Alexander Nalivayko , VNIIMETMASH HOLDING COMPANY - ВНИИМЕТМАШ
Release Date: 2011-03-23
Alexander Nalivayko, First Deputy General Director and Board Member of the Russian Design and Research Institute of Metallurgical Machinebuilding (VNIIMETMASH), has been interviewed by Russianavia.net for a Special Report on Special Metals and Alloys to discuss the history of VNIIMETMASH in Russia, its proven international leadership in producing equipment for the metallurgical industry and the current challenges on the Russian market.VNIIMETMASH is one of the oldest Russian manufacturers of a wide range of machinebuilding equipment for metallurgy, aerospace, nuclear energy, transport, oil and gas and other industries on an international scale. What helped VNIIMETMASH survive during the hard times for the Russian industry and continue successful operation?
Over the last 60 years, VNIIMETMASH has lived different phases of development and managed to preserve its core that had been established by its founder, academician Alexander Tselikov. VNIIMETMASH’ structure is formed with an R&D department involved in development of technology and research, a construction department and equipment manufacturing facility - a principle that was destroyed in a lot of similar industry players that lost their facilities or, due to lack of human resources, designers. Consequently, following our traditional values and attention to nurturing our human resources were essential for VNIIMETMASH to survive.
Moreover, high qualification of our designers helped us retain our team during the 1990ies. One of the key factors here was our cooperation with the leading profile institutes and universities such as Bauman Moscow State Technical University – where academician Tselikov founded one of the scientific schools within the machinebuilding department – National University of Science and Technology, Moscow State Technological University “Stankin” and the Moscow State Evening Institute of Metallurgy. Besides, our experienced designers ensure the transfer of knowledge generation to generation which was of utmost importance in keeping our team and our potential in construction and R&D.
Secondly, it is important to note that an important peculiarity of machinebuilding for metallurgy is a wide range of equipment produced for the basic industries such as aerospace, transport machinebuilding, construction and the military industry. This range of products and equipment enables us to be flexible in interacting with the national industries.
Mr. Nalivayko, as you said, the facilities of VNIIMETMASH allow production of a wide range of equipment. Is it challenging to maintain such a wide product range?
The construction department of VNIIMETMASH employs about 250 designers and comprises production of rolling and pipe rolling equipment, continuous casting machines, pressure machines, part rolling mills, electric-powered automatics and hydraulics department and a comprehensible department responsible for designing the facilities. Each of these departments is involved in its special scope of activities but, thanks to the structure of VNIIMETMASH and high qualification of the designers, they can refocus on any other type of activities. Our main feature is that we design and produce means of production, so VNIIMETMASH does not need to follow the market trends as closely as the end product manufacturers do.
VNIIMETMASH integrates R&D, production, experimental base and maintenance. What are the advantages of this structure?
VNIIMETMASH, formerly an industrial institute, integrates R&D, production and technologies, with the entire range of services – not only design and production of equipment but also modernization and repair of Russian and foreign equipment. As a result, we have managed to increase its efficiency. Applying our lab equipment allows us develop technologies for production and supplies of products. For instance, VNIIMETMASH supplies mills for production of energy saving power convertor walls with improved corrugation. Besides, VNIIMETMASH controls the process of manufacturing. Our principle is independent manufacturing and engineering (except for certain elements and spare parts) because most issues in cooperation are related to controlling the quality of production.
What were the main challenges that VNIIMETMASH had to face during the last years?
VNIIMETMASH had the face the same challenges as all other national industries in Russia: fight against import and against the European suppliers who entered the market when Russian machinebuilding was down. As a result, it is much more complicated to compete with them. Moreover, the manufacturers of equipment in need of crediting get high interest rates that make the price of their products uncompetitive from the viewpoint of the Russian companies, whereas the foreign companies enjoy 2-3 times lower interest rates.
VNIIMETMASH has always tried to develop using its own assets – which makes us easily adaptable to the financial conditions at any Russian and foreign markets – but our main bottleneck is finding the right approach to forming the price and production costs to make a competitive offer to the Russian clients.
Unfortunately, there is a false but very popular stereotype: “Russian means cheap”. For instance, our control systems use the element base, hydraulic and automatic systems by international companies – if the client specifies this as a requirement. Correspondingly, how can you get a lower price? The metal price and labor costs are higher than with the international companies – thus, the only way to fight for a lower price is to find cheaper financial instruments. The conclusion is that you need cheaper loans, state support or sovereign guarantees.
So, convincing Russian companies to buy Russian equipment is predominantly a matter of price?
This is an interesting question. Fact is, although we lost the market in the 1990s, it is fair to say that in the last few years we have managed to start changing the mentality of the Russian companies. Over the last 5 years, VNIIMETMASH earned a large reference list, mainly because we started exporting our equipment when there was virtually no demand on the Russian market.
What were the main export markets?
We have constructed a bearing facility for Timkin (U.S.), supplied pipe rolling mills for Specitube (France) for the European aerospace companies, supplied equipment for production of high precision pipes for Posco (South Korea), titanium pipe production equipment for China and dual-purpose equipment in partnership with Rosoboronexport. These factors eventually proved our competitiveness to the Russian companies which helped us significantly increase supplies of equipment and the volume of contracts for modernization and reconstruction of equipment on the Russian market.
What are the main VNIIMETMASH’ markets today in Russia?
Our main markets in Russia are ferrous and non-ferrous metallurgy works and manufacturers of special types of building bars. Namely, one of our most successful projects during the last years was construction of a metallurgical mini-works in Yartsevo (Smolensk region) for production of 280,000 t of building bars per year constructed at the expense of financing by the Moscow government. The objective was to fill the Moscow market of building bars. The works is already operating at the planned capacity and we’re considering possible increase of its efficiency. 90% of equipment comes from Russian suppliers which helped us prove that Russian equipment is as good as its foreign analogs. As a result, this pilot project has proved to the Russian manufacturers of metal products that the Russian equipment suppliers are competitive.
What is the role of the International Union of Metallurgy Equipment Manufacturers (Metallurgmash) in promoting the Russian manufacturers?
Metallurgmash, an association of the manufacturers of metallurgical equipment and all the by-products for the metallurgical industry, was created by VNIIMETMASH five years ago. Metallurgmash is not only a single front of the Ukrainian, Russian and Belorussian equipment manufacturers but also a union that can benefit the European manufacturers. This is a very good example of how a manufacturer can fight for his share on the Russian market. After our success in Yartsevo project, the European spare part manufacturers applied for membership in Metallurgmash. As a matter of fact, some Russian companies operating foreign equipment with spare part high prices due to the export duties, are again looking for Russian suppliers. As a result, the European companies are ready to give their engineering and sell equipment under Russian brands. One of our live examples is a company that bought the same type of equipment from VNIIMETMASH and from a European supplier. After two years of operation, it became evident that the Russian equipment is far more competitive. This makes me confident that VNIIMETMASH will get the next contract in 2012. This is a graphic example of how we fight with our foreign competitors.
A similar example is a company from South Korea that bought four rolling mills five years ago. As I found out during my visit to that company, they made sure that our price for four mills and their efficiency are comparable to that of two German mills. Nevertheless, this company chose to buy from Russia and they forecast that in five more years our equipment will pay off a few times, resulting in a low production cost and a better price than that of a European company.
During the last years, hi-tech industries are showing more demand for new metals and alloys. Is VNIIMETMASH’ offer targeted at production of these alloys?
Thanks to the school founded by academician Tselikov, VNIIMETMASH, a state scientific center for metallurgical machinebuilding, is involved in developing equipment for production of special alloys for both Russian and foreign companies, pipes for nuclear power plants and special profiles, and in a program for development of new materials for end customers.
In particular, we have recently finished a project for the High Technology Scientific Research Institute of Non-organic Materials of Bochvar (VNIINM of Bochvar) and Central Scientific Research Institute of Ferrous Metallurgy of Bardin (TsNIIchermet of Bardin) in development of technologies for rolling special materials and alloys. A few months ago, we have received a U.S. delegation that offered us a contract for supply of our industrial and laboratory equipment for production of special alloys.
Are the federal target programs for development of industry also an opportunity to develop the offer of VNIIMETMASH?
VNIIMETMASH took part in subprogram for development of heavy machinebuilding. We also cooperate with Rosoboronexport for exports of dual-purpose equipment. Rosoboronexport is a strong and world famous partner which is an important guarantee for our international customers. Besides, VNIIMETMASH was invited to the program of developing the so-called technological platforms that were listed by the Russian Ministry of Economic Development as the basis to develop innovations. This list comprises medicine, light diode technologies, radiation and biotech, software, computers, photonics, aviation, space, space communication, nuclear physics, thermonuclear synthesis, power networks, power generation, renewable energy, transport infrastructure, railway transport, composite materials and constructions, metallurgy, production of mineral resources and oil and gas.
In general, we feel the aftereffect of all interstate agreements for supplies of equipment.
How would you characterize the prospects of VNIIMETMASH for the next five years?
The prospects of VNIIMETMASH are related to the general prospects of machinebuilding in Russia. The attention that the state is giving to development of machinebuilding for strategic industries - defense and aerospace – gives us very good prospects, provided that development and support of R&D will also be on the agenda.
Our position in Russia and in the world and the stability of our exports gives us a very positive view of the future.
| Company: | VNIIMETMASH HOLDING COMPANY - ВНИИМЕТМАШ |
| Position: | First Deputy General Director and Board Member |
| Country: | Russian Federation |