Managers at Kharkiv-based turbine maker resisting efforts to privatize after result of tender last year was reversed when buyer failed to live up to commitments
ng for foreign investment and expertise. It doesn't want any.
'For now we do not have a big desire for a strategic investor to buy out our plant,' chief engineer Mikhailo Virchenko told journalists at an open house, adding he feared it would mean the end of Turboatom.
'We know turbine-making companies very well, and serious companies do not want to have additional competition … if we (privatize) we will destroy Turboatom.'
Plant officials fear a strategic investor would turn the plant into a mere subsidiary of a larger international company.
Regardless of Turboatom's reservations, the government is plowing ahead with plans to sell 25 percent of the firm – four gray, Stalin-era workshops on the edge of the eastern city of Kharkiv – on June 19.
The sale follows a collapsed attempt to sell 24.78 percent of the company last year, when the tender winner failed to pay for the stake. A new auction of the stake has already been postponed once from April 26.
But Virchenko said Turboatom had not only survived eight years of post-Soviet turmoil on its own but was even increasing output and seeking to boost exports.
BETTER OFF THAN MOST
Most other aging industrial behemoths are struggling to adapt to the new order – standing idle or cutting output to a fraction of capacity due to electricity shortages and a lack of funds for new equipment and technology.
'It is difficult to say what will happen next, but for the time being we are increasing output,' Virchenko said.
'We are hoping to increase output by five to 10 percent this year,' he said, proudly showing a large new turbine built for a hydro-electric station in India.
The plant, built in 1934, has suffered its share of setbacks, the biggest blow coming after the Chernobyl nuclear power station's fourth reactor exploded in 1986 – the world's worst civil nuclear disaster to date.
Virchenko said Turboatom had cut 3,000 of its 10,000-strong workforce after Soviet authorities imposed a moratorium on producing turbines for nuclear power stations following the catastrophe.
Economic recession also caused some of the layoffs, he said.
Ukraine agreed in 1998 to U.S. demands not to make turbines for Iran's Bushehr nuclear plant, adding to Turboatom's problems. Ukrainian officials say Turboatom and other firms lost some $500 million in potential business.
U.S. officials said Ukraine lost no more than $50 million on the Bushehr contract and stood to gain more through cooperation with U.S. firms.
CHANGES HAD TO BE MADE
Turboatom has adapted, diversifying into smaller turbines for sugar plants and equipment for steel mills.
But orders from the troubled domestic electricity sector, afflicted by chronic cash shortages, are weak, while Russian demand had fallen considerably from Soviet levels despite still consuming 25 percent of Turboatom's annual output.
While Virchenko said Turboatom accounted for 14 percent of the world's output of nuclear power station turbines, it needed to step up efforts to export its products.
The plant was making two turbines for China, had orders from a hydro-electric station in India and was focusing on building new ties in southeast Asia, Latin America, Africa and the Middle East. But more needs to be done.
'We export our turbines to 35 countries … but we need to search for new clients and new relationships,' Virchenko said.
Virchenko said the search for new orders often meant teaming up with Germany's Siemens and Sweden's ABB (Asea Brown Boveri), as Turboatom did not have the funds to finance large projects by itself.
But it was determined to make its own way, Virchenko said, adding there were enough skilled engineers at the plant and that they were unwilling to work on others' designs.
'We have our own market niche and we would like to keep it,' he said. But he acknowledges the market was a tough one.
'There are many producers but the number of orders has fallen,' he said.
