Progress point to recovery in output from the success of Turkish tender

Published: 11/10/1999

Progress, based in the Far Eastern city of Arsenvevsk, still remains one of the key Russian military and industrial plants, in spite of significant scaling down since its heyday and scarcity of funding impacting heavily on orders. The workforce has fallen from 14,000 at the plant's height to its current 4,500. The plant currently manufactures the civil four seat Mi-34, the aerobatic aircraft , the Yak-55 and two combat helicopters, the Ka-50 Black Shark and the two-seat Ka-52 Alligator. It also produces arms for both ground and military forces, most notably the Kh-41 Moskit air to surface missile. Output has been severely curtailed since 1990, when Progress made 170 Mi-24s attack helicopters a year. The military is increasingly turning to upgrade options for the Mi-24 in preference to replacement, on cost grounds and a number of projects are currently underway including one from Mil, the helicopter's designers. But the outlook is not all gloomy. Victor Pechenkin, General Director, observes that, while the plant is currently operating at just 25%-30% of capacity, only 300 out of 4,500 employees are on forced leave, compared to 2,500 in 1998. He is confident that full employment can be achieved by the end of the year and this confidence is reflected in the recruitment of 400 additional workers during 1999, many of who bring specialist skills to the plant. He anticipates a dramatic increase in output of 5,000%, compared to 1998. His grounds for optimism are contingent on the successful negotiation of prospective contracts. Pechenkin hopes that the Turkish tender for attack helicopters, due to be decided in April 2000, will favour the Ka-50 over its closest rival, the US Apache after extensive redesign in response to the requirements of the Turkish authorities, including a tandem two man crew version, the Ka-50-2 Erdogan. Progress began serial production of the Ka-50 in 1999 for a limited number of aircraft, after producing training aircraft, although recent reports suggest that the building programme may be accelerated in the light of conflict in Southern Russia. The Russian Army's interest in receiving the helicopter has been the subject of considerable debate of late with less than complimentary comments from the head of Army Aviation (www.concise.org. 10th October 1999). Pechenkin also expects Rosvooruzhenie to conclude a deal with S. Korea for the Ka-50, who has been an enthusiastic acquirer of Russian helicopters of late.In addition, the company has signed a contract for the delivery of six light Mi-34S to Nigeria. The basic price of the Mi-34 is approximately $350,000. Since 1995 the company has looked for other non aerospace areas of activities using its facilities and these have included furniture, feeding bowls for poultry farms and recently a further contract with Japan for waste storage containers.1999 has also seen the delivery of Moskit missiles to China. Although Progress has manufactured the missiles for several years, it has been prohibited from exporting them, until recently. A law passed in 1998 banned the production of military products by companies where the foreign share of ownership exceeds 25%. Pechenkin dismisses the legislation as “nonsense”. There have been recent rumours denied by Pechenkin, that local company Radiopribor, planned to buy out foreign investors to consolidate its relationship with Progress and take foreign holdings below the 25% limit and others that the company would issue stock and dilute foreign interest to below 25% (www.concise.org 20th September 1999).While he declined to reveal the extent of foreign ownership in Progress, Duma deputy, V Grishkov, estimated it to be around 27% in April 1999, although the holding of foreign shareholdings through Russian holding companies, makes this a guess at best. The state owns 50% plus one share in the company. Some 45 companies and 11,000 individuals make up the rest.

Article ID: 1068