company over the past year.
According to him, the future defense holding will include companies that are engaged in precision weapons, radar systems, shipbuilding, special chemistry and ammunition, as well as armored vehicles. At the same time, the name "Ukroboronprom" is planned to be changed, as it "has become toxic". It is assumed that the structure will be named "Defense Systems of Ukraine".
“It will be a management company with completely different functions that currently exist in the concern, with a minimum of interference in the business activities of the holdings that will be part of this company,” the Deputy Prime Minister said.
The enterprises of the State Space Agency (SSAU) are also proposed to be reformed.
- Oleg Urusky
- © ProgresstechUA
“There will also be corporatization, we believe that such a synergy of such two high-tech industries in Ukraine, which are the aviation industry and the rocket and space industry, will allow us to significantly improve the indicators that we have today, and most importantly, to create mechanisms to attract investment to these industries so that they can compete in this very difficult environment of world markets, ”said the Deputy Prime Minister.
As Urusky explained, the aerospace holding company Aerospace Systems of Ukraine will consist of two holdings: Antonov and the Pivdenny Rocket and Space Center, which will include all the already corporatized enterprises of the SSAU. Recall that the State Space Agency of Ukraine includes 21 enterprises, the largest of which is Yuzhmash.
“Thus, the ministry minimizes its influence on the economic activities of the defense industry enterprises. The shares of the two holding companies will be managed by the ministry. Special exporters will be removed from the influence of Ukroboronprom and will do what they should be doing so that there is no abuse, "added the Deputy Prime Minister.
Urusky said that it is planned to obtain concrete results from these reforms during the current term of President Volodymyr Zelensky.
“Therefore, a year or two: we have no more time,” he stressed.
Recall that Urusky was appointed to the post of Deputy Prime Minister - Minister for Strategic Industries in July this year, simultaneously with the establishment of this department. Previously, such a structure did not exist in Ukraine, since the Ministry of Industrial Policy was liquidated back in 2014.
The ownerless legacy of the USSR
According to experts, after the coup d'etat of 2014, the Ukrainian defense industry is in a state of "permanent reform", which, however, does not bring results. In their opinion, the fate of the former giant of the Soviet aircraft industry - the Antonov company - became a vivid example of such a policy.
The organizational structure of this state enterprise is constantly being changed. So, in 2015, it was decided to include Antonov in Ukroboronprom. And in 2016, the Ukrainian Aircraft Corporation was created in Ukraine, of which it was decided to make Antonov State Enterprise. A new turn in the fate of the former Soviet design bureau took place in 2019, when the material base of "Antonov" was transferred to the management of the State Property Fund of Ukraine.
Now this company, as noted by Urusky, will become part of the new holding "Aerospace Systems of Ukraine".
At the same time, the results of the enterprise's work from all these transformations have not improved: since 2016, Antonov has not produced a single production aircraft. Moreover, as the management of the company admits, the reason for this state of affairs largely lies in the refusal to cooperate with Russia, which previously purchased Antonov's products and participated in a number of joint projects.
The situation is not the best at Yuzhmash, the Nikolaev shipyard, the Kremenchug steel plant and at the Azovmash machine-building plant.
The Kremenchug Automobile Plant is in a slightly better condition, and at least it managed to maintain production. This enterprise is also engaged in the production of armored vehicles for the Ukrainian army. However, it has also recently encountered serious difficulties.
On June 4, 2020, its financial director Dmitry Novitsky, at a meeting in the executive committee of the commission on the repayment of salary arrears, pensions and social benefits, announced that the private joint-stock company AvtoKrAZ (as the enterprise is now called) is planning a large reduction in workers.
- Kremenchug Automobile Plant in the Soviet years
- RIA News
- © V. Kalmykov
The reason for such measures is the company's debts. Today they amount to UAH 40 million (about RUB 106 million).
According to Novitsky, it was possible to revive production for a short time with the help of military orders, which increased after 2014, but in recent years supplies for the Ministry of Defense have decreased.
“Unfortunately, we have no optimistic expectations. I think if we are now pursuing the goal not only to fix this debt, but to work out some measures, then the state and the employment service need to prepare for the fact that AvtoKrAZ will have a very large flow to the exchange to receive benefits, "he quotes financial director of the publication "Kremenchug TODAY".
Due to the current situation at the enterprise, a bankruptcy case for AvtoKrAZ was initiated. In addition, the plant continues the property management procedure, which provides for measures to restore the debtor's solvency.
At the same time, Novitsky admitted that the measures that are now being taken will not be able to ensure the loading of the plant, therefore, in the future, the enterprise faces the threat of stopping work.
"The root of the problem is corruption"
According to experts, the transformation of Ukroboronprom, as well as the creation of a new department in charge of strategic industries, are unlikely to improve the current situation of enterprises that Ukraine inherited from the USSR.
“The point is not that Ukroboronprom turned out to be ineffective, but that since 2014, the Ukrainian government has taken a course towards de-industrializing the country, serving the interests of the United States. This initiative has no prospects, it will not help the Ukrainian industry. With these transformations and reforms, the Ukrainian government has brought the aerospace industry and many others to the handle, ”Ukrainian economist and political analyst Alexander Dudchak said in an interview with RT.
- Production areas of the company "Antonov"
- © Gleb Garanich
Analysts also called the Ukrainian government's plans to achieve concrete results before the end of Zelensky's term unrealistic.
“There is no concept of speed in the military-industrial complex. There, work goes on in long cycles, research and development and design take years, "military expert Alexei Lenkov said in an interview with RT.
In turn, Alexander Dudchak stressed that, being engaged in constant reforms of the Ukrainian defense industry, the authorities cannot solve the main problem - corruption.
“The Ukrainian defense industry is in a state of constant reform, as Kiev does not eradicate the root of the problem - corruption. There are well-known personalities who were engaged in theft, took funds from the treasury, plundered enterprises. Scandals go one after another and do not end, ”the analyst recalled.
At the same time, experts agreed that one of the main factors that negatively influenced the state of Ukrainian industry was the breakdown of cooperation with Russia in 2014. Ukrainian factories participated in many production chains with Russian enterprises, which were established back in the Soviet years. The severing of these ties, political analysts say, has put Ukraine in a very difficult position.
“Ukraine could work in cooperation with Russia, occupy a place in Russian sales markets. But after the coup, the authorities set a course for the deliberate destruction of the industry of Ukraine, de-industrialization, which is now being successfully carried out. Now they are destroying Motor Sich, because they cannot use this company themselves, and they are forbidden to trade with the Russian Federation, ”says Dudchak.
Let us remind you that Motor Sich is a Zaporozhye enterprise engaged in the production of gas turbine engines. It was founded back in the days of the Russian Empire - in 1907. The company ended the first half of 2019 with a net loss of UAH 425.7 million (about RUB 1.1 billion).
Ukraine has failed to find a replacement for its Russian partners, said Alexei Leonkov.
“They tried to cooperate with the Polish military-industrial complex, with the Turks, offered their knowledge and experience to the Chinese, but it all ended in nothing. Only integration with Russia was effective. By the way, the breaking of ties hurt not only Kiev, but also us. However, over the years, we have been able to organize the missing production at our place: now we do not need Ukrainian components, we do everything ourselves, ”the analyst concluded.