The main task of
Ukroboronprom is to meet the needs of the Ukrainian army and the
National Guard, as well as other military units, for modern
equipment, upgrades, repairs and recycling. As a new head of
Ukronoronprom, appointed by presidential decree on March 21, I will
make it top priority of my activity.
Currently, we’re getting
ready to supply 49 armored personnel carriers for the National Guard
to reinforce their fighting capabilities.
But I
am happy to say that we are able to produce a lot more, and meet the
army’s demand for arms and equipment to fight a defensive war. We’re
able to produce many components for aircraft and a lot of military
equipment, but what we cannot produce, we need to be able to quickly
buy from abroad, including from NATO facilities.
We’re
waiting for the political leadership of the country to produce the
National Security and Military Doctrine, which will lay out Ukraine’s
needs for enhancing military effectiveness. The next step will be to
develop a new Concept of Army Development, which breaks the doctrine
down to individual tasks.
Ukroboronprom
will then be able to implement these tasks in cooperation with the
Defense Ministry of Ukraine, though the domestic potential of its
arms industry and through military and technical cooperation with
others.
But the
state-owned arms concern is in a state of crisis by itself, and needs
to increase the efficiency of its own performance. Here’s an example.
There are 120,000 workers employed by the arms industry companies
that are part of Ukroboronprom.
In the
past years, per worker output at these companies ranged from Hr
30,000 to 150,000 per year, depending on the type of production. On
average, it was less than $10,000 per worker. At the same type, the
Israeli armament industry, which employs up to 30,000 workers, the
output is $200,000 per worker. In France, the number is 240,000 per
head.
One of
the reasons behind this gap is technological backwardness of
Ukrainian production. The production facilities of Ukrainian arms
factories have changed very little since the Soviet times. To produce
a single component, a chain of dozens of links is used, each
employing a worker to run it. If one of those workers fails to come
to work, the whole production like is halted.
Another
key problem of Ukroboronprom is corruption, and the web of corrupt
schemes that has entangled it. For example, some pieces of
legislation that were adopted for this industry were in fact
specially designed legal loopholes to allow outsiders inside this
very secretive industry.
In the past years, the
commissions intermediaries have been allowed to make off the arms
industry increased by 5-7 percent, eating not only the potential
profit for the national arms concern, but making the production
loss-making.
I have
taken a number of measures to reverse these and other schemes. We are
now able and must ensure we have zero tolerance for corruption. The
new management of the state concern is finalizing a detailed plan of
primary anti-corruption measures. At the same time, we’re analyzing a
number of corruption-sensitive procedures, particularly the
procurement.
Our
next task will be enhancement of human resources. Staff problems are
key and have to be addressed extremely carefully, with respect to
each worker. But searching for new people is even more difficult. We
plan to search for people – especially those who are engaged in
financial and economic activities of the company – through
competitive procedures and are currently developing the regulations
required to compete this task. Ukroboronprom workers make decent
wages, so we can expect high quality professionals to want to fill
our vacancies.
Under current
circumstances, the goal of increasing the world market share for
Ukraine’s arms industry though supply of more competitive products,
and making hard currency off it for the nation’s coffers, becomes
secondary, but still stands. We will continue active trade, and hope
to meet last year’s sales figures in 2014.
Ukraine’s export potential
should benefit from Ukroboronprom’s new priority of meeting the needs
of Ukraine’s army. As a rule, military equipment adopted by the
domestic armed forces sell better abroad. Moreover, the arms industry
can become an important locomotive for the nation’s economy in times
of recession.
The emergency our country
is facing should significanty speed up the rate of upgrades of the
idustry, and trickle into the Ukrainian research industries as well.
The path from designing the weapons and making them should become
much shorter, which should also be beneficial for the economy.
The key
directions here should be development of controls and automated
systems, aviation and air-defense facilities, means of
military intelligence and high pressure weaponry.
And last, but not least,
Ukraine will have to address the issue of technical cooperation with
the Russian Federation. At this point, no military equipment is
supplied to Russia anymore. But even if the current standoff
de-escalates, our bilateral relations will remain frozen. Yes, we
will incur economic losses, but at least we will no longer arm the
enemy.
Yuriy Tereshchenko is
the newly appointed head of Ukroboronprom state concern, the arms
production monopoly in Ukraine. He has 20 years of experience in the
national defense and weapons industries, and has worked as Deputy
Secretary of the National Security and Defense Council and Head of
the Committee on Military Technical Cooperation under the President
of Ukraine. The Ukrainian and Russian versions of this op-ed was
printed
in the March 29 edition of Zerkalo Nedeli Weekly.
