Today, one of the largest manufacturers of diesel engines for machinery, diesel and gas generators - the DEUTZ company, is being active in the Ukrainian market, by breathing life into the local machines. UDR interviewed representative of DEUTZ in Ukraine - a senior adviser to Automotors Michael von Hayden about latest company’s achievements.
What is the DEUTZ experience on the Ukrainian market? When this cooperation started and what are the results up to date (if possible - quantitatively or in percent). Please, give the most successful/interesting examples.
DEUTZ had a breakthrough when KhTZ decided to purchase 3000 motors in the year 1998. Additional highlights were the sale of 200/300 motors to LAZ for the Kiew city buses and the sale of 200 diesel motors (with Allison automatic transmissions) to Malishev Plant in Kharkov, who was exporting BTR3 to UAE. Besides BTR3 DEUTZ motors are also used in BTR4 and Dozor B. The success of the compact motor is due to several unique features proving to be very advantageous, especially for the application in APCs. The main advantages are: high torque, low weight, low fuel consumption, V-type engine (if requested) and highest durability even under extreme stress.
Which products/services of DEUTZ are of the greatest demand in Ukraine? Which sectors of Ukrainian industry - military or civilian - are the largest customers?
Presently, the focus is on the military sector. However, in the future the demand in the civil sector will dominate again. As soon as the economy is reversing its downtrend, more buses, tractors and trucks will be produced.
As to your question about the services big in demand I could name 2 services:
- Our application engineers are constantly in contact with Morozov Design Bureau and the producers of APCs assisting them especially when prototypes are newly designed and produced.
- DEUTZ is the market leader with a population of app. 15000 diesel motors in Ukraine. DP Automotors as exclusive distributor of DEUTZ AG for the Ukrainian market has important service obligations. In order to fulfill them Automotors is running a fleet of service cars in order to render a mobile service all over the country.
What caused the situation of not supplying of engines by DEUTZ to Ukraine during 2014 - beginning of 2015?
Before talking about supply problems of the past I would like to make the following statement: DEUTZ AG is ready to supply as many motors as required by the Ukrainian OEMs.
In the second half of the year 2014 indeed export restrictions to Ukraine were in place. All European exporters were facing a jungle of boycott measures hard to overcome. There were general export restrictions, but also those against individuals and institutions in Ukraine. Finally due the active intervention of the president of Ukraine, chancellor of the Federal Republic of Germany, Ukrainian Foreign Ministry, RNBO and a board member of DEUTZ, we received the permission of the German Export Control Institution and, finally, common sense prevailed.
DEUTZ has significant experience of cooperation with the leading armies of the world in creation and maintenance of cars/armored vehicles. What you can or wish to advise Ukrainian military and local producers of armored vehicles, taking into account the best practices and experience of other armies in Europe?
DEUTZ AG is neither creating nor servicing armored vehicles. The task to produce modern and compact motors and fulfill all European environmental requirements remains the main goal and at the same time keeping a competitive advantage over the competitors. Our dealers and distributors worldwide have been instructed to carry out the service on their local markets. By decentralization this task DEUTZ is expecting to obtain in return an optimization of the service in the respective countries. For more than 20 years Automotors Kiew is responsible for marketing of motors, spare parts and rendering technical service to customers by means of the service stations in Bucha and Zaporozhe, running a fleet of service cars and training of technical personnel of our customers. The aim is to enable the customers to do all repairs and maintenance by themselves, only major repairs and overhaul will be carried out by Automotors.
Concerning the advice to manufacturers of APCs:
- try to focus on the creation of new APCs by increasing the quality gradually up to NATO standards
- make use of local parts if and when the local producers are willing and enable to increase the quality demands (western industrial norms). Alternatively import the goods which in general have a superior quality to price ratio than locally manufactured products.
What are the priority directions of cooperation DEUTZ with Ukraine for a short, medium and long perspective?
The priority direction of DEUTZ AG and Automotors is to increase sales to the military and civil sector, to strengthen the service infrastructure and to build or to rent 2 more service stations in the nearest future.
Another aim is to train free of charge the mechanics of the armed forces in the training centers of Automotors in order to enable them to become almost autarkic, except for major repairs and works under the guarantee.
In this connection it is important to know: avoid using too many different brands, introduce standardization as much as possible otherwise you will have tremendous logistical problems in and outside of Ukraine.
Is the company ready to participate in projects related to the construction in Ukraine of modern service centers or assembly plants for the manufacturing of DEUTZ products in Ukraine? Are there the necessary preconditions for this?
YES, Automotors, as DEUTZ distributor is ready to participate in the construction of new service stations in Ukraine. In fact Automotors is constantly enlarging and improving the existing service infrastructure. Only recently a second service point was opened in Zaporozhe in order to facilitate the service for military vehicles.
Obviously the present economical situation in the country does not warrant an assembly plant. In the future, say in 2 to 3 years, the main OEMs such, such as KRAZ, KhTZ, Bogdan and ZAZ would probably see their sales rise again. Even their increased sales potential would not be sufficient for an assembly plant. They are all private and cannot be forced to unite their purchasing power and buy from one Ukrainian assembly plant. Furthermore the producers need a large variety of motors: different in power output and EU emission norms, since some might export into EU countries, others to countries like Egypt, Iran etc. Due to these circumstances they will be no secure base load for the off-take of motors for any future assembly plant.
Equally important are the following considerations, which are to be taken into account: DEUTZ is an existing, fully automated production, which can produce more than 200 thousand engines annually. While as an assembly plant in Ukraine, which has not even built yet, would produce a small number of engines, and local producers are unlikely to replace imports, because most of Ukrainian companies have not yet reached the European standards.
The only economical reason for erecting an assembly line in Ukraine would be to obtain government subsidies in form of tax’s exemption (import duty and/or VAT). This might not be in the very interest of the government since an assembly plant using mainly imported parts represents only a pseudo-industrialization and does not bring any real benefits to the government. Consequently there remain strong doubts as to the economical advantages of such a project.