Mechanical engineering in Ukraine: industries and current trends

Mechanical engineering of Ukraine is traditionally considered the leading branch and locomotive of the economy. Here are concentrated large high-tech enterprises of auto and aircraft building, metallurgy, power engineering, military-industrial complex and other areas.

History of the industry

The history of machine building in Ukraine in the XIX century begins. The development of large coal deposits in the Donbass and the development of metallurgy required the use of industrial equipment, tools, and metal structures. For agriculture, more sophisticated tools and partial mechanization were also needed.

The first factory of agricultural machines was opened in 1840 in Mlievo. The largest enterprises were the Aleksandrovsky plant in Ekaterinoslav (present Dnepropetrovsk), the Hughes plant in Donetsk, the Dneprovsky plant in Kamensk (now Dneprodzerzhinsk), the locomotive building workshops in Kharkov and Lugansk. Before the revolution, Ukraine's share in the total industrial production of the Russian Empire was 25%.

The mechanical engineering of Ukraine acquired a new breath with the advent of Soviet power. The region invested heavily in the construction of large enterprises. In particular, the Kharkov Turbine Plant (1929), the Kharkov Tractor Plant (1930), the Dnipropetrovsk Electric Locomotive Plant (1934), the Kiev Armored Plant (1935), etc. After the war, high-tech branches of engineering: aircraft, rocket and space, Automotive, military, heavy engineering, instrument making and others.

general characteristics

The observed tendency of the development of machine building in Ukraine speaks of a radical breakdown and restructuring of the entire structure of the industry. Against the backdrop of breaking ties with Russia (once the main partner) and expanding export opportunities to Europe, large enterprises face both problems with the export of traditional products and certain prospects for diversifying production in the future.

To the question "Describe the industrial structure of mechanical engineering in Ukraine" there is an exact answer. The machine building complex of Ukraine includes more than 20 specialized industries, 58 sub-sectors. In fact, all existing types of mechanical engineering are represented in the country. According to official data, 11 267 enterprises are registered in the structure, 146 of which are large, 1 834 - medium, and 9 287 - small. The structure employs about 1.5 million workers.

Production volume analysis

According to the State Statistics Committee, the volume of production of the machine building complex in 2011-2013 against the background of the whole industry is as follows (see table):

According to statistics, even before the crisis in 2014, there was a decline in the production of the industry from 10 to 8.7%. If we compare the engineering industry of Ukraine and the world, then by the volume of products sold (in percent relative to the whole industry), the indicators vary greatly - this ratio is much smaller than in developed countries. This trend characterizes the chaotic development of the machine-building complex.

Analysis of exports and imports

In recent years, the exports of engineering products mainly fell to the CIS countries, mostly to the Russian Federation and Kazakhstan. Reduction of investment activity in the main sales markets led to a decrease in exports of the industry.

According to the State Statistics Committee of Ukraine, in 2011-2013 the republic exported to other countries more than half of the output. However, the previous increase in demand for the products of Ukrainian enterprises in the world market and the export orientation of the country's machine building complex in 2015 were replaced by stagnation of the industry.

Products of mechanical engineering in Ukraine imported by foreign partners (2014):

• Engines and pumps (total revenue - $ 3 billion).
• Electrical equipment ($ 2.7 billion).
• Railway transport ($ 0.8 billion).
• Road transport ($ 0.3 billion).
• Air transport ($ 0.2 billion).
• Instrument-making ($ 0.2 billion).
• Ships ($ 0.1 billion).

The centers of mechanical engineering in Ukraine

Traditionally, most of the industry's enterprises are located in the central and eastern part of the country. They gravitate toward the cities with a population of one million and the Donbas industrial region. The largest machine-building clusters are Kiev, Dnepropetrovsk and Kharkov.

The main mechanical engineering plants (Ukraine):

• Rocket and space and aircraft industry: Kiev (Antonov), Zaporozhye (Motor Sich), Dnepropetrovsk (Yuzhmash).
• Automotive industry: Zaporozhye (ZAZ, IVECO-Motor Sich), Kremenchug (KraZ), Cherkassy (Bogdan), Lutsk (LuAZ), Kiev (UkrAvto).
• Transport engineering: Kharkov (Malyshev KhZTM, Ordzhonikidze KhTPZ).
• Shipbuilding: Nikolaev ("Ocean", Plant named after the 61st Communard), Kherson (KhSD).
• Heavy engineering: Mariupol (Azovmash), Kramatorsk (Novokramatorsk Machine Building Plant), Donetsk (NPK Gornyi Mashiny), Sumy (Frunze Research and Production Association), Kharkov (Electrotyazhmash, Turboatom), Kiev (Bolshevik ), Dnepropetrovsk (Dneprotyazhmash).
• Railway transport: Dneprodzerzhinsk (Dneprovagonmash), Kremenchug (Krukovka Carriages), Lugansk (Luganskteplovoz).
• Electrical engineering and instrument making: Zaporozhye (Zaporozhtransformator), Odessa (Telekart-Pribor).
• Household appliances: Donetsk ("NORD").
• Metalworking: Kharkov (HARP).

Automotive industry

Automotive mechanical engineering of Ukraine has a rich tradition. Enterprises of the industry produce a full range of military and civilian products. It covers a wide range of organizations involved in the development, production and sales of vehicles, commercial and truck cars, buses, trailers, motorcycles, mopeds, special equipment, spare parts and components.

According to the concept of the development of the automotive industry, by 2015 it was planned to produce up to 500,000 cars, up to 45,000 trucks, 20,000 buses. In practice, the share of the industry in industrial production in recent years is only 0,8-0,6%, and in the creation of the national gross domestic product - less than 0,4-0,3%. Automobile mechanical engineering of Ukraine is characterized as underdeveloped, and its contribution to the national economy is insignificant. The structure employs less than 0.1% of all workers in the country.

In the segment of "cars" there is mainly a large-unit assembly of foreign brands of the middle class (C, B) with a low level of localization and added value added on the territory of Ukraine. In general, in the Ukrainian automobile industry employs about 100 enterprises, the largest of which:

• ZAZ CJSC.
• KrASZ LLC.
• CJSC "Eurocar".
• Corporation Bogdan.

Heavy engineering of Ukraine

This is one of the most developed sub-sectors of the country, characterized by a large number of enterprises, the presence of a "strong" engineering and technical school, the traditions of production. Products are readily bought abroad, both eastern and western partners. Manufacture: excavators, loaders, ladles, molds, converters, self-propelled tamping, drilling, tunneling, casting, road machines, elevators, aggregates for grinding, sorting, grinding, processing, mixing of soils, ores, stones, other minerals.

Aviation industry

The industry has more than 60 organizations, accounting for a quarter of all national engineering workers. The basis is made up of five large enterprises. The potential of the aviation industry makes it possible to increase the amount of development and production of aircraft equipment, in particular:

• Regional passenger and transport aircraft;
• Aircraft engines and units;
• On-board radio-electronic equipment, oriented to the use of satellite communication, navigation and surveillance systems;
• Helicopters and aircraft of small aircraft, in particular unmanned aircraft.

Prospective developments include:

• Aircraft "An" of various modifications.
• Manufacture of aircraft engines.
• Helicopters.

Other industries

Machine-tool construction ensures the development of all branches of engineering, their production culture and technological progress. Machine-tool plants (automatic lathes and semi-automatic machines, diamond-boring machines) are located in Kharkov, Lviv, Kiev, Berdichev, Odessa, Cherkassy, Dnepropetrovsk. The heavy machine-tool plant operates in Kramatorsk (automatic lines).

Instrument making plays an important role in accelerating scientific and technological progress. The leading enterprises for the creation of electronic equipment in the country are the production associations Impulse in Severodonetsk and Elektronmash in Kiev. A wide range of electrical and other devices are produced in Kiev, Kharkov, Ivano-Frankivsk, Lviv, Sumy, Cherkassy, Zhitomir, Lutsk.

Agricultural machinery of Ukraine provides farmers with the necessary equipment. Enterprises of this industry are located in the areas of consumption of finished products. Powerful tractors are produced by the Kharkov Tractor Plant. Kirovograd plant "Krasnaya Zvezda" produces seeders. Beet harvesting complexes are being built in Dnepropetrovsk and Ternopil, combine harvesters in Kherson (Slavutich) and Alexandria (Lan), corn-harvesting complexes in Kherson, tillage machines in Odessa, Kiev, Berdyansk, and Slavyansk. Mechanical engineering for livestock and fodder production is concentrated in Uman, Novograd-Volynsk, Nezhin, Kolomyya, Belaya Tserkov.

Shipbuilding in Ukraine is concentrated in the large sea (Black, Azov Sea) and river (Dnieper) ports. Naval vessels are built in Nikolaev and Kherson, river and sea vessels are built in Kiev. Ship repair works in Odessa, Mariupol.

Transport engineering produces locomotives and wagons. The centers of locomotive building are Lugansk, Kharkov (main diesel locomotives), Dnepropetrovsk; Car building - Stakhanov, Dneprodzerzhinsk, Kremenchug. Railway tanks are manufactured in Mariupol. In large transport cities, locomotive repair shops work.

Mechanical engineering in conditions of European integration

Specialists predicted what could be the machine building of Ukraine in integration with Europe. The signing of the Association Agreement between Ukraine and the European Union provides for the simplification of the movement of commodity flows between countries, starting from January 1, 2016. And since April 2014, the introduction of unilateral trade preferences for Ukraine by the EU has already contributed to an increase in exports of machinery products and a reduction in the negative balance of foreign trade with European countries in the production of machinery.

According to statistical data of the State Statistics Committee of Ukraine, in 2014 mechanical engineering accounted for 18.3% of exports and 23.8% of commodity imports, and for the first half of 2015, respectively, 11.7% and 20.8%. In 2015, the trend continued to decrease the turnover of the industry. At the same time, the share of the EU in the total structure of exports of machinery increased from 30.4 (2014) to 43.4% (first half of 2015).

Statistics and trends

The tendency of the development of machine building in Ukraine shows that not all industries have adapted to the new economic realities. On foreign markets, boilers, machinery, electrical units, nuclear reactors are in great demand. Their total share in the structure of sectoral exports to the EU countries is 40%. Among the main importers are (2014):

• Hungary (for $ 270.6 million).
• Germany ($ 239.8 million).
• Poland ($ 207.9).
• Czechia ($ 80 million).

Prospects

Ukraine, whose machinery is sufficiently developed, still needs high-tech equipment, machines and components of foreign production. There is an increase in imports of cars, tractors, grain harvesters, household appliances, heavy engineering products. The largest volumes of products are imported from:

• Germany (worth $ 577.9 million).
• Poland ($ 255.1 million).
• Italy ($ 160.9 million).
• Czechia ($ 116.8 million).
• France ($ 101.4 million).

Practice shows that the signing of the Association Agreement gives more advantages than risks. Further development directly depends on how quickly the machinery industry of Ukraine will switch from the topic of risks to the topic of opportunities.

Risks

A significant obstacle to expanding the volume and improving the structure of mutual trade in engineering is the availability of technical barriers to trade between Ukraine and foreign partners. Risks are associated with the possibility of a partial loss of individual machine-building industries that worked primarily on the Russian market and their technical regulations. Particularly vulnerable were high-tech industries: in the aviation sector, military-industrial complex, shipbuilding, space exploration.

Industrial enterprises, whose products have a higher added value, it is necessary to develop the ability to respond quickly to changes in the external environment, to create products that outrun the requirements of customers. This can be facilitated by changing the business model, moving to the process model of problem solving management. For most flexible companies, there is a model that combines the main processes: product lifecycle management, new product development, customer relationship management, sales and order management with support processes. In any case, the machine building industry in Ukraine is waiting for big changes. What they will be - time will tell.