VLADIMIR BARKOVSKY: "WE HAVE REPEATEDLY REPLACED THE TEAM OF FINANCIAL MANAGERS"

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Question: MiG is the only corporation, which has managed to concentrate practically all stages of the creation of aircrafts…

Vladimir Barkovsky: The merger began in 1995; this was a very difficult process. At the same time, our strategy is not a sensation. All industrial countries are following in this path. The USSR had a joint aircraft corporation – the Ministry of Aircraft Industry. In fact, MiG restored what had been lost as a result of the break-up of the USSR. Of course, restoration was based on market relations. I think that MiG’s success is connected with a government’s decision to create one legal entity based on the aircraft corporation in 1999. We repeatedly replaced the team of financial managers. At the same time, we retained skilled workers, engineers, and designers. The designer and producer merged. After that, we began to restore the corporation’s positions on solvent markets.

Despite a very severe rivalry, the corporation has been winning over aircraft markets of Eastern Europe one by one since 2000. We have concluded contracts to upgrade our warplanes with Hungary, Bulgaria, Poland, Slovakia, and Yugoslavia. We intend to sell our warplanes to Austria. In addition, the corporation is expanding to South Asia, Africa, and the Middle East. We do not depend on the state budget, and our financial stability increases as we sign new contracts. Unfortunately, we produce almost no warplanes for the Russian Army, and the portfolio of orders consists of contracts with foreign customers.

Question: The company’s integration continues. What are its basic principles?

Vladimir Barkovsky: The main phase – the creation of the cycle “designing – production” – has finished. The corporation is now carrying out the second phase. MiG is creating a motor branch, which will consist of the V.V. Chernyshev plant, Krasny Oktyabr, and the Soyuz company. In other words, producers of engines, reduction gears, and drives will unite within the corporation. One should note that no one forces these enterprise to unite. It is easier to survive in a big corporation.

Question: What do you intend to do in the conversion sector?

Vladimir Barkovsky: The analysis has shown that realization of all military programs requires only 50% of the corporation’s facilities. The remaining facilities of the corporation can be used for producing civil products.

The Tu-334 passenger jetliner is a prospective project. We are now conducting certification tests of this jetliner. MiG has invested its own money in this project. We intend to produce the jetliner in Lukhovitsy, within the Moscow region. To date, 20 Russian airlines are interested in purchasing the Tu-334, and we plan to produce around 130 such jetliners by 2012.

The MiG-110 multifunctional plane is another promising project. The MiG-110 currently takes part in a tender.

We will continue producing small planes. These are the Il-103, Aviatika, and a range of planes created by various design bureaus, which have good prospects on the market.

Question: The state’s capabilities linked with the development of the aircraft industry are limited. Where does the corporation take money for research and development and producing new types of planes?

Vladimir Barkovsky: As a state-owned enterprise, the MiG Corporation receives 99% of its revenues from foreign contracts. Our payments to the state budget exceed our proceeds from the state defense order. The MiG Corporation has made every effort to retain skilled personnel and technologies. The portfolio of contracts has become six times larger over the last two years. We are now creating a stable basis, which will allow the corporation and its subsidiaries to work during the next five years.

Question: As is known, the Defense Ministry is now formulating its requirements for the fifth generation fighter. How do your approaches to the creation of the fifth generation fighter differ from the Sukhoi design bureau’s project?

Vladimir Barkovsky: MiG’s strategy based on the analysis of geopolitical and domestic trends has made it possible to formulate the task of creating a combat tactical aircraft complex, which must comply with a range of basic requirements. The fifth generation fighter must make it possible to:

– create a tactical air group of the Russian Air Force with maximum efficiency and minimum burden on the state budget;

– provide a high export potential of the new fighter.

This is the only correct and fruitful approach to creating a special program for designing the fifth generation fighter. Characteristics of the new fighter must correspond to the country’s resources. In other words, we must objectively evaluate the Air Force’s ability to purchase the new fighter in 2010-15. In addition, we must scrupulously evaluate the fighter’s export potential.

The analysis shows that heavy fighters account for 15% of the total number of exported fighters (around 7,000 warplanes). The share of light fighters is 85%.

The MiG-29 light fighters have been exported to 28 countries; 18 countries have the F-16, six countries use the F-18, and seven countries have purchased the Mirage-2000 fighter.

The F-14 heavy fighters were exported to only one country – Iran. The same concerns the F-15 fighters, which were exported to only three countries – Japan, Saudi Arabia, and Israel – during the Cold war. Eight countries, including four CIS member-nations, use the Su-27 fighters.

China and India have purchased the Su-27 fighters and licenses to produce the Su-30MKK and Su-30MKI fighters respectively. This means that China will produce and upgrade these heavy fighters until 2017-20.

The US plans to export only F-35 light fighters (2,000 to 3,000 warplanes). The US will produce only 300 F-22 heavy fighters for the Pentagon.

It is evident that the class of the fighter – light or heavy – depends on its dimensions and the power of the engine.

It is very likely that the weight of the prospective fifth generation fighter will reach 25 tons with the engine power of 18-20 tons, and will exceed 40 tons with the engine power of 28-30 tons.

Prior forecasts show that the number of light fighters will exceed the number of heavy fighters by 150%. As a result, the creation of a heavy fighter will be twice as expensive than the production of a light fighter.

Another very important economic aspect of the problem involving the creation of the fifth generation fighter is that the overall program cost is equal to Russia’s defense budget. At the same time, Russia must develop other branches of the Armed Forces, which need new military hardware and weapons. This is why the prospects of purchasing the new fighter must be connected with other programs of the Air Force and the Defense Ministry. All of this must coincide with the progress of the nation’s economic development, the growth of GDP, and realistic budgets. Experts say that the fifth generation program will cost $20 to $30 billion depending on the class of the fighter. This means that the state will have to spend $1.3 to $2 billion a year on creating a group of new fighters.

Otherwise, the new fighter will become obsolete. The most dangerous thing is that neglect of the actual economic situation will lead to the creation of “the most powerful fighter”, which the state will not be able to purchase.

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