Inside Kazan`s Best-Kept Secret /www.avia.ru/

Inside Kazan`s Best-Kept Secret
[24 May 2000] The Kazan helicopter plant fell on hard times in the last decade but has started to thrive since it became a private enterprise.

KAZAN – Until the early 1990s, this was a closed city to foreigners. What made it such a sensitive site was the Kazan Helicopter Plant, which manufactured up to 300 military choppers a year and was considered to be one of the most important facilities of its type in the country.

Russia`s military may have fallen on hard times over the last decade, but the helicopter plant, now operating as a private enterprise, has succeeded in adapting to a post-Soviet role. And most observers say it is continuing to thrive as the new century gets under way.

But what doesn’t seem to have changed is the sensitive nature of the plant’s operations. After repeated promises, first for an interview with plant officials, then for answers to general questions, the firm`s management suddenly decided not to talk, saying only that: ``It`s not in our interest to talk to a general-circulation newspaper.``

However, Alexander Khlebnikov, editor of Kazan-based Helicopter magazine, a publication supported by the factory and which assists with its public relations, did speak to The Russia Journal about the firm and its products aimed at both the military and civilian markets.

``The plant was originally scheduled to be built in St. Petersburg in the early 1940s, but the idea was transferred to the Tatar capital because of the war,`` he said. ``At that stage, only airplanes were produced here. The first helicopters were built in the early 1950s.``

The Kazan plant has traditionally manufactured MI series helicopters designed by one of the world’s foremost helicopter constructors, the late Mikhail Mil, who was showered with Soviet government awards for his work.

Mil designed 10 machines, of which the Kazan plant has continuously produced five. The MI 8 group of helicopters currently forms the manufacturing base at Kazan. The plant has been producing the MI 8 for 30 years and has issued 8,000 of these helicopters to the domestic market and to more than 70 other countries.

Recent new projects include the Ansat and Aktai models, which are lighter and cheaper to construct than some MI models. The Ansat has already attracted interest from potential purchasers including Gazprom, the Ministry for Emergency Situations and several leading domestic oil companies. Foreign buyers have also been inquiring after the new model, with some countries hoping to start manufacturing the Ansat under license.

``Now, up to 90 percent of output is sold for export, mainly because the domestic market is overcrowded,`` said Khlebnikov, who added that, to a large extent the plant has survived the turbulent times of change since perestroika by relying heavily on export sales. ``After the Soviet Union collapsed the manufacturing program decreased heavily, but the plant continued working by exporting, mainly to Asia, Africa and South America,`` he said.

As if the collapse of the political and military system that created the plant was not enough, it then had to contend with the Russian economic collapse of 1998. However, the crisis wreaked minimal damage on the financial state of the factory, and officials say that what for much of the country’s manufacturing industry was a financial disaster led, in an unexpected way, to an upturn in fortunes.

``The crisis did not have a negative effect on the plant, as exports increased dramatically. Staff were paid in dollars and were consequently able to increase wages and pay bonuses, which offset the effect of devaluation,`` said Khlebnikov.

``After perestroika, a reduction in manufacturing meant job losses, but now more qualified specialists are being taken on, and new vacancies are appearing.``

Muslim Tatarstan’s semi-autonomous government has spoken out against the campaign in Chechnya to the point of refusing to send new recruits to the war zone. This friction led to a potential conflict of interests between the republic’s leaders and the local helicopter industry, which is responsible for supplying the military with some of its hardware.

``Helicopters produced in Kazan have certainly played a role in Chechnya, but there have been no new, specially built ones commissioned for the war,`` said Khlebnikov.

Kazan Helicopter Plant`s prospects are far from predictable, but there are grounds for believing that the Tatar aviation specialist will continue to hold its own as Russia`s leading helicopter manufacturer.

``The outlook for the future is very positive, with several new projects in operation at present,`` said Khlebnikov. ``The main questions for the future are the battle to keep up sales – improvement is always being worked on, as there are so many competitors worldwide.``

According to industry observers, the well-being of Russia’s helicopter manufacturers depends to a large extent on the effectiveness of their marketing campaigns abroad. The worldwide helicopter market for commercial and military machines expanded faster than expected in 1999. A recent study conducted by independent analysts Forecast International predicted that by 2008, the Mil helicopter manufactured at Kazan would constitute 7.2 percent of all helicopter sales worldwide.

Kazan-produced helicopters already appear regularly at major airshows and exhibitions worldwide, including the prestigious Le Bourget in France and Redhill in Britain. The plant`s management will be hoping that exports continue to remain at high levels by promoting their machines at such events.

Kazan`s MI 172 is already used by the South Korean police, and it emerged last month that the Malaysian military is considering purchasing 10 of the versatile MI 17 helicopters, which cost about $5 million each.

By PATRICK GILL / The Russia Journal