Alexander Velovich/MOSCOW
IT IS EITHER a confederation of cripples, or the creation of a group which mirrors the scale advantages enjoyed by US aerospace goliath Lockheed Martin: only time will tell which is true of VPK MAPO.
The creation of VPK MAPO (Military Industrial Complex - Moscow Aircraft Production Organisation) rescues disparate elements from the rubble of the former Soviet Union's defence-aerospace industry.
VPK MAPO was formed recently by a presidential decree from Russian leader Boris Yeltsin and the subsequent order of the Russian Government. A total of 12 production enterprises and one commercial bank are listed as founding members of the organisation.
Alexander Ageyev, VPK MAPO director for strategic planning, information and marketing, explains what the creation of this organisation means to its members. "This is a further consolidation of MAPO-MiG, with its suppliers of avionics, engines, instruments and other systems," he says.
In addition, a fixed/rotary-wing alliance has been formed with helicopter designer Kamov. Some argue that a "cleaner" route to rationalisation would have been for the Government to have forced Mil and Kamov to combine, although this might have been like asking oil and water to freely mix.
Ageyev recognises that there is a continuing process of consolidation taking place among Russian aircraft manufacturers. "Similar processes are going on with Tupolev, Yakovlev, Sukhoi, Ilyushin and other companies which are forming financial-industrial groups and production associations," he says.
Trailblazer
He believes, however, that the formation of VPK MAPO pushes this integration a stage further than that previously seen in the Russian manufacturing base. "The characteristic feature of VPK MAPO is that we have favoured a more rigid form of a state unitary enterprise, rather than a loose association or financial-industry group," Ageyev says.
The grouping includes several state-owned enterprises which have become VPK MAPO subsidiaries, together with state-owned joint-stock companies (whose shares still belong to the Government) which have been transferred into the possession and trust control of VPK MAPO.
The novelty of even a quasi-Western approach to business is enough to turn VPK MAPO into a trailblazer, albeit with the accompanying problems.
"Property relations in VPK MAPO are complex: sometimes it is difficult to find relevant articles of the recently adopted Civil Code to regulate them," says the MAPO director. "We, however, prefer state property to be oriented towards the market, and the most important thing here is efficiency."
The administrative structure of the enterprise also requires that certain posts be established, including a chief executive appointed by the Government. Alexander Bezroukov, former commercial director of MAPO-MiG, has been appointed as chief executive of VPK MAPO.
There is also a board of directors chaired by Vladimir Kuzmin, MAPO-MiG general director. Executives of all member enterprises have seats on the board. Technical leadership of research and prototype development and upgrade programmes will be carried out by Mikhail Waldenberg, who has been appointed general designer. Waldenberg was previously chief designer on the MiG-29 programme, taking over from Alexander Chumachenko in 1982. Widely respected within the industry, Waldenberg is also viewed as the prime motivator behind the MiG-29M project.
According to Ageyev, the corporate headquarters is organised on a functional-task principle. The chief executive has one first deputy, and another ten people form the directorate, each taking responsibility for a certain area, such as strategic planning, information and marketing, or foreign economic relations, or civil products, economics, finances and logistics. In total, there are more than 200 people working in the corporate headquarters.
"We have many relatively young people among our directors who have successfully adapted to work in the new economical realities, and there are many experienced managers in our team with years of experience in aviation science and industry, the foreign ministry, the ministry of foreign economical relations and other state and financial institutions," Ageyev adds.
Ageyev, who is 35, is a graduate of Moscow University, with a PhD in economics. Before working at MAPO, he made his career in the ministry of foreign economical relations.
Bezroukov, the chief executive, is even younger, at 31, and both men epitomise the contrast to the traditional, former-Soviet, practice of trusting the wheels of the industry only to ageing patriarchs.
Ageyev considers that the creation of the group will not result in job losses, believing that cuts in the workforce have already been effected by the reduction in defence expenditure."We do not have the task of reducing the workforce: several years of economic reforms have done that for us. When the finance for military orders was sharply reduced, many workers left the defence industry for other sectors of the economy. Now, only the most devoted to aviation, the elite, remain with us," he says.
Ageyev says that the reduction of the workforce has gone on for several years, but that, in 1995, this tendency at MAPO MiG began to show signs of reverse.
In the near term, VPK MAPO believes that the MiG-29 family and the MiG-AT advanced trainer will be the platforms on which it will build its business, for both home and export sales. Ageyev also considers that the "-Kamov Ka-50/Ka-52 combat helicopters and the Ka-32 family have good sales prospects".
He is also supportive of the air force's fifth-generation-fighter programme, the MFI, saying that "-we are strongly committed to the development of the new-generation multi-function fighter".
Although the air force continues to fund MAPO's research-and-development projects, financing is inadequate. The first flight of the MFI advanced fighter prototype, the 1.44, presents clear evidence of that. "We are planning the MFI's first flight in connection with the release of funds for its development," acknowledges Ageyev. "There are no technical problems preventing the MFI's maiden flight."
Arcane product range
Ageyev adds: "We were ready to display the aircraft at the Moscow air show in August 1995, but this was not done because of external reasons, so it was shown only to selected guests." At least one of the two prototype aircraft was in a hangar at Zhukovsky during the show.
Like many other traditionally military Russian design bureaux, VPK MAPO has also looked to the civil sector to bolster its order books. The Ilyushin Il-103 five-seater light aircraft is produced at the MAPO plant in Lukhovitzy. The turboshaft-powered T-101 Gratch derivative of the Antonov An-2 utility biplane is being flight-tested, and more than 200 Aviatica ultralights have been produced by the MAPO plant in Moscow.
Beyond the civil market, VPK MAPO covers an arcane product range embracing machinery for the food-processing industry, medical equipment and even cross-country vehicles. Although MAPO executives stress that deliveries to the Russian air force have the highest priority for the company, recently it has been the export market which has kept the manufacturer afloat.
Ageyev says: "We feel we are at the lowest point of the curve in the development of the world combat-aircraft market between the fourth and fifth generations. We are confident that, when we pass this lowest point, we will be capable of meeting the most demanding requirements of the Russian air force. As for export sales, we are among the world leaders in terms of aircraft actually being delivered to export customers in recent years," he claims.
Rumours circulating in Moscow suggest that it was the successes of MAPO's export practices which finally tempted Kamov to join the new concern, in the hope that such a move would boost the helicopter maker's exports. Ageyev argues, however, that, "-in my view, the major motivation for Kamov to join was the mutual realisation of the importance of industrial consolidation, and the pooling of resources for investment projects. We have made some progress in that area recently."
Ageyev suggests that another advantage of Kamov joining MAPO is that it allows the company to offer to potential customers, through one marketing department, a fixed/rotary-wing-aircraft package. "That, we believe, could make our offers more attractive for customers," he points out.
For two years, MAPO MIG was the only Russian manufacturer which had the right to sign arms-sales contracts independently from state export agency Rosvoorouzheniye.
"We, in some sense, paved the way for the Government's decision to issue arms-export rights to seven other enterprises, but these new exporters are oriented mostly towards delivering spares, while we have the capability to sign contracts for deliveries of full fixed-wing and rotary-aircraft weapons systems," explains Ageyev. Unlike many other defence manufacturers which complain about Rosvoorouzheniye's monopoly position in arms sales, VPK MAPO has working-partnership relations with the export agency.
"We received export rights at the highest level, through a presidential decree, so we are equal in that with Rosvoorouzhneiye, and we often act together on the market," says Ageyev. The contract for deliveries of MiG-29s to the Royal Malaysian Air Force was signed on behalf of Russia by both VPK MAPO and Rosvoorouzheniye.
Necessity of integration
Aviabank, the leading bank servicing Russia's defence industry, has been enlisted as a member of the new concern, to help its investment activities, and VPK MAPO has pulled together concerns which never belonged to the ministry or aircraft industry. These include the Ryazan radar plant and the air force's Kubinka repair plant.
Ageyev says that nobody was forced to join. "All the member enterprises began to feel the necessity of integration, so decisions to join were voluntary."
The Kubinka repair plant remains a state-owned enterprise, but has now become a subsidiary of the new concern, albeit retaining a high level of independence in operations. The air force will still be its main customer.
The Kubinka plant specialised in repairing the Mikoyan MiG-23 Flogger and its engines. The Russian air force has removed that type almost completely from active service, but many remain in service abroad. VPK MAPO also intends to pursue repair of and modernisation work on, MiG-29s and older aircraft.
Source: Flight International
