VASYL KRYLAS: “IT IS PLANNED TO SELL UAH 2 BILLION WORTH OF PRODUCTS IN 2020”

SE "Malyshev Plant" has always been considered one of the flagships of the indigenous defense industry. In fact, the glorious history of the Ukrainian arms business begins with "Malyshev Plant" - when in 1996 the Plant together with “Progress” company began to fulfill the largest contract in the history of Ukraine for the supply of 320 T-80UD tanks to Pakistan. Then there were many projects and agreements, and Ukraine, along with the contract, became one of the ten leaders in world arms exports.

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Interview was first published on the “Defense-Industrial Courier” portal

http://opk.com.ua/

“Malyshev Plant” today

- 2020 is not over yet, but already now, comparing the results with last year, we can say that the enterprise is ahead of last year's figures. How, despite the adjustments made by the epidemiological situation in the country, did “Malyshev Plant” manage to reach a new level?
- 2020 has become a difficult year in everyone's life. This is no exception for the staff of “Malyshev Plant”. In addition to the problems that arose in previous periods - non-fulfillment of contractual obligations and unprofitable production activities - the challenges of working in a special mode, which was introduced at all Ukroboronprom enterprises during quarantine due to the threat of coronavirus in Ukraine, were added. It was necessary to change the algorithm of actions in the entire management system at the enterprise. This includes remote work or flexible work, as well as additional leave, mandatory two-week quarantine in case of contact with sick people, disinfection of premises and other necessary measures. And given the fact that our enterprise is involved in the fulfillment of the state defense order and foreign economic contracts, it was necessary not only to maintain the pace of industrial production, but also to fully ensure the fulfillment of planned production indicators and commitments. Corona crisis stimulated us to develop! Thanks to a set of measures, we managed to improve the existing system of organization of production and labor, improve the procurement, hold meetings online, and at the same time respond quickly to all non-standard situations for the Plant. Thus, according to the results of 8 months of 2020, compared to the same period in 2019, it was possible to increase the volume of goods production by 71%, sales increased by 1.5 times, and labor productivity increased by 75%.
-Is there a chance now for today’s “Malyshev Plant” to increase the production rate?
- Yes. A lot has been done at the enterprise already to modernize production facilities, we are constantly working on production volumes increasing and on products range expanding. This year, we have almost doubled the production output of engines for armored vehicles and are planning to increase this indicator. We are mastering the manufacture of hulls for BTR-4, working on improvement of the technological process and on reduction of the labor intensity for manufacture of this product. Among the tasks is the resumption of production of civilian products: engines for Ukrzaliznytsia.

ORDER PORTFOLIO
- How busy is the enterprise now?
- We are busy with work for 2020 in full. The plan for 2020 envisages the sale of products worth UAH 1.9 billion. The main direction is the sale of military products. In addition to contracts with the Ministry of Defense of Ukraine there are export contracts, which are concluded to supply equipment and spare parts for heavy tracked equipment through Ukrspetsexport, as well as domestic contracts with our reliable partner - SE “Kharkiv Morozov Design Bureau”, which develops new equipment for us and provides design support for the fulfillment of orders.
- What state orders does “MP” fulfill today? In particular, is the repair and modernization of the Bulats damaged in the war zone in eastern Ukraine being continued?
- "Malyshev Plant" continues to fulfill the state defense order for the repair and modernization of Bulat tanks. By the way, in the near future we plan to hand over to the customer the next batch of repaired and modernized T-64BM "Bulats" for the Ukrainian Army. The Plant's specialists have installed the latest communication system, improved aiming devices and a surveillance system. Fulfillment of this order continues.
- Recently, the company started mass production of caterpillar tracks for infantry fighting vehicles. How promising is this field for “Malyshev Plant”?
- I would like to remind you that until recently, caterpillar belts for BMP-2 were manufactured only abroad, and now, thanks to the start of serial production at “MP”, Ukraine manufactures these components independently. In August, our specialists completed the production of several caterpillar sets for BMP-2 according to the order of the Zhytomyr Armored Plant, which repairs infantry fighting vehicles. Currently, work is underway to manufacture the next batch of sets.
There is a need for mass production of tracks for BMP-2 for the Ministry of Defense of Ukraine, so we hope to receive orders next year - both from the Zhytomyr Armored Plant and to replenish the warehouse of the Ministry of Defense, which will provide more work for the Plant. We also hope that special exporters will offer these products as an export option to other countries that have BMPs in service. In other countries, the number of such vehicles is significant, so we expect to enter the foreign market.
PROSPECTIVE PRODUCTION

- Does “Malyshev Plant” plan to produce the main product - BM "Oplot"?
- We are ready to manufacture “Oplot” combat vehicles, including for the Armed Forces of Ukraine. The Ministry of Defense of Ukraine is ready to order "Oplots", but under conditions of full import substitution. The fact is that in the composition of these combat vehicles there are a number of devices, parts and materials produced in Russia. Currently, together with SE "KMDB" and other contractors, research and development work on import substitution is being carried out.
- Are foreign customers interested in purchasing "Oplots"?
- Representatives of the countries of the Asian and African regions are showing great interest in our "Oplots". We carry out active presentation work in this direction - both during the visit of our company by representatives of foreign countries and at the meetings of the commission on military-technical cooperation with the involvement of representatives of foreign embassies.
- At the beginning of 2020, the company reached a new rate of engine production. Has it managed to maintain this pace and is the enterprise provided with orders for the manufacture of engines for the next year?
- Production of engines is going according to the plan. We are provided with orders for the manufacture of engines not only until the end of 2020. Now Ukrspetsexport is very active in working on orders for the Plant for the next year.

MODERNIZATION
- Engine manufacture requires a serious level of technical support. Is the equipment of “MP” Engine Plant being modernized according to the needs of this ultra-precise production?
- You are absolutely right. We have not only increased the production output, but also are actively engaged in modernization, technical re-equipment and reconstruction of existing production facilities. We are working on the commissioning of new equipment and development of production, taking into account the updated technological processes. The main object of modernization is the branch "Engine Plant" of SE "Malyshev Plant", which manufactures unique engines for armored vehicles in terms of the characteristics. These products are complex and require the use of high-precision components. And the new equipment with numerical program control will allow to organize production of parts of the necessary quality with the minimum influence of human factor. Separate sections have already been organized on the “Engine Plant” site, where 17 units of modern equipment of leading world brands have been installed and put into operation. These are CNC machining centers for the manufacture of cylinder blocks; 5, 4 and 3 coordinate lathes and milling machines for machining parts of complex configuration such as impellers, diffusers, etc .; vacuum impregnation equipment that eliminates microporosity defects in critical body parts made by the casting method; machining center for crankshafts grinding and polishing; powerful compressors to ensure the flow of compressed air, etc. Each unit of the latest equipment allows to release 5-7 units of obsolete machines. In connection with the mastering of new equipment, more parts are produced on machines with numerical program control. This significantly increases productivity, manufacturing accuracy and to some extent solves the staffing problem.
By the way, four more units of equipment for the production of tank engines are being installed.
- And what other production areas need immediate re-equipment?
- Our main field is the manufacture and modernization of armored vehicles. Today's task for us is to ensure quality preparation for the production of the “Oplot” tank. Our foundry, which provides half-finished products for the production of both special and civilian products, also needs immediate modernization. A set of equipment for heat treatment of armored steel sheet parts is extremely important for our further effective work. In the future, we need technology and equipment to strengthen the barrel of the gun. The implementation of modern technologies and the latest equipment is our future. Improvements in technology and modernization of equipment will enhance product quality and significantly increase the number of parts, assemblies, units that will be produced in a shorter time.
SHORT-TERM PROSPECTS
- What is MP's order portfolio for the next year?
- The state defense order for the next year will be formed in the coming months. At the request of the Ministry of Defense of Ukraine, together with the Kharkiv Morozov Design Bureau, we plan to begin research and development work on the in-depth modernization of the T64 tank. Successful fulfillment of this project will allow to obtain a contract for the modernization of hundreds of combat vehicles in the future with the simultaneous manufacture of more powerful engines for them. Work is also underway to conclude contracts for the supply of diesel engines and spare parts for railway transport and spare parts for stationary medium-speed diesel engines for nuclear power plants.
As for the foreign partnership, thanks to the active cooperation with Ukrspetsexport, which provides us with orders, currently we are signing contracts for a significant amount of supplies of spare parts for military equipment according to won tenders in foreign countries.
The cooperation of our enterprise with the State Enterprise "Kharkiv Morozov Design Bureau" in the project for the manufacture of several dozen units of Power Packs with engines for military equipment is extremely promising.
- Vasyl, you became the head of “Malyshev Plant” which had a large debt and was in a state of bankruptcy. Is there a chance for the enterprise to get out of bankruptcy? What steps have already been taken and what do you plan to do next?
- Despite the presence of significant debts to contractors and the budget, which was formed in previous years and reaches more than one billion hryvnias, the company demonstrates effective work. As for the bankruptcy procedure, at the moment the proceedings in this case are in court, a draft plan for the rehabilitation of the enterprise is being worked out, according to which the solvency and financial condition of the plant will be improved. Financial recovery is of great importance for the further development of SE "MP". We hope that with the state support in this direction, by joint efforts with the state concern "Ukroboronprom" we will be able to achieve the set goals and bring the company out of bankruptcy.
Our goal is to create production environment equipped with modern machines, which allows highly qualified specialists to work with a high level of remuneration in comfortable conditions. One of the most important issues is wages increase. The level of the average salary at the enterprise during 2020 is 7% higher than the same indicator in the industrial field of Kharkiv region. According to the latest data, the average salary at the enterprise is UAH 10,945. All employees are provided with all social guarantees in accordance with the legislation of Ukraine and the current Collective Agreement. By the end of 2020 and during the next year, a gradual increase in wages is planned, taking into account the financial capabilities of the enterprise.
- What management decisions are now made at the enterprise?
- Now the work on reengineering of business processes and development of technological solutions continues. Working in this direction, the company will be able to increase the efficiency of all economic activities, maintain and optimize the necessary functions within departments, reduce paperwork by translating documents into electronic format, timely conduct the necessary monitoring and control. The results for 8 months of 2020 indicate an increase in the efficiency of the enterprise, which provides an opportunity to further reach a profitable level of activity.
SE "Malyshev Plant” is a unique enterprise with a 125-year history and extensive experience in the manufacture of military-technical products. SE "MP" is one of the largest plants in the country and the only manufacturer of heavy armored vehicles in Ukraine. "MP" is of strategic importance for the economy and security of the state, and I am confident in the great future of our enterprise.
- What future awaits “MP” in the context of reforming the defense-industrial complex of Ukraine and the state concern Ukroboronprom in particular?
- As you know, in the process of transformation of Ukroboronprom, more than 5 branch state holdings will be created, which will unite the specialized enterprises of the concern on the principle of branch cooperation and synergy. Among them is an armored vehicles holding company. Over the past 6 months, the strategic committee of Ukroboronprom has been developing visions of these industry associations, their structure and development strategy. Together with the directors of other armored companies, I am also involved in this process - we have developed a vision of the future armored vehicles holding, which we will be ready to present after the approval of the corporate strategy of Ukroboronprom. Nevertheless, I can already say that this association will include more than 10 state armored vehicles manufacturing and repairing enterprises, including “MP”. However, the creation of this industry business unit will be possible only after the adoption of the law on the corporatization of Ukroboronprom. Our company is unique and it is difficult to imagine the domestic defense industry without us. Therefore, today we celebrate not only the 125th anniversary of our enterprise, but also stand on the threshold of a new stage of our development. There is a lot of work ahead, but we are ready for it.

Inna Borzillo, Marina Efanova
for IA “OPK”

REFERENCE 1
Results of the implemented measures for 8 months of 2020 compared to the same period last year:
- production volumes increased by 71%:
- sales volumes increased 1.5 times;
Cost reduction was achieved, namely:
- overhead costs (without reduction of labor costs) – reduced by 11%;
- administrative expenses - reduced by 19%;
- rejected items expenses - reduced by almost 30%;
- electricity consumption - reduced by more than 40%;
- natural gas consumption - reduced by 54%.
Additionally:
Prices for certain groups of materials were reduced by 4% to up to 35%
Material component in the cost of production – reduced from 40% to 27%
Labor productivity increased by 75%
The level of average wages of production workers increased by 6%.

REFERENCE 2
It was possible to reach the 2020 figures thanks to correct management decisions:
- top management of the enterprise was changed;
- plan of measures to improve the efficiency of the enterprise was developed, including production costs reduction plan;
- the budgeting system was introduced;
- new payment systems with suppliers and contractors were introduced;
- control over all types of expenses was established;
- product quality was improved;
- new equipment was put into operation;

- a system of staff motivation was developed.

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