Post-perestroika chaos affected all industries of Ukraine, especially those, oriented to production of complex production, namely instrument and machine engineering. As of 1990, the engineering industry of the Ukrainian republic supplied the USSR and a number of foreign countries with metallurgic, chemical, agrarian and communal service machines and equipment, railways cars and ships, instruments and household appliances. According to the Economy Ministry, the engineering share of the Ukrainian republic in the total volume of production, supplied abroad, made 35-40% in monetary terms, while for the last years it has not exceeded 16-18%.

Industry's breakdown lasted for 10 years, and first signs of recovery appeared in the first years of XXI century, when country's economy started to wake. After five years of active revival the industry was hit again, this time by the economic crisis. But in 2011 the machine engineering demonstrated the record restoration and growth rate at the amount of 16.9%. The production of machinery for mining industry and construction increased by 24.7%, and production of general-purpose vehicles grew by 20.6%. The decline happened only in the sector of metallurgy equipment (-10.7%), but there are grounds to believe that in 2012 the positive dynamics will continue, despite the complicated economic demand-supply situation.

Indeed, in the first half of 2012 the industry continues slow but steady growth, adding 0.3% to the figures of January-June 2011 period. In particular, the production of railway cars increased by 14.7%, radio, TV and communication equipment - by 44.3%. However, a number of production sectors observes decline.

One way or another, engineering remains the base of industry and economy of any modern country. Engineering base in Ukraine is strong, and domestic machines are still in demand at foreign markets.

Aviation industry

Aviation industry is one of the classic subsectors of our machine engineering. The Cabinet believes that in 2012 the production may grow by 8-10% in monetary terms, despite the slow industry-wide dynamics.

According to the economic analyst Ruslan Pavlenko, large-scale projects of aircraft manufacturing and related sectors (engines, equipment), started in the past years, may finally speed up by the yearend. "In fact, the process has already started. This year the aviation industry has strong financial and state support," the specialist says.

Aviation industry of Ukraine is based on such enterprises as Antonov and Kharkiv aircraft plant, which mount ready aircrafts, and Motor-Sich and "Ivchenko-Progress", which produce engines and details. In 2010-2011, these enterprises concluded a number of important contracts, which are enough for the industry to grow.

On the other hand, Pavlenko says, the realization of these contracts depends on external factors, including with the world economic crisis and relations with Russia. Russia and Iran are the main consumers of Ukrainian aviation production.

In 2011, "Antonov" holding signed a contract with Russian firm "Iliushyn Finance" on supply of 10 new aircrafts An-158 and a call for 10 similar machines. Iranian airlines also want to purchase 20 of these aircrafts. There are contracts on mounting An-148/158 models in Isfahan (Iran). "Motor-Sich" has a contract with "Helicopters of Russia" holding on supplies of engines. "Motor-Sich" director Serhiy Voitenko told ForUm that the cost of these contracts makes up to $2.5 billion.

As for the engine production, "Motor-Sich" has orders for 505 new aircraft engines and 590 repaired ones. "Ivchenko-Progress" is finishing the development of new generation turbojet engines of Ai-28 model.

Ukraine's government has also rendered its share of state support to the industry. The Cabinet purchased two aircrafts, costing UAH 440 mln, from "Antonov" for the state company "Leasingtechtrans", and allocated UAH 160 mln to compensate interests of loans, granted to private airlines for purchasing "An" aircrafts. As of the year beginning, there were eleven An-148 aircrafts in the park of national airlines.

Transport industry

Despite unclear economic situation in the world, train car builders demonstrate rapid growth of the industry. In 2011, the production growth of cars exceeded 20%, and in the first half of 2012 - by 14.7% comparing to the first half of 2011.

The main factor is the demand from Russia and CIS countries, with which we have common railway space. In December 2011 ForUm learned from vice PM of Belarus Vladimir Semashko that the wear problem of freight rolling stock in Russia made 93%, in Belarus - 80%.

The matter concerns not only export: Ukrainian railway company "Ukrzaliznitsia" announced that in 2012-2103 it would buy 8300 new freight cars at total costs of UAH 6 billion. If these plans get fulfilled at least in half, the main producers - Stakhanovski and Kriukovski car plants, "Sneprovagonmash" and "Azovmash" will have plenty of work.

The last year production growth in motorcar industry was in decline. Deputy head of the Federation Council of employers of Ukraine Dmytro Oliynyk says the decline happened due to active market policy of importers, who take advantage of Ukraine's WTO membership. At the same time, the economist pays attention to domestic bus production. According to him, this year it may be produced more than 2000 units, which is way more than in 2011. The main clients are local authorities of large cities, especially hosts of Euro-2012. The main suppliers are Lviv motorcar plant and "Bohdan". In monetary terms, the total amount of bus supplies costs UAH 340 million.

As for the water transport, the growth of production may reach 25-30%, despite skeptical estimations. The activity of domestic shipbuilders is notable by regular announcements on new contracts.

Among others, Ukrainian shipyards have orders for 30 various ships and watercrafts, as well as maintenance orders for 100 units. Speaking about state orders for ships, the Cabinet adopted a 10-year program on construction of military ships of "corvette" class, costing more than UAH 16 billion.

Power engineering industry

The third large sector remaining active is power engineering industry. It is driven mainly by state orders: the government expects to invest more than UAH 11 billion into the existing and new power facilities, including UAH 6 billion into nuclear power. As for the thermal power plants, Krivorog and Zaporizhya power plants (three blocks each), Pridneprovska and Burshtynska power plants (two block each) are undergoing modernization now, which is UAH 300 million of annual investments into each block. The leading enterprise "Turboatom" has already concluded several large contracts on supply of equipment, having won the tender.

Good dynamics can be observed in other engineering sectors, Pavlenko sums up:  pumping compressor equipment, for example. "Russian Gazprom and the whole Russian oil and gas sector depend on supplies of Sumy Frunze engineering complex and some other domestic producers. For the seven months of this year, the prices grew by 4% thanks to positive growth of demand.
Oliynuk, in turn, believes that national IT industry also has a bright future. This summer the industry has got new tax exemptions, though even without this the sector has been growing pretty fast.

If the favorable situation remains in the future, large foreign IT corporations will be interested to create their bases on Ukraine's territory with a view to the further export. It means that Ukrainian engineering industry has good economic possibilities. The production growth may not be that significant in 2012, but in 2013 it promises to demonstrate relative growth by 15-20% due to stabilization of international economy.

Andriy Boyarunets


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