I was just looking at the website for Yuzhmash, which is Ukraine’s principle producer of launch vehicles. I ran across the following letter to employees published on Oct. 10. It includes this rather prediction:
“Pivdenmash [Yuzhmash] is in deep financial crisis, the main factor which is a precipitous decline in production. The current crisis is not irreversible, but the situation is close to the point of no return.
“The actual bankruptcy of the enterprise will result in the loss of Ukraine’s status as a space power, failure of the obligations of the State to enter into international agreements, irreversible loss of proven technologies.”
This was four months ago. And by all accounts, matters have only gotten worse. The fighting eastern Ukraine has intensified. The government’s finances haven’t improved. And employees were given two-month unpaid leaves in late January. That came after many months of 3-day work weeks and partial pay.
Yuzhmash is involved in the following programs: first stage of Antares for Orbital Sciences Corporation; Zenits for Sea Launch and Land Launch; fourth stage for ESA’s Vega; Dnepr launch vehicle; and Cyclone-4 for Alcantara Cyclone Space.
Russia announced last week that it would no longer purchase Zenit boosters and would end cooperation on the Dnepr program after flying out its manifest this year.
The letter is reproduced below.
About An Open Letter to Labor Collective of Yuzhmash
10 October 2014
Consider an open letter to employees of the enterprise from 09.10.2014 № 101-PPO (Ref. № 3505 from 10.10.2014) Pivdenmash reports the following.
The enterprise has developed really very tense situation. Unfortunately, all of the facts set out in the handling labor collective, untrue.
State Enterprise “Production Association Yuzhny Machine-Building Plant named after A. Makarov” (Pivdenmash) is the largest company of rocket-space industry of Ukraine, as well as an integral part of the economy of Ukraine, therefore, like all other industries, has been influenced by all processes that occur in it. Unlike enterprise space-rocket engineering other countries Pivdenmash has no support in the form of direct government order, which helps to overcome difficulties in the period characteristic of our specialization fluctuations in capacity utilization. Because of the absence of a stable government order company, whose main activity is focused mainly on exports, significantly loses competitiveness in the global market and are vulnerable during economic crises.
Factor of negative trends – landslide production cutbacks due to rupture of ties with traditional customers, who provided most of the orders.
The actual bankruptcy of the enterprise will result in the loss of Ukraine’s status as a space power, failure of the obligations of the State to enter into international agreements, irreversible loss of proven technologies.
At present, the SE “PA YuMZ behalf AM Makarov” is a participant in the high-tech large-scale international projects:” Sea Launch “,” Land Launch »,« Taurus II / Antares »,« Dnepr “,” Cyclone-4 »,« Vega ».
Civic activity of the company includes the production of landing gear for the aircraft AN-140 and AN-148, AN-158 and universal tractors of drawbar category 1.4, ranging from 60 to 100 hp, technological equipment and tools.
Acceptable way out of the situation may become decisive shift Yuzhmash new markets through participation in international projects, a significant change in the range of products, including by bringing to fulfillment of the state defense order. All this is possible if the state support.
Pivdenmash developed a number of measures to overcome the crisis, we attract additional orders, including defense purposes, we expand cooperative ties with other companies, including diversification within our own production, we are also prepared to increase its output of civilian products – tractors, municipal electric transport, to resume production of wind turbines. Developed as several investment projects that have received a positive decision of the State Space Agency and is now considered the ministry.
In order to ensure financial stability and further development of the enterprise Pivdenmash prepared a package of four bills that are currently being developed in the central bodies of executive power and, in the case of a positive decision of the Cabinet of Ministers, will be submitted to the Verkhovna Rada of Ukraine. The need to adopt this legislation is due not only difficult financial situation of the enterprise, but also the need to ensure the implementation by Ukraine of its obligations under international treaties.
Given the foregoing, it can be noted:
- Pivdenmash is in deep financial crisis, the main factor which is a precipitous decline in production;
- The current crisis is not irreversible, but the situation is close to the point of no return;
- Pivdenmash designed by the State Space Agency and the Dnipropetrovsk Regional State Administration supported the package of necessary measures to overcome the crisis;
- For it is required to overcoming the crisis is an effective government support, in particular, at the legislative level.