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20 Jun, 2008 01:52

Record orders but $8m losses – military giant under fire

Protestors at a top Russian military factory have demanded to know why it is losing millions of dollars despite record worldwide orders. They are calling for the boss of the Chernyshev plant to be sacked amid speculation that the government may now be set

The plant has more than $US 2 billion in orders for its MiG-29 engines from the likes of India and China.

Yet management admits an $US 8 million annual loss. According to its shareholder union, losses are actually triple that.

Ahead of the plant’s annual general meeting on Friday a minority shareholder accused CEO Aleksander Novikov of bankrupting the plant, to sell it as prime Moscow land.

But management believes corporate raiders are behind the protests. It blames plant losses on exchange rates and commodity prices.

“The 30 rubles we got for every dollar China paid us 3 years ago is now 23. The cost of kerosene’s doubled, nickel and titanium prices are 2 to 5 times higher,” explains Chernyshev Military Engine Plant’s deputy chairman Gennady Arkhipov.

The government currently owns 51% of Chernyshev. It now sees Irkut’s IPO and Chernyshev-style ownership scandals as a failed experiment.

Some industry analysts warn the state is planning to seize back even more of the defence industry.

“With consolidation is going government control, the private owners are forced to sell their shares,” said Maksim Pyadushkin, Editor-in-Chief of Air Transport Observer.

Production’s also being returned from abroad. The government says the Chernyshev plant will make Mil and Kamov helicopter engines currently licensed to Ukraine.