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Monday, October 1, 2007

Eye on Russia: Rebirth of an Industry

Elizaveta Kazachkova

THOSE WHO VISITED THE MOSCOW International Aviation and Space Salon in previous years could not have missed a striking difference in the way the show looked this time.

Two large, uniform-looking pavilions housed the joint exposition of the United Aircraft Corp. Another hangar was dedicated solely to Oboronprom Corp. All foreign exhibitors enjoyed each other’s company in a separate building. Half of it was occupied by Chinese industry, represented for the first time in the Moscow biennial show’s 16-year history. That’s a different story, however.

For anyone who still had doubts regarding the rebirth of the Russian aircraft industry, the 2007 edition of the show, known by the Russian abbreviation MAKS, was an unambiguous demonstration of the consolidation processes sweeping throughout the industry — military and civil programs, and both airframe and engine production.

The flow has now finally reached helicopter producers. The state started the consolidation by bringing together helicopter design bureaus and three important production sites under the government-controlled Oboronprom. This year, Denis Manturov, Oboronprom’s general director, announced the creation of the new holding structure called "Helicopters of Russia" (Vertolety Rossii, pronounced "ver-to-LIO-ty ros-SEE-i"). It is headed by Yuri Ivanov, a former vice president of the Komsomolsk-on-Amur aircraft production plant (known by the Russian acronym Knaapo), the manufacturer of the Sukhoi family of aircraft.

According to Manturov, the game plan for the new organization is to raise annual helicopter production from the current 170 to 500 machines by 2025.

Whereas Oboronprom’s business is quite diversified, the new organization is solely about rotorcraft. It will hold control of all companies involved in helicopter production and its functions will range from managing the assets to identifying marketing futures of each program currently developed by controlled companies. The plan is to complete the consolidation process by converting to a single share by 2009.

"I’d like to emphasize that the single share is not an end in itself, implying Soviet-style government control of the helicopter industry," Manturov said. "It is an instrument by which we plan to reorganize helicopter production, to make it efficient and apt for entering financial markets.

"Whether foreign investors will be allowed to participate will depend on the way relevant legislation will develop," he said. However, describing the production range of the "Helicopters of Russia," he referred several times to ongoing negotiations with Western helicopter and engine manufacturers regarding joint programs.

The limitations that Russian laws put on a foreign company’s share in a Russian venture put an end to the Euromil Mi-38 heavy helicopter, a joint project between Eurocopter and Mil, back in early 2005. Since then, Western producers have been quite cautious in their relations with the Russian aircraft industry. (Those laws are still in force.)

Their attitude is beginning to change slowly, due mostly to the development of the Sukhoi Superjet100 regional jet program, which involves a dozen Western partners.

Manturov’s view of the future cooperation is an optimistic one. "We are discussing different types of possible cooperation," he noted, "from producing separate units and assembling aircraft under license to developing joint programs."

The main candidate for such joint efforts is Mil’s Mi-54, the 4.5-ton, 12-passenger (in standard configuration) helicopter.

"There’s a future for this machine," Manturov commented. "In five years, when we launch serial production, there will be only Eurocopter’s AS365 and EC155 in this niche, and those are relatively old designs. We are particularly aiming at making this helicopter apt for offshore operations to serve the oil and gas sector."

The most viable cooperation model for this project is involvement of a Western powerplant supplier. Valery Krol, Turbomeca’s business development and sales regional director, admitted such talks had taken place, but said they are still in too early a phase to reveal details.

In other weight classes, there are more modernization plans for older designs. The Mil Mi-17 is to replace the veteran Mi-8, the Kamov Ka-226 its predecessor Ka-26 and so on.

Yesterdays’ competitors, representatives of design bureaus and production sites, seemed somewhat uneasy as they gave their first joint press conference during MAKS 2007.

"We realize we are now on the verge of overcoming a crisis," said Sergey Mikheev, chief designer of Kamov Helicopters. It will evidently be an uphill climb for Russian helicopter makers. But uphill is better than downhill in this case.

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