The new engine by JSC “Zvezda” is by 70% localized

In 2011 a number of sub-programs under the Federal Special Purpose Program “National Technological Base” was launched, one of which concerned the diesel engine manufacturing. JSC “Zvezda” is one of the key enterprises in the implementation of the subprogram. Our interviewee today is Pavel Plavnik, Chairman of the Board of Directors.

- Mr. Plavnik, what task does your company perform within the Federal Program?

- The company was requested to develop an engine that would become a basic one in a new family within power range from 400 to 1,700 kW. It would have to meet the needs of a variety of civil industries in addition to the Ministry of Defence and other power-wielding agencies.
The work was organized by the specialists of JSC “Zvezda” in conjunction with one of the leading foreign engineering companies having the highest world rating in this field. Moreover, teachers and students of Saint Petersburg State Polytechnic University have also been involved in the work. This was also very important – our goal was to form the backbone of professionals that would ensure the development of a new family of engines in the next 15–20 years.
As a result, the ship’s diesel engine of the M150 family (code name “Pulsar”) was presented at the IMDS-2015. It conforms to all of the main requirements. Now we are carrying out the additional tests relating to follow-on development of adjustment modes, optimization of fuel consumption and further improvement of environmental performance indicators.

- It was announced at the International Maritime Defenсe Show that a number of technical innovations that are designed for the future were implemented in M150...

- The engine is competitive on a global scale. Furthermore, it has the potential for development both with respect to power and the use of engine fuel. Proceeding from the baseline design it is easy to produce it in the generator version for maritime and rail applications, or for the mining equipment. At the same time, due to the universality of the basic units, its price becomes very attractive for the market. In general, this new product is a major impetus for the development of the whole enterprise.

- Today the issue of localization of components and assemblies is very important...

- The M150 engine was created in a very short period of time with a tight deadline. The companies with extensive experience in the development of parts and components and developed manufacturing facilities were involved to create the first basic models, in order to take the components right off the shelf, so to say. One of the requirements to the suppliers was the ability to quickly adapt to the requirements of the new engine.
In the next phase starting from 2013 we began the maximum localization to make it worthwhile in the long term. We have developed several levels of localization taking into account the real possibilities of the existing production facilities in Russia and the countries of the Eurasian Economic Community, as well as the BRICS states.

- That is, Zvezda has been actively engaged in import substitution even before the imposition of economic sanctions?

- We initially considered this localization option. We calculated what level would be effective for us – it is 70%. It is optimal with regard to the price and quality, as it gives an opportunity to form the maximum added value in Russia. Now the level of localization is about 40%, but in the next two years we will reach 70% – it is an achievable figure. In addition, we have developed a plan for the full import substitution in case of a negative scenario.

- When do you plan to commercialize the new engine?

- We are ready to produce the first engines on the existing territory of the plant and at present technological facilities a year after the beginning of financing. This term includes ordering the components and the delivery, assembly and testing thereof. As for the serial production, there is another approach – we need to prepare additional technological facilities, organize additional assembly lines, set the specialized benches and purchase equipment for handling key parts and components.
It’s nice that designers are already waiting for our engine. For example, Alexander Shlyakhtenko, Head of Almaz Central Marine Design Bureau personally attended the first public launch of this engine, he listened carefully to the comments from the experts and assessed its technical features. Such attention is very reassuring.

- Speaking of supplies from the Ministry of Defence of the Russian Federation, what needs to be done?

- There are two main ways of using our diesel engines for the Navy. The first is supplying the engines for main propulsion plants. We are talking about the projects with not very large displacement, where our M150 engines with power up to 1,400 kW are the optimal solution, which exceeds both the previous engine models of Zvezda and similar engines of foreign firms.
The second sector for the Navy is generators. Our engines can be used for emergency powering the ships, and for powering the auxiliary power units for their own needs. In particular, powering the electric drives is a very interesting area for individual projects today.

In addition, we see the prospects in using a new generation of diesel engines as diesel generators in various submarine units of the Navy.
Naturally, in addition to the Navy there is a number of other branches of troops, where the need for both emergency and main power supply is very relevant: from the Strategic Missile Forces and the Air-Space Force to providing electricity to military medical institutions in the field.

- Have the sanctions affected the enterprise?

- Prior to the imposition of sanctions we had a special atmosphere of confidence between Russian and foreign engineers and designers in arranging the transfer of the best technologies, and now the situation has worsened. Some managers of the Western firms have a real fear of being pressured by their governments because of the interaction with the Russian partners.
In addition issues have emerged due to the sanctions regarding delivery of the equipment, which did not exist before. Again, the issues concern both sides – our partners are losing profitable customers.
There is some positive outcome too. After all, sometimes the inadequate and not well-informed decisions have been made that did not go to the benefit of the national economy and science, the development of human resources and engineering culture in Russia. Today, it is clearly understood that it is necessary to rely on our own capabilities and resources, including intellectual ones.

- What economic problems are of particular concern today?

- First of all, tariffs spikes. Within a month, they can surge by 40%! This cannot be explained economically. We may only hope that the decision to disband the Federal Tariff Service and transfer its powers to the jurisdiction of the Federal Antimonopoly Service will be effective. But the result has to be very fast and efficient – the situation needs to be improved dramatically.

- The need for technical re-equipment is the pressing problem of the domestic industry. What do you intend to do at the plant in the coming years?

- Of course, I would like to have more opportunities for the purchase of equipment. I hope the plans voiced by the president of Russia to partially incorporate the re-equipment costs into the prime cost will be implemented, and some order will return. I think it would be a serious step to increase the pace of modernization.
We in turn are committed to direct the entire profit to modernization. Sometimes we even manage to spend 200% of the profits on it due to the interaction with the public authorities –connecting to core programs of co-financing. This is when half of the ruble is given by the city government and another half – by the federal center for every ruble we invested in modernization of production. It should be noted that St. Petersburg has a positive experience in this regard, and we do feel real support.
In particular, we plan to obtain qualitatively upgraded facilities for the production of gearboxes in the coming years. We hope that it will launch a program to re-equipment of foundry production, the demand for which in the North-West region is enormous both in shipbuilding and other industries. In addition, we will upgrade one of the shops of the area of 12 thousand square meters, where new production plus bench equipment will be formed providing increased capacity for the production of a complete line of products for the shipbuilding industry.

Interview by Oleg Pochinyuk