180913 MAINUkraine Poised to Dislodge Russia in Global Markets by Leveraging Innovative Strategies and its Unique Defense Industrial Capacities


There is a favorable situation evolving now for Ukraine to compete more aggressively in the global defense MRO market by luring away from Russia the customers who used to be traditional users of Soviet and ex-Soviet weapons, military equipment and associated maintenance, repair and overhaul (MRO) services.


Ukraine is poised to make a new breakthrough into the global MRO market for ex-Soviet military equipment, leveraging its emerging capacity for adapting the equipment to modern warfare conditions and requirements and taking advantage of the confidence it enjoys with Western partners and of the international sanctions imposed on Russia in response to its annexation of Crimea and hybrid aggression in Eastern Ukraine. Another facilitating factor is that ex-Soviet equipment upgrades offered by Ukraine to its international customers are all developed with an eye to NATO compliance.


Major Areas of Effort Focus


In Ukraine, efforts have been underway to this end. Ukroboronprom CEO, Pavlo Bukin has announced planned actions to be taken to muscle Russian contractors out of particular markets: "We are planning to conclude contracts aimed to replace products previously sourced from Russian suppliers. There are markets where Russia used to enjoy a great advantage. But sanctions have made work with Russia more complicated, which is playing into our hands... UAE and Saudi Arabia – the biggest arms buyers in the Middle East – will be the first country markets to see this “oust and replace Russia” strategy in action, to be followed by Qatar, Kuwait and several other regional markets”, Mr Bukin said.


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“We are planning to conclude contracts aimed to replace products previously sourced from Russian suppliers. There are markets where Russia used to enjoy a great advantage. But sanctions have made work with Russia more complicated, which is playing into our hands” – Pavlo Bukin, Ukroboronprom CEO


In said markets, one of the first ambitious objectives to reach is to dislodge the Russian “Kornet” ATGM system by replacing it with a highly capable, current-generation Ukrainian counterpart known as Skif.


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Apart from the Skif ATGM, Ukraine has in store other products that could be advertised in foreign markets with the same purpose of ousting and replacing Russian rivals: "We have been conducting appropriate marketing research. We make offers based on the marketing grid developed by government's arms-trading agents, then negotiate contracts. Our products’ integration into a foreign weapons system always implies a dialogue. Not only is it necessary to show off the price advantage, but also tactical and technical advantages, and to conduct live demonstrations too. We never announced this yet, but several of these demonstrations, in particular, of products by KB Luch R&D Company, have already been conducted in the Middle East ", said Pavlo Bukin.


Importantly, Ukrainian companies are also aiming to help potential customers willing to replace products sourced from the Russian Federation localize production of armaments that are modern and, most importantly, battle proven in fighting Russian aggression.


Beyond that, many of Russian-supplied equipment operators are complaining about the Seller country's failure to comply with its in-service support obligations. This is where Ukraine’s engagement could be welcomed. In this regard, highly promising is Brazil -- the biggest defense market in Latin America. In 2007, the Russians forced a deal on Brazil obliging it to buy a dozen Mi-35M/AH-2 Saber helicopters. Of the twelve helicopters delivered, only two or three are airworthy, while the remainder remain grounded due to malfunction. These helicopters require MRO servicing that only Russia is entitled to provide, which allows it to charge monopolistically high prices.


Ukrinmash CEO Serhiy Slyusarenko, when asked about his opinion on this situation in a Defense Express interview, said: "The Mi-35 is effectively a modernization of the Mi-24. Ukraine would have no problem doing all kinds of works on it, and this needs to be made clear to the customers and operators of these helicopters. Ukraine has achieved great accomplishments in modernizing the Mi-24, having developed several upgrade packages known as Mi-24PU, Mi-24PU1, and Mi-24PU2".


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Of the twelve Mi-35M/AH-2 Saber helicopters Brazil bought from Russia, only two or three are airworthy, while the remainder remain grounded due to malfunction and monopolistically high maintenance prices charged by Russian companies


Mr Slyusarenko also noted that those who continue collaboration with the Russian Federation in defiance of international sanctions are vulnerable to the risk of being sanctioned for this: "Potential business partners of Russia should not overlook the U.S. and EU sanctions imposed in response to Russian annexation of Crimea and military aggression in eastern Ukraine. Now many have reasonably been thinking over how to avoid the impact of these sanctions while cooperating with with Russian companies, because any kind of relations with Russia’s military business become highly toxic. Added to this consideration is the fact that Rostech and Russian Helicopters -- the companies responsible for providing maintenance to the helicopters in Brazil – have been under international sanctions imposed on Russia ".


“Ukraine – who has its own school of thought on helicopters, own production facilities for modified Mil-series helicopters derived from Soviet-era designs, as well as a powerful MRO infrastructure for helicopters and engines – has much in store to offer. Ukraine belongs to the global list of 20 countries that have the capacity to develop and manufacture helicopters and 10 countries capable of developing and producing aircraft gas turbine engines. In elaborating further, I would add that Ukraine is a viable candidate for a contract to refurbish the Mil Mi-17/Hip helicopters the US government had bought from Russia to supply the Afghan Air Force”.


It is worthwhile to note that Ukrinmash has been actively engaged in the helicopter domain. Thus, in January 2018, the Company, assisted by DP Aviacon, launched a Mi-8/Mi-17 helicopter MRO service center in the People's Republic of Bangladesh.


New Frontiers


Provision of MRO services to ex-Soviet helicopters is only one of the areas of potential interest. Ukraine has a great capacity to indigenously develop and manufacture fixed-wing aircraft, and it has been traditionally strong in MRO servicing of foreign-manufactured aircraft. After independence Ukraine gained control over a number of aircraft building and maintenance companies that hold all the required and necessary MRO Manuals for the aircraft that had been designed and developed by companies based in ex-Soviet republics, including Russia – MiG, Su, and Il series of airplanes, and Mi and Ka-series of helicopters.


MRO license for these types of aircraft had been obtained in full compliance with procedures required in the former USSR, and the licenses had been obtained along with a full set of copies and relevant manuals and blueprints. These licenses cannot be revoked, nor are there any legal grounds for additional licensing.


Beyond that Ukraine, having declared a policy of EU integration, has brought its aviation legislation in full compliance with the corresponding requirements and standards of the European Union, which is not and will not be the case in Russia, certainly in the immediate future and perhaps even in the long-term future. That being said, all the activities in the aviation sector are regulated by the Aviation Regulations of Ukraine, which incorporate all the standards required by the EU Aviation Safety Agency.


The above clearly indicates that for Ukraine, winning new MRO markets for ex-Soviet military equipment by way of dislodging Russia would hold great promise. This cannot be achieved without expanding cooperation and building up trust with Western partners – potential technology donors for Ukraine.


By leveraging advanced Western technologies and technical solutions, and combining them with proven, reliable and efficient ex-Soviet technologies, Ukraine is able to create new and highly effective armaments and military equipment.


Read more in Ukrainian Defense Review by Defense Express Media & Consulting Company

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