Uralvagonzavod ends Caterpillar, Bombardier programs over sanctions
YEKATERINBURG. Sept 4 (Interfax) - Uralvagonzavod (UVZ) has shut down its programs with Caterpillar and Bombardier owing to Western sanctions against Russia, CEO Oleg Sienko told Interfax.
"The sanctions are having an effect. There are difficulties with payments. We have closed several programs with partners: locomotive production with Caterpillar, and metro car production with Bombardier. There are certain problems at our enterprises abroad. Everything is more or less normal with Polish Pesa, because our joint venture is located in Russia," Sienko said at a briefing on Thursday.
Raising money has also become more difficult, he said. "We have civilian and defense manufacturing programs. We are working to stick to those plans. Of course, financing has become difficult, since our main banks and creditors, which provide us support not only for investment programs but also programs to support the balance sheet allocations of funds, are all on the sanctions lists, so there is difficulty with raising enough long, inexpensive money," he said.
Commenting on support from the state in the current situation, Sienko said: "Right now of course the state guarantee process is being examined, but that won't increase the resource that the banks have."
"Everyone's balances, covenants are feeling effects. Clearly, we are in crisis, margins are shrinking. It is fluctuating around the zero mark, since output, particularly for railroad equipment and vehicles, where demand is down. This is an objective fact, because rolling stock was not retired on schedule over a long time period, service lives were extended illegally. As a result, all plants are in a borderline state: what are they to do now?" he said.
Caterpillar diesel and electric locomotive manufacturer Electro-Motive Diesel Inc signed a protocol of intent with UVZ in December 2013 to study development and construction of mainline locomotives in Russia. Caterpillar planned to assemble SD70Ace diesel locomotives at UVZ production facilities. The first stage of the project called for test operation of a Caterpillar-delivered locomotive in Russia.
In addition, UVZ and Bombardier Transport & Services planned to set up a joint venture to manufacture metro cars in Moscow under an agreement signed at the Hannover Messe trade fair in April 2013. The agreement covered joint development, manufacture and maintenance of metro trains for systems in Russia and the CIS.
UVZ is an integrated company uniting over 20 manufacturing enterprises, research institutes and design bureaus. It has about 100 different models in its product lineup including military equipment, road construction machinery, and gondola, tanker and specialty rail cars. State property agency Rosimushchestvo owns 100% of shares.
