Record-setting rail cars

13.09.2012 — Analysis

The headquarters of the Uralvagonzavod research and production corporation, OJSC is beating the old Soviet records. In 2011, the factory in Nizhny Tagil surpassed its previous peak in the manufacture of railroad rolling stock. Plus, in the past two years, the firm has increased its production of civilian equipment by 70%. In an interview with Alexander Neugebauer, the acting director of finance and economics told RusBusinessNews about how the demand for high-quality products has meant round-the-clock operations at the plant.

- Aleksandr Yurevich, what are Uralvagonzavod's goals for 2012?

- Between January and June, we produced about 40 billion rubles' worth of finished goods and had net profits of about 4.1 billion rubles. The goal by year's end is to reach a production level of 95 billion rubles. Net profits are projected to be about 9.9 billion rubles.

- How do these figures compare to last year's?

- Production and sales are up by 40%. In 2011, we earned a net profit of just over eight billion. So now we're looking at an increase of 20-25%.

The year 2010 was seen as a successful and even record-setting year for Uralvagonzavod (with net profits of 5.7 billion rubles), and if we take those figures as a reference point we can see that Uralvagonzavod's official numbers have practically doubled.

Our tax liabilities are also growing. In 2010, the company paid 300 million rubles in taxes to the city of Nizhny Tagil, and that number rose to 500 million in 2011. Just in the first half of this year we have added 310 million rubles to the municipal coffers.

- What areas of production are growing the most rapidly?

- We're seeing growth everywhere. In 2011, Uralvagonzavod produced 25,500 units of rolling stock. That's a new record. This year we plan to produce 28,000 units, which is more than any other company in our industry has ever manufactured, even in the Soviet era. That's almost 70% more than in 2010. Military production is growing at about the same rate.

- What new products is Uralvagonzavod introducing to the market?

- In 2012, the model 33-9808 dump car, which is designed to transport overburden rock and ore, went into mass production and immediately found a ready market.

However, our biggest success this year was bringing the multipurpose TMV-2 vehicle to the market, which is able to run on either tires or rail wheels. This model recently obtained certification, and the number of orders has already exceeded our production capacity, which raises the question of moving some of the production to a separate facility.

As for the future, we're currently working on gondola cars with a greater axial load capacity and that are able to run longer before needing maintenance. Our goal is to get that distance up to one million kilometers - currently the standard is 500 thousand kilometers.

- How popular are Uralvagonzavod's products right now?

- Demand exceeds supply for our range of civilian products. And this is despite signs that Russia is experiencing an economic crisis and a decline in rail shipments of freight. While other freight-car manufacturers have slowed their production rates, demand for Uralvagonzavod's products has increased. Buyers and carriers have begun to look more closely at product quality, and no one in Russia can match the quality of our freight rolling stock.

We're fully contracted through the end of 2012. Orders are already shifting into next year. We're working on getting deposits and advance payments for deliveries in 2013.

As for military production - I can say that we're operating at full capacity. We've entered into a long-term, three-year contract with the Russian Ministry of Defense. Work is also underway on the signing of an additional three-year contract.

- How does your company manage its portfolio of orders?

- Our factory operates 24 hours a day. We keep our eyes on the future – Uralvagonzavod has an investment budget of over ten billion rubles, which is the highest it's been in the last ten years. We're also introducing modern equipment made by the biggest European manufacturers, such as machining centers and automated production lines.

We currently employ almost 30,000 workers. By comparison, Uralvagonzavod had a staff of only 28,500 in 2010. We recruit employees by offering a respectable wage, which went up over 30% in 2011 and almost another 25% in the first half of this year. Today, the company provides an average salary of 32,000 rubles, plus benefits.