Defense companies named the main difficulties due to new sanctions

Postponement of contracts, lack of marine engines, difficulties in repairing Superjet - these are just some of the problems voiced by Russian defense companies that they faced due to new sanctions.Details - in the material RBC

After the start of Russia's military special operation in Ukraine , the United States and European countries introduced a number of new sanctions against the Russian military-industrial complex. Now companies in the industry are still assessing the risks, but it is already clear that due to new restrictions a number of contracts are being postponed, there are problems with the lack of marine diesel engines, import substitution of helicopter and aircraft engines, electronics, replacement of imported components in tank fire control systems, as well as with repairs aircraft, representatives of defense enterprises and military experts told RBC. At the same time, the defense industry assures that the state defense order will be executed at the same level as a year earlier.

The industry does not have the task of 100% import substitution of all goods, they emphasize in Rostec and the Ministry of Industry and Trade, the stake is also placed on parallel imports. RBC talked to leading defense industry enterprises and experts and learned from them how big the problems caused by the new sanctions are and how they plan to solve them.

How did the authorities in charge of the defense industry react?

In early March, Deputy Prime Minister for Defense Industry Yury Borisov said that "the full scale and depth of the current sanctions ... was difficult to predict." However, Borisov pointed out that in 2021 the state defense order was completed by 98% and there are “every opportunity to maintain such indicators in the future.”

Rostec explained to RBC that the corporation's income consists of three components: civilian products, state defense orders and exports. The last two accounted for approximately 55% of the revenue, over 45% came from civilian products, the state corporation said. “Obviously, in the current realities, changes are inevitable, the ratio will change. How exactly - we are now analyzing, by about the middle of the year the picture will be clear, ”said Rostec. Now the companies of the state corporation are adjusting their plans taking into account the new introductory ones, for a number of projects the deadlines are objectively “shifted to the right” (that is, they are postponed to a later time), its representative said, without specifying what kind of projects they were.

Among the measures taken at Rostec, they named the following: developing new opportunities for cooperation, changing the supplier base, accelerating import substitution programs in critical areas. For example, for aviation, these are power plants, both aircraft and helicopters, on-board systems, for industry, specialized software. At the same time, there was and is no task to produce absolutely everything, stressed in the state corporation. “This is unreasonable. There are alternative suppliers, there is a mechanism for parallel imports,” Rostec summed up.

The Ministry of Industry and Trade of RBC also stated that no country in the world completely refuses to use foreign technologies and units. “Statements about 100% import substitution are populist,” the ministry said. As for decisions to support the industry, the ministry recalled that during the covid-19 pandemic, the department generated the necessary measures, some of them were considered redundant at that time and, having been brought to readiness, they did not launch. “And now we are using these“ blanks ”, - they summed up there, without specifying what tools they are talking about.

What awaits him under Vladimir Potanin Articles Pro The moratorium deprived the company of collateral. What to do Instructions

What new sanctions have been announced against the Russian defense industry

On the day RUSSIA announced the start of a special operation in Ukraine, the UK and the US Department of Commerce announced new sanctions against the Russian defense industry. In particular, Britain imposed restrictions against the United Aircraft Corporation, Rostec, the United Shipbuilding Corporation, Uralvagonzavod and the Tactical Missiles Corporation. The US Department of Commerce announced that the new US sanctions are aimed at depriving such sectors of Russian industry as the military-industrial complex, aircraft manufacturing and shipbuilding, of critical technological elements. The sanctions came into effect on March 3.

On February 26, Brussels imposed a ban on the sale of aircraft, spare parts and equipment to Russian airlines. They also cannot provide insurance and maintenance services. On April 8, the European Union imposed sanctions against the Kalashnikov Concern, the State Transport Leasing Company, the United Engine Corporation, the Russian Machines company, several shipbuilding enterprises, the Tactical Missiles Corporation, Ruselectronics and the Arzamas Machine-Building Plant company.

On April 18, U.S. Deputy Treasury Secretary Wally Adeyemo said that sanctions against the Russian defense industry and its supply chains are the next target for the United States. According to him, the Russian military operation in Ukraine is taking longer than Moscow originally expected, so the Russian Armed Forces need to be supplied with new ammunition and weapons. To prevent this from happening, the US intends to deprive Russia of critical resources in industries such as aerospace and electronics, Adeyemo added.

What's going on in the aviation industry

A representative of the United Aircraft Corporation (UAC) noted in a conversation with RBC that after the introduction of new sanctions, “there was more work.” In the civil segment, an important area of ​​work for manufacturers of Russian aircraft, systems and components in the short term is maintaining the serviceability of the existing fleet of Sukhoi Superjet 100 aircraft. This work is carried out together with airlines, each operator has its own “road map” of joint actions. Over the past period, spare parts warehouses have been created, including a pool of replacement engines, the UAC said. At the same time, “certainly, there are sensitive positions” regarding the repair of the Superjet 100, the company acknowledged.

In early April, IrAero CEO Yuri Lapin warned that due to US and EU sanctions, airlines operating domestic Sukhoi Superjet 100 aircraft could not ensure the repair and maintenance of the technical suitability of Russian-French SaM146 engines. This, according to Lapin, in the short term could lead to a "park stop" Superjet. The managers of three other airlines flying the Superjet also reported problems with engine maintenance. One of them noted that if the technical support of the engines does not improve, then his airline will have to stop the transportation of passengers on these aircraft in the fall of 2022.

Surrender of Azovstal. What ended the three months of the military operation in Ukraine Politics

In the civil aviation industry, two major programs - for the production and operation of the short-haul Superjet 100 and the medium-haul MS-21 - assumed the use of a significant number of components of foreign origin, recalled Oleg Panteleev, executive DIRECTOR of the AviaPort industry agency. This, in particular, is about the American Pratt & Whitney engines for the MS-21 and the Russian-French SaM146 engines for the Superjet, he specified. “The Americans canceled the deliveries, the French side also blocked the delivery of its component - the generator module and other components. Therefore, it is impossible to maintain production at the planned pace, ”the expert explained.

As for combat aircraft, even if there are single components of foreign origin somewhere, they belong to a category where their use is allowed, because large stocks were created in advance and they can be bought in countries that do not support sanctions, noted Panteleev.

At the end of March, the Kommersant newspaper reported that the UAC was unable to obtain most of the engines for the MS-21 from the American Pratt & Whitney, which reduced the plan for the supply of this aircraft. Rostec plans to start deliveries of the MS-21 with the domestic PD-14 engine in 2024, but even these dates are considered too optimistic by the industry, the publication emphasized.

The MS-21-310 airliner with the PD-14 engine in the hangar before the start of the tests (Photo: Nina Padalko / RIA Novosti)

Deputy Prime Minister Borisov said in mid-March that the Russian authorities, under sanctions, are considering the possibility of increasing the mass production of Il-96 and Tu-214 passenger aircraft, which are still being produced in small series for special customers. The UAC told RBC that they are already increasing the production of Tu-214 aircraft. “These machines will help support the air transport industry in a difficult period,” the company noted.

As for helicopter building programs, it is necessary to replace import engines for the Ansat, Ka-62 and Ka-226 helicopters, Panteleev continues. “At the same time, further maintenance and repair of Western machine tools involved in the production of aircraft raise more questions. To increase production volumes, they must be purchased,” the expert concluded.

Between 2014 and 2018, the French group of companies Thales equipped 60 Su-30 two-seat multirole fighters with the latest TACAN navigation systems, according to Disclose, an investigative journalism portal. In addition, similar TACAN systems were delivered to Russia for the modernization of MiG-29 fighters, as well as special high-tech pilot helmets. Since 2014, Russian Air Force fighters have received Sigma 95N navigation systems developed by the French association Safran, which allow autonomous orientation without satellite signals. Target detection systems were also designed for Ka-52 helicopters, according to the website.

What shipbuilders say

In response to a question from RBC about what components are missing due to new restrictions, the United Shipbuilding Corporation (OSK) said that it is necessary to increase domestic production volumes, primarily for marine diesel engines, elements of propulsion systems (rotor-steering columns), anchor and mooring equipment and ship systems (water treatment, wastewater treatment, etc.).

Russian shipbuilders today are really experiencing great difficulties with the supply of engines to ships of various classes - from boats to large warships, Ilya Kramnik, a researcher at the Center for North American Studies of the IMEMO RAS, a specialist in the Navy, confirmed to RBC.

For example, project 20380 multi-purpose corvettes armed with guided missiles were initially supplied with engines manufactured by the Kolomna Plant. But practice has shown that domestic diesel engines do not meet expectations, Kramnik recalled. There were complaints about reliability, power, and modernization potential, he explained. It was decided to supply German engines to the improved corvettes of this type (project 20385), but, naturally, the deal fell through due to new restrictions. The fleet continues to use domestic diesel engines, for some projects the purchase is made from CHINA , the expert noted.

There are relatively few enterprises in the world that produce powerful modern marine diesel engines. And Russian enterprises are not among them, although Russia has diesel competencies, Kramnik emphasized. As for propulsion systems and anchor and mooring equipment, imports have traditionally been preferred here, and it is not yet clear how soon domestic developments can be implemented, the expert summed up.

For the listed types of equipment, import substitution plans have been developed and are being implemented, provided for by the Strategy for the Development of the Shipbuilding Industry until 2035, USC assured. In 2023, it plans to launch mass production of rudder propellers for a series of river-sea vessels in addition to the domestic thrusters already mastered and serially supplied to these vessels. In addition, Russian enterprises that produce engines are modifying them to meet the requirements of the register.

The corporation has previously worked in this direction, but now the scale has increased significantly and claims to be a full-fledged business segment capable of making a profit, USC is sure. The development of tactical decisions will take about two years. “From 2024 to the beginning of 2025, we expect to completely switch to the Russian production of piston machines and other systems that were traditionally bought abroad,” the USC explained. The situation requires, first of all, a tough position of state customers regarding the acquisition of civil orders with domestic ship equipment, this will be the main support for shipbuilders, the company stressed.

How serious are the problems with electronics

Deputy Prime Minister Borisov has repeatedly stated about the "collapse of microelectronics" in Russia and the need to restore this industry. In mid-May, he again emphasized that the country faces the challenge of gaining technological independence.

Ruselectronics told RBC that under the sanctions restrictions, the holding's enterprises continue to fulfill contracts for the state defense order and the supply of civilian products. To ensure the continuity of work, stocks of electronic component base are used, and cooperation chains are also being reviewed. “In terms of exports, we see a stable demand from foreign customers for a number of electronic components, in particular for sealed magnetically controlled contacts. So, we expect that the volume of EXPORT revenue in the first half of 2022 will remain at the level of 2021, ”summed up in Ruselectronics.

The company greatly underestimates the situation when they say there are no problems, Kramnik said. “There are great difficulties with the production of microprocessors, especially in military, protected military and space applications. The equipment that we have now allows us to produce some things, but we must be aware that it is already quite outdated, ”the expert explained.

When it comes to introducing, for example, artificial intelligence into modern weapons systems - with real-time data transmission, support for the development of tactical decisions - growing constituent capacities are required, which are not always available on old solutions, Kramnik emphasizes. Especially when compact equipment is needed, he adds. “If there is some kind of ground point, building, then, in general, it is not so important to place 100 or 500 kg of equipment there. And when it comes to a guided missile, the requirements for dimensions and weight increase dramatically. The product should be light and small, and this is difficult,” he explained.

There are also problems with modern optical and thermal imaging equipment, Kramnik continues. Russian enterprises already have their own matrices, but not in the quantity and not always with the characteristics that are required, he notes. “Even imported cases, switches, cables. That is, it is necessary to start not with electronics, but with electrical engineering, ”the expert concluded.

What did the only tank manufacturer in Russia face?

The press service of Uralvagonzavod (UVZ) told RBC that the concern's enterprises are working stably and are even increasing their output. The concern has been operating under sanctions since 2014, a company representative recalled. Import substitution does not apply to the production of the concern's products for both military and civilian purposes, UVZ stressed.

At the same time, at the end of March, as the Kommersant newspaper reported with reference to the press service of the plant, "an insignificant part" of the workers of the car assembly production were sent on short-term vacations with the preservation of 2/3 of their wages. The exact number of employees sent to idle time was not indicated, but the press service emphasized that they were provided with orders until the end of the year, and for a number of products - until the end of 2024.

There really are no problems with the number of orders, there are problems with their implementation, Alexander Ivanov, a representative of the trade union of the enterprise, told URA.RU in early April. According to him, Uralvagonzavod faced a shortage of components due to the transition to import substitution. “The plant is looking for Russian suppliers, ways are being developed to purchase raw materials from friendly countries that have not joined the sanctions,” Ivanov said. He also added that in idle time with the preservation of 2/3 of the salary of the employees of the car assembly shop, they are sent in large quantities, and not pointwise, as the press service of the enterprise told Kommersant.

Uralvagonzavod generally fulfills the state defense order, but components for fire control systems - including for the main Russian battle tank T-90M - were purchased through Belarus from the French company Thales, Colonel Viktor Murakhovsky, editor-in-chief of Arsenal of the Fatherland magazine, recalled. This is not about the entire fire control system, but only about its "night part", Murakhovsky specified. It is not yet known how critical this is and whether there is a potential for the production of a domestic analogue, the expert made a reservation. The European online publication EUobserver also reported that Russian T-72s are equipped with a thermal imaging sight from the French company Thales.

What is the position of the gunsmiths

On April 7, a meeting of the Board of Directors of the Union of Russian Gunsmiths named after V.I. M.T. Kalashnikov under the chairmanship of the shareholder of the Kalashnikov concern Alan Lushnikov. The meeting was devoted to the issues of import substitution, simplification of procedures for the export of weapons and ammunition, work to eliminate excessive administrative barriers in the field of arms circulation and state support measures for the industry, followed from a message received by RBC from the concern.

Vladimir Zhikharev, executive director of the Union of Russian Gunsmiths, told RBC that the organization had studied the risks that could arise as a result of sanctions pressure from unfriendly countries, and came to the conclusion that for some Kalashnikov enterprises there is a risk of non-delivery of many components, 70% of which (and sometimes more than 80%) were previously purchased abroad. In addition, there is a problem with the repair and replacement of imported equipment in the short term.

“Many enterprises found themselves in a very difficult situation. The production of pneumatic weapons, cartridges of many civilian nomenclatures is experiencing a significant shortage. Some enterprises have stopped the production of certain types of civilian products,” Zhikharev said. He added that after the recent tightening of the sanctions regime in the civilian small arms sector, the group of companies could lose up to half of its exports.

The press service of "Kalashnikov" did not respond to a request from RBC. RBC also did not receive a response to inquiries from Russian Helicopters and the United Engine Corporation.

Dietary supplements and vitamins in EAPTEKE. Fast shipping. Medicines at competitive prices. Discounts and promotions. Vitamins for all occasions. Order on the site!