It is believed that Ukraine has lost its high-tech market outlets. The best we can hope for is the exports of goods with minimal manufacturing.
This is not quite accurate. EuroPravda has already provided vivid examples of the companies, which entered the European market. These companies produce instruments for radiation measurement, added to armoury by many of the NATO countries.
Our new hero is Kharkiv company FED, which produces aircraft aggregates.
This is a relatively young company, but it was established on the basis of the Soviet giant (and kept its name).
Export orientation is the only alternative for these Ukrainian companies, as there is no demand for their products in Ukraine.
The company started to think about getting the EU certificates in 2012. “Although we had no problems on the Russian market, we realized that our future was the maximum integration into the world system, and that was virtually impossible without European certificates,” – says the CEO Victor Popov.
This approach helped the company weather the global economic slump in 2014. It is worth noting that the break with Russia affected the companies in aviation most. Apart from the restrictions made by Russia, the National Security Council also affected the shipments having banned the sale of military and dual-purpose goods.
As a result, the company had lost the orders not only from Russia, but also from other countries executed in partnership with the Russians.
A lot of Ukrainian companies have not got over that loss yet. However, the FED expects that production will be 3-5% higher at year-end 2016 than in 2013.
It is now possible thanks to the participation in the European project ESPOSA, which is oriented on turbine engine technologies tailored for small aircraft. This project involves 20 industrial enterprises, 12 research institutes and 10 universities from 15 countries, including Ukrainian companies.
“We have reached the agreement with the Czech UNIS in order to supply pumps to their aircraft engines. That was the first step that made the entrance of the European market possible. Afterwards, the Austrian Diamond Aircraft became interested in these engines. Eventually, they have chosen Ukrainian engine with a dosing pump,” – they say in the FED.
The first model of Diamond airplane with Ukrainian engine – DART-450 – has been presented at the Salon in Farnborough this year.
Diamond expects to produce 200-300 aircraft per year.The peculiarity of aircraft business is the longterm supplies. “As we say, once you have found the way to aviation, you will be getting orders for several decades until the model is taken out of production,” – said Victor Popov.
This is not only a training DART-450, but also the bigger one DA50-JP7, which uses that same Ukrainian engine and is also being certified. It is a small-sized aircraft that can be used as an “air taxi”. These very models are in a deficit in Europe, since Airbus does not produce aircraft of this type.
Moreover, the Chinese have already bought the right to produce the Austrian model. Therefore, it is possible that engines for these planes will be produced in Ukraine.
Another success of Kharkiv is a participation in the tender of French company Thales to supply heat exchangers for satellites.
“That was not our first attempt to participate in the Western tenders. We have enjoyed success in Canada, however, this project was never implemented by the customer. Therefore, we definitely had experience and it proved useful. It was a quite difficult selection, French experts checked all the details of our work,” – says the deputy chairman Serhij Avershyn.
Is this enough for a large-scale access to the European markets?
Unfortunately, Ukrainian producers will have to face many obstacles on the way to the EU.
Some of them are traditional – for instance, currency restrictions or certification that cannot be carried out by Ukrainian authorities if just for a small number of domestic companies that produce such products.
A much more serious problem is the fear of Europeans to conclude contracts with Ukrainian companies.
However, the reality is that the company’s representative gets recommendations of its Foreign Ministry, where it says that it is safe for their citizens to visit Kyiv, but they are not recommended to visit Kharkiv or Dnipro.”A simple example – we need very expensive European equipment for our production. Such equipment has to be installed by a producer’s specialist.
It takes much time to convince them, giving additional guarantees, promising risk bonuses. And we are the ones who buy. You can only imagine the way they would behave when buying Ukrainian products,”- says Victor Popov. According to him, this problem should be solved at the state level – the Ukrainian Foreign Ministry has to prove that visiting Ukrainian cities is safe.
It is much more than that, for European buyers should be sure that their supplier will fulfill the orders on time.
This is the key issue – Ukrainian companies’ reputation is not that good in this respect.
Numerous failures of Ukrainian enterprises to conclude the major contracts could not go unnoticed. The irony is that contracts are failed by the state companies casting a slur on everybody’s reputation.
That is not the half of the story!
“Austrian Liebherr Aerospace is our main competitor on the European market. It produces similar range of products, supplying Airbus with nodal parts. In fact we have a good working relationship, we exchange delegations on a regular basis, monitor the work of each other.
Logically, there is always the question of cooperation. Although this project is profitable for them as well, their top managers recognize – the board is not going to approve it,”- says Victor Popov.
What is the problem? First of all, it is about the confidence. Not in the manufacturer, but in the state.
Aviation industry depends on state assistance like no other. They say, “planes are made by professionals and sold by presidents.”European companies are familiar with the peculiarities of Ukrainian business climate. “They know well that the operation of any enterprise can be blocked by the tax agency, fire service and many others. The order cannot be failed. And it is all working against us,” – they recognize in the FED.
At the same time, Ukrainian companies have succeeded in spite of that. This brings up the question – what would happen to the industry in case of the normal government policy, for example, such as the European one?
However, recent government promises to establish Ukrainian aircraft leasing system first and foremost adds some optimism. “If any of the promises is implemented next year, Ukrainian aviation industry can significantly improve its performance,” – Victor Popov is summing up.
Article was prepared by “European Pravda” within the framework of “Stronger Together!” information campaign.