How to win in the missiles race. Part 2

 This is the second part of the interview with KTRV chief, taken by 'Expert' journal.

Q - Besides the missiles and the aircraft bombs your corporation develops   the sufficiently wide spectrum of sea weapons    . How is developed the cooperation of [KTRV] with our Navies?

A - We have proposed to the Navy commander Vladimir Vysotskiy to develop the whole     program of sea weapons creation. In it the phase of     new ships production and weapons for them must be clearly connected. There before was frequently that there are new torpedoes, but the submarine still stands in the dock. We presented our operating times, I think, this question will succeed in solving in the working order soon.

Q - What new armaments for the Navies does now develop [KTRV]?

A - First of all, this are the torpedoes, including of the large diameter (more than 500 millimeters). They are made by Moscow enterprise “Region”, which forms a part of our corporation. This is chief implementing agency on the sea underwater weapon. It's part is approximately 60 percent of all experimental design works, carried out on this thematic along with Navy, and about 48 percent of the series production. We now complete the tests of the system of antisubmarine complex “Packet- E/NK', which includes new torpedoes and anti-torpedoes for the protection of ship from the submarines. This system allows to counter the attack of enemy and to secure ship, and other hand - to deliver effective retaliatory attack. Furthermore, we continue works on the torpedoes “Squall”, which are capable of under water move at a rate of 100 meters per second. This is the most terrible naval weapons, which was created in the USSR. And I am glad, that it was possible to follow this thematics.

Q - In the last year, despite the recession, KTRV could increase sales and its financial gain up to 31,3 billion rubles. Due what this did occur to?

A – It was our luck! But if we speak seriously, then, of course, we very strongly supported by the state orders (to the air weapon for Su-34 and Su-35 for total cost of 6 billion rubles. - “Expert”). Its profitability is small in comparison with the export contracts, only a   few percents. Therefore with an increase in the gain our clean profit fell one and a half times. Nevertheless precisely the state orders in combination with the export contracts makes  possible to ensure the progressive development of our corporation. The potential of the domestic market is enormous. I would sell considerably more   weapon for internal market for   pleasure. But, unfortunately, the demand   of armed forces   was insignificant till recently. In the previous the amount of missiles were bought so many, that in the real military operations this quantity would be spent in only one day. Meanwhile August, 2008, events in the Caucasus showed that without a good weapon it is not possible to protect our interests. And the present management of RuAF clear   understood this. Therefore I hope that now the situation is changed in its basis. I can say that already in the present year we plan to increase the gain approximately to 40 billion rubles.

Q - Until recently    almost three  fourths  of your productions was     exported. What part of export in the total volume of sales you do consider as optimum?

A - This year we have the export and the state order in equal. I consider that this good proportion for our corporation. Because with   today's low profitability of the state orders, we will not survive without the export contracts. We need to conduct the modernization of production capacities, to buy the new machine tools, draw the new highly skilled personnel. All this requires very large investments.

Q – What investments?

A - Now only within the corporation framework we is realizing 17 projects of the technical reequipping. On basic area it means to built several new buildings, new laboratory- design housing. It is very important for us, since a contemporary anechoic chamber for the simulation of varied conditions for  new weapon testing will be there created. This will make  possible to substantially reduce expenditures for full-scale flying tests. So   only this project will require several hundred million rubles, and entire program of modernization – costs several billion.

Q – Will these amounts be grant by the state or you should find them independently?

A – The state financing is, of course, provided, but it is insufficient  . The program of defense- industrial complex development until 2015 is under way. It provides state participation in financing of such projects. I.e., speaking in general terms, if state gives one hundred rubles, then the enterprise must invest approximately fifty rubles in its own means. Thus far we satisfy this requirement. But when the investments will jump up to billion,   without the additional aid we cannot manage it. Because if we had billion in pocket, then already long ago we would make all needed by ourselves.

Q - Besides money, what also  you expect from the authorities?  

A - In reality the major problem is   the regular paying. Yes, they subsidize the interest rate on the credits to us. But the means come with   large delay. The production process of missiles is from nine to eleven months. And if we themselves do not begin to invest our own money, then   simply lost the order. Therefore the part of the works on the state order and on the export contracts we are forced to advance   by our own money or to take credits in the banks. Only in the past year for servicing of our credits   we have spent almost one-and-a-half billion rubles, which   could be invested in modernization.

Q – how  this situation can be changed?

A - Today   the Ministry of Defense has already decide that the credit advance must be not less than 80 percent of the sum of order, and not 15 percent, as it was earlier. And they try to reach this number. So, some improvement is done.

Q - Let us return to the export. The markets of our traditional buyers, are close to saturation. Who can replace them?

A - Such growing partners as Vietnam, Algeria and Venezuela. We continue to actively develop our connections also with India. The stiffening of competition is observed there, but I still consider this market as   promising. But the export to China is reduced indeed. But  already   long ago it is not a number one partner for us. The Chinese now try to manufacture all weapons with their own forces.

Q - As I know, they even cloned your missile X -31 and now they started with others. Does this represent a threat?

A - Well, I assume, they still cannot make X -31 for very long time. Even Americans cannot mimic it. But   for   long term China - is the country number one, in my opinion. And those, who earlier said that the Chinese will not make “Mercedes”, now   see that they made mistakes. China is capable to do a lot.

Q – This is only the exterior view, but the filling there is terrifying.

A - You are right, but the exterior view will follow everything else. We here   began in the Sixties with “Lada” (car), but further no big progress occurred. But the Chinese progress is visible. They already make their automobiles, another complex technology, even the machine tools. But we practically were deprived of promising machine-tool construction during years and  now is forced to buy machine tools in Japan, Korea, in Taiwan and China. But indeed the own machine-tool construction -   is the basis of entire machine building.

Q - Honestly speaking, I do not believe that the Chinese make actually good machine tools.

A - Certainly, if   taking the metal-working machines,   China yet reached  the top. But, for example, the bench equipment, vibro-stands or, let us say, climate-controlled chambers - all this they have in very worthy quality. These are very complex civil constructions, and the fact that this production the western companies buy in China,   speaks     much. This means that they mastered advanced technologies. Yes, of course, it would not without the aid of the western companies. For example, in the   machine-tool construction they have joint venture with the Japanese. But this is only the first step. Now they, as you speak, clone, but tomorrow will already make all by themselves. I   do not need to speak, that they know how to sell well. All markets are oppressed by the Chinese machine tools. It is another matter that they lose western on the reliability, the longevity and some other criteria. But fact it is present, the Chinese learned all these lessons very rapidly.

Q - You do actually think that the Chinese can be a serious competitor for Russia on the market for the air weapons?

A - Certainly yes. If I then did not consider, then he would not try to accelerate the development of new armaments by all forces. Yes, I see that China - this is a competitor, perhaps - not just tomorrow, or even a day after tomorrow, but accurately in five years. Would be an error to underestimate its role   .

Q - Nevertheless they were not able to create   a serious combat aircraft, despite   twenty years   work…

A – Till today were not able, but the time passes  very rapidly.

Aleksey Khazbiev, an editor of the “Expert” journal,  the division of the infrastructural branches  

26.04.2010