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Sergey Slyusarenko: in "Ukrinmash" change can not be avoided


Traditionally, the business model of Ukrainian special exporter was selling goods from the warehouses of the Ministry of Defense. But now the situation has changed: it is necessary either to find the right product on the global market, or to adjust its production to the group "Ukroboronprom" facilities. And to make this possible, there should be a profound reform within the vendor's arms, getting rid of the classic military hierarchy. For information on how to implement such radical changes in the special exporter and thus increase employee motivation, as well as to lead the direction of high-precision instrumentation, in an interview with the business portal UAprom the director GHVIF "Ukrinmash" Sergei Slyusarenko.





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10:00 07/07/2016
- Ukraine has 6 arms exporters, including "Ukrinmash". Tell us, what is your specialty and what is different from other companies?

- "Ukrinmash" was one of the first special exporters of independent Ukraine. And by the way, this year the company is celebrating its 25th anniversary. Our core competence - and a special high-precision instrument. If we talk about the geographical aspect, our main market - the developing countries.

For example, such a complex, uneven and heterogeneous region as Africa. By working with the countries of the continent, we have to, among other things, to monitor how the internal political processes develop, with what result completed elections, which party comes to power, whether countries hit possible sanctions lists, etc.

I recently held elections in Chad. We are closely following the events taking place there, because it is one of the key "Ukrinmash" markets, where a number of contracts are at various stages of implementation.You can also select a specific Cuban market, where, in spite of the resumption of cooperation with the United States, yet remains sufficiently Soviet weapons and military equipment. They must be maintained in working order.

- You are more than six months heading the company. How to change its strategy after the arrival of your team?

- We have become more widely to evaluate the possibility of the markets in which we operate. First of all, we pay more attention to the analytical component - study customers' needs and form proposals that they will be able to "close". Previously, special exporter selling of Defense Ministry reserves, now need to find new approaches: either buy the products in the global markets, or look for partners that enterprises "Ukroboronprom" ready to renovate, modernize and build co-production, and then the resulting product to sell in foreign markets. We are working on a second model, as it allows the company "Ukroboronprom" additional orders.

- That is, if earlier it was the export business, is now likely for trader?

- I would call it integration-export model. Today, in order to obtain at the output a competitive product that can be sold must first be possible to combine several manufacturers. The Concern "Ukroboronprom" includes more than 100 enterprises, we just need to take advantage of them and offer a unique product of the external market.

Today intensively developing cooperation with Turkey in the framework of which is discussed together with the "Antonov" to develop patrol aircraft and simulators for the line AN. We work with the Middle East, in particular, we plan joint production of anti-tank complex, the Javelin analog. Of the European countries, Poland can be identified. With the Polish company plan to cooperate in the modernization of armored vehicles on the basis of the enterprise "Ukroboronprom".

- And what difficulties and problems you faced at the beginning of the work?

- I did not expect such a large number of papers. For me, as a man of business, a lot of things before that existed solely in electronic form. We have already begun to move towards the introduction of electronic document management, but understand that completely replace the paper we have not succeed. First of all, the question of regime.

In addition, it is difficult to implement electronic document in a special exporter, if it is not done in the other (although this problem is already solved in the framework of the Group). In turn, "Ukrinmash" ready to develop and launch a pilot project. There is another problem - the bureaucracy, which is in a reasonable scale needed for such a structure as "Ukrinmash", but in our case has become excessive.

- Around defense companies arise periodically corruption scandals. Not so long ago it was reported that "Ukrinmash" suspected of abuses under the contract for sale in UAE cartridges. How can you comment on it?

- This question does not apply to the current leadership "Ukrinmash". I took over the company by an open tender in November 2015, and in the materials of the case, as far as I know, we are talking about earlier contracts. I believe that the assessment of the actions precursors should give only the competent authorities. We provide them with the necessary information for the investigation of the case and look forward to a fair result. In addition, "Ukrinmash" pays sufficient attention to the reduction of corruption risks. The company, along with other members of the "Ukroboronprom" Concern implements adopted an anti-corruption program.

- Considering your plans radically to reform the company, many of the old staff, certainly embraced the arrival of a new team in the "hostility"?

- Of course, the question of relations between the new and the old team is very difficult, especially when you consider the fact that we immediately made it clear - the changes can not be avoided. As long as people do not understand exactly what will change, they experience discomfort. Therefore, I need to understand the expectations of employees and establish contact with them and to bring our vision of a future restructuring without loss of meaning.

- And what are the results? Will dramatically "shake up" the staff?

- As practice shows, the Ukrainian state company grows "superfluous" people. Periodically, this ballast must be reset, leaving only those who are able to effectively perform the tasks. Many people are used to working in an environment where warehouses were filled with surplus weapons and military equipment, and did not need to make an effort. It's part of the old system, which we want to leave.

In the nearest plans of the 165 employees leave 130. Previously we conducted several stages of interviews. Attracted to the process of the external experts who participated in the selection of candidates to the National Police. It was an instrument to achieve maximum objectivity, because people outside the system does not pay attention to the family, to who whose brother, brother, friend.

In addition, we plan to gradually update the part of the staff. While this process is an evolutionary way.For half a year in the "Ukrinmash" New people came, some resigned himself. For new employees, we have a requirement: knowledge of English. We also try to take a team of people who have been trained in the MBA program.

In any case, the remaining employees, we plan to raise salaries to the real market level, but it will be a clear monitoring of the results of their work. The contracts will also be awarded.

- Are not you afraid of nepotism? Does the pressure on you to leave certain people?

- I do not exclude that will begin when the actual reduction of pressure attempts will be made. However, we clearly state that the names do not have to have meaning.

- There will be clipped age employees, done on youth rate?

- The age factor here has its own specifics. The basis of the contract department - it is usually people who have had related to military service. They know, or technique, or the market, or were military attaches at one time. In fact, this is the age when the military retirement or in stock. We have a very young people are not so much. Where possible, we involve young people.

For example, the information-analytical department was created, before it did not exist in pure form.Business on the arms trade is still built on personal relations man-man, and systematic work on the study of markets and customer needs, systematic access and search contacts have been conducted. It turned out to find an intermediary - held the contract, did not work - did not take place.

- Let's go back to the topic of the upcoming restructuring. It will be some cosmetic reforms or is it possible to expect a revolutionary change?

- We plan to change the structure of the major departments that are involved in sales, based on business needs. Now they are called in the military: departments, divisions, etc. In fact, this is a classic military hierarchical structure, where all the problems down the vertical well. I think this system is outdated, it is necessary to change and adapt to the realities and demands of the market.

Part of the staff should work out of the company by studying market needs and offering solutions. Their mission - to give customers and employees within the company should already fulfill these requests and contracts. The Corporate Business terminology, this is a classic separation of front-office and back-office.The first will be the people who are competent in the negotiation process, the search for customers, while the second - the experts, those who possess the technical information complete and working with documents.

- Will the split geographically? According to the type of weapons?

- Front office requires geographical separation of the markets. A technical back-office experts are divided on the board. No one can navigate around the list item. The model is as follows: the seller, who knows the market of a particular country, to strengthen their arguments on the negotiations may involve a technician. As a result, they offer a contract that further fulfill completely different people, enter into ancillary contracts, etc. In this reform has several purposes. First of all we want to minimize the vertical of power, to the sellers of the front office had more freedom and opportunity to implement their initiatives.

The second goal - reporting. We want to introduce project management, which allows at any time to get a slice of information about who is doing what, to track the dynamics of how to develop projects. But there are a number of limitations, for example, work with secret documents, so we can all put in the database.

The third - to create a competitive environment to motivate employees to bring as many contracts.Previously, "Ukrinmash" all contracts involved exclusively CEO and his deputies. But the market has changed now, you need not only to sell but also to manufacture, and actively seek to tender platforms orders.

In addition, the reform will help to clearly define the scope of responsibility of employees. Now I have the feeling that everyone is doing it. As a result, there is no personal responsibility when a specific person is responsible for a certain piece of work.

- I think you hold such a reform will not succeed without proper employee motivation ...

- The basis of motivation to be laid concrete targets and indicators, that will be put to each employee.For sellers - this is the sales plans for the employees of the Department of the contract - work smoothly.Depending on the results will be exhibited assessment team each contract, based on which the decision will be made on bonuses. Now people think that the premium - that is what they are supposed to in law, but they need to earn extra effort.

- What are the long-term goals "Ukroboronprom" confronts "Ukrinmash"?

- One of the complex issues in the framework of "Ukroboronprom" strategy is the transition to the so-called cluster system. That is, when a special exporter, which has expertise in a certain area, working within the cluster, which brings together companies specializing in a specific product group.

"Ukrinmash" can lead the direction of special and high-precision instrumentation. These include optics, radar and electronic warfare systems. In our area of responsibility includes the communication. Now there is a problem of the need to close the APU due to localization of communications, who will choose for their military tasks. We favor this case, as a marketing or a logistic function. In any case, our priority - to develop its own military-industrial base.

- "Ukrinmash" traditionally engaged in the import of weapons and military equipment. What is the state of affairs in this sphere?

- Yes, we continue to engage in import for our military needs. Since 2014 the volume of foreign supplies have fallen significantly due to the termination of cooperation with the Russian Federation. Now we do not buy anything in Russia, implementing the policy of import substitution. "Ukroboronprom" began to develop independently the main headings on which there have been problems, gradually reducing the share of imports. At the same time, "Ukrinmash" actively increasing cooperation with manufacturers from Europe and North America.

Before my arrival in "Ukrinmash" has already entered into a number of import contracts for the supply of arms and military equipment for the Ukrainian army, which we continue to perform, even though very often it is not an easy task with the highest risk. Once in the country become more active hostilities, as was the case in Ukraine, it is implicitly or explicitly fall under the sanctions. All refused to sell arms to states covered by the war.

- What are your relations with the Ministry of Defence? I have to start from scratch, given the trail of scandals, inherited from the previous management?

- It was not possible to start from scratch. Flex old problem of supply left, and the relationship with the Ministry of Defence, shall we say, is not simple. Complicating the situation is that the military is very comfortable to be in the position of "I'm the customer who pays the money," and if something is not brought, then blame special exporter. In their work, our picture of the world - only to transport the product from the warehouse abroad to Ukraine.

But the system does not work, there are a lot of permits. Often, only the registration of all necessary licenses and securities takes three months, and she delivery if the product is ready, and it does not need to produce - a week or two. Moreover, if earlier often traded catabatic products, now often imported products, which are beginning to be made only after the conclusion of the contract and prepaid income.And it is 6-18 months.

- What is the relationship with the State Service for Export Control?

- The situation is complicated. The system is very-bureaucratic. I would have said the system of currency control, which is very clearly follows, where we paid the money and when we deliver the goods. It is very difficult because of this, to carry out the contracts that have long production cycle. Because exchange controls provides that after the payment of the advance, we have to put the country within 90 days of any product or return the money. And if some goods are manufactured from 6 to 10 months, then we immediately fall under the influence of foreign exchange controls, should receive an extension of authorization.

- Why did you go into "Ukrinmash"?

- It was with a view to try myself in a new role, set out to create a system and a controlled competitive company not only in the domestic market with other special exporters, but also at the global, too. We compete with global companies, and not only Ukrainian.

When at some show, and recently we were in Malaysia, see, for example, is represented by the Turkish defense industry, you realize that you need to invest a lot of energy to meet the demands of the global market. It is necessary to change, to adapt to new challenges.

- Your lifestyle somehow changed after the steel head "Ukrinmash"?

- The first few months of my team went home until 9-10 pm. Usually, after a hard day of work, meetings, communication, when the odds most of the staff, the time from 6 to 9 hours it took to sign all kinds of documents and the fact that within the team to take stock, to define the tasks for the next day. 4-5 months later the process has entered into a normal course, and now we go for an hour or two earlier than it did in the early months. Nevertheless, I still very often one of the last signature in the log of visits and rejoice when it happens earlier than 8 pm.

- In the restructuring is the beginning, but it has no end. When "Ukrinmash" expected completion of the active phase of restructuring?

- Perhaps, in this joke has some truth. If you get to the end of the year to change the structure of the contract departments, prescribe for their processes and bring it under the system of motivation, it will be very good. This optimistic period. We need a separate group of people, which will be gradually transformed into a special exporter company, which is located on the edge of the cluster, can consolidate manufacturers, to attract investors and sell these products in foreign markets. This is a very difficult task. It is necessary to form a team that will be mastered by it.
 
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Stugna-P في القوات الاوكرانية المحموله

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Complex “Stugna-P” developed by the State Kyiv design Bureau “Luch” (GP Gosmkb “Ray”) and uses anti-tank guided missile R-2S caliber of 130 mm.
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Stugna-P مطورة من R-2S missile
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