Engineering of Ukraine: industries and current trends

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-17 18:37

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

Industry history

The history of mechanical engineering in Ukraine begins in the 19th century. The development of large coal deposits in the Donbass and the development of metallurgy required the use of industrial equipment, tools, and metal structures. Agriculture also needed better tools and partial mechanization.

The first factory of agricultural machinery was opened in 1840 in Mliev. Large enterprises were the Aleksandrovsky plant in Yekaterinoslav (now Dnepropetrovsk), the Hughes plant in Donetsk, the Dneprovsky plant in Kamensky (now Dneprodzerzhinsk), locomotive workshops in Kharkov and Lugansk. Before the revolution, the share of Ukraine in the total industrial production of the Russian Empire was 25%.

The mechanical engineering of Ukraine gained a new breath with the advent ofSoviet power. Large funds were invested in the region for the construction of large enterprises. In particular, the Kharkov Turbine Plant (1929), the Kharkov Tractor Plant (1930), the Dnepropetrovsk Electric Locomotive Plant (1934), the Kyiv Armored Plant (1935), and so on. automotive, military-industrial complex, heavy engineering, instrumentation and others.

General characteristics

The observed trend in the development of mechanical engineering in Ukraine speaks of a radical break and restructuring of the entire structure of the industry. Against the backdrop of the disruption of ties with Russia (once the main partner) and the expansion of export opportunities to Europe, large enterprises have both problems with the export of traditional products and certain prospects for diversifying production in the future.

There is an exact answer to the question "Describe the sectoral structure of machine building in Ukraine". 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 are medium, and 9,287 are small. The structure employs about 1.5 million workers.

Production volume analysis

According to the State Statistics Committee, the production volumes of the machine-building complex in 2011-2013 look likeas follows (see table):

	2011		2012		2013
	Million hryvnia	%	Million hryvnia	%	Million hryvnia	%
Engineering	133 469	10	143 533, 1	10, 2	117 301, 9	8, 7
Industry	1 331 887, 6		1 400 680, 2		1 354 130, 1

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

Analysis of exports and imports

In recent years, exports of goods from the machine-building industry have been predominantly to the CIS countries, mostly to the Russian Federation and Kazakhstan. The reduction in investment activity in the main sales markets led to a decrease in exports of the industry's products.

	2011	2012	2013	2014
	Export, billion $
Engineering	11, 9	13, 3	10, 6	7, 4
General	88, 1	81, 2	76, 1	53, 9
	Import, billion $
Engineering	8, 2	10, 9	7
General	88, 8	90, 2	84, 6

According to the State Statistics Committee of Ukraine, in 2011-2013 the republic exported more than half of its products to other countries. 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 gave way to the stagnation of the industry.

Ukrainian engineering products imported by foreign partners (2014):

• Motors 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).
• Instrumentation ($0.2 billion).
• Ships ($0.1 billion).

Mechanical engineering centers inUkraine

Traditionally, most of the industry's enterprises are located in the central and eastern parts of the country. They gravitate towards million-plus cities and the Donbass industrial region. The largest machine-building clusters are Kyiv, Dnepropetrovsk and Kharkov.

Main engineering plants (Ukraine):

• Rocket, space and aircraft industry: Kyiv (Antonov), Zaporozhye (Motor Sich), Dnepropetrovsk (Yuzhmash).
• Automotive industry: Zaporozhye (ZAZ, IVECO-Motor Sich), Kremenchug (KrAZ), Cherkassy (Bogdan), Lutsk (LuAZ), Kyiv (UkrAvto).
• Transport engineering: Kharkiv (KhZTM named after Malyshev, KhTZ named after Ordzhonikidze).
• Shipbuilding: Nikolaev (Ocean, Zavod im. 61st Kommunar), Kherson (KhSZ).
• Heavy engineering: Mariupol (Azovmash), Kramatorsk (Novokramatorsky Mashinostroitelny Zavod), Donetsk (NPK Mining Machines), Sumy (NPO Frunze), Kharkiv (Electrotyazhmash, Turboatom), Kyiv (Bolshevik), Dnepropetrovsk (Dneprotyazhmash).
• Railway transport: Dneprodzerzhinsk (Dneprovagonmash), Kremenchug (Kryukov Carriages), Luhansk (Luganskteplovoz).
• Electrical engineering and instrumentation: Zaporozhye (Zaporozhtransformator), Odessa (Telekart-Pribor).
• Household appliances: Donetsk ("NORD").
• Metalworking: Kharkiv (HARP).

Automotive

The automobile engineering industry of Ukraine has rich traditions. Industry companies producea full range of military and civilian products. It covers a wide range of organizations involved in the development, production and sales of motor vehicles, light commercial vehicles and trucks, buses, trailers, motorcycles, mopeds, special equipment, spare parts and components.

According to the concept of 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 industry's share 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%. Automotive engineering in 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 passenger car segment, there is mainly a SKD assembly of foreign brands of the middle class (C, B) with a low level of localization and added value created on the territory of Ukraine. In general, about 100 enterprises operate in the Ukrainian automotive industry, the largest of which are:

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

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, and production traditions. Products are willingly bought abroad, both eastern and western partners. Produce: excavators, loaders, buckets, molds, converters,self-propelled tamping, drilling, tunneling, casting, road machines, elevators, aggregates for grinding, sorting, grinding, processing, mixing soil, ores, stone, other minerals.

Aviation industry

The industry has more than 60 organizations, which account for a quarter of the workers of the entire national engineering industry. The basis is made by five large enterprises. The potential of the aviation industry allows to increase the volume of development and production of aircraft, in particular:

• regional passenger and transport aircraft;
• aircraft engines and components;
• avionics equipment focused on the use of satellite communication, navigation and surveillance systems;
• helicopters and small aircraft, in particular unmanned aircraft.

Promising developments include:

• An aircraft of various modifications.
• Production of aircraft engines.
• Helicopters.

Other industries

Machine tool industry ensures the development of all branches of engineering, their production culture and technical progress. Machine tool factories (automatic and semi-automatic lathes, diamond boring machines) are located in Kharkov, Lvov, Kyiv, Berdichev, Odessa, Cherkassy, Dnepropetrovsk. A heavy machine tool plant operates in Kramatorsk (automatic lines).

Instrumentationplays an important role in accelerating scientific and technological progress. The leading enterprises in the creation of electronic equipment in the country are the production associations "Impulse" in Severodonetsk and "Electronmash" in Kyiv. A wide range of electrical and other instruments is produced in Kyiv, Kharkov, Ivano-Frankivsk, Lvov, Sumy, Cherkassy, Zhytomyr, Lutsk.

Agricultural engineering of Ukraine provides farmers with the necessary equipment. The enterprises of this branch are located in areas of consumption of finished goods. Powerful tractors are produced by the Kharkov Tractor Plant. The Kirovograd plant "Krasnaya Zvezda" produces seeders. Beet harvesting complexes are being built in Dnepropetrovsk and Ternopil, grain harvesters - in Kherson ("Slavutich") and Alexandria ("Lan"), corn harvesters - in Kherson, tillage machines - in Odessa, Kyiv, Berdyansk, Slavyansk. Mechanical engineering for animal husbandry and fodder production is concentrated in Uman, Novograd-Volynsky, Nizhyn, Kolomyia, Bila Tserkva.

Shipbuilding in Ukraine is concentrated in large sea (Black, Sea of Azov) and river (R. Dnieper) ports. Sea vessels are built in Nikolaev and Kherson, river and sea vessels - in Kyiv. Shipyards operate in Odessa, Mariupol.

Transport engineering manufactures locomotives and wagons. The locomotive building centers are Lugansk, Kharkov (main diesel locomotives), Dnepropetrovsk; car building - Stakhanov, Dneprodzerzhinsk, Kremenchug. Railway tanks are made in Mariupol. Locomotive repair plants operate in large transport cities.

Engineering in the context of European integration

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

%. In 2015, the downward trend in the trade turnover of the industry continued. At the same time, in the overall structure of exports of engineering products, the share in the EU increased from 30.4% (2014) to 43.4% (the first half of 2015).

Statistics and trends

The trend in the development of mechanical engineering in Ukraine shows that not all industries have adapted to the new economic realities. In foreign markets, boilers, machines, electrical units, and nuclear reactors are in greatest demand. Their total share in the structure of sectoral exports to the EU countries is 40%. Among the main importers are (2014):

• Hungary (worth $270.6 million).
• Germany ($239.8 million).
• Poland ($207.9).
• Czech Republic ($80 million).

Prospects

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

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

Practice shows that the signing of the Association Agreement provides more benefits than risks. Further development directly depends on how quickly the Ukrainian engineering industry switches 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 presence of technical barriers in trade between Ukraine and foreign partners. The risks are associated with the possibility of partial loss of certain machine-building industries that worked mainly for the Russian market and according to their technical regulations. High-tech industries turned out to be especially vulnerable: in the aviation sector, the military-industrial complex, shipbuilding, and space exploration.

Industrial enterprises, whose products have a higher added value, need to develop the ability to quickly respond to changes in the external environment, to create products that are ahead of customer requirements. This can be facilitated by a change in businessmodels, the transition to a process model of problem solving management. Most agile companies have a model that combines core processes: product lifecycle management, new product development, customer relationship management, sales and order management, with supporting processes. In any case, Ukrainian engineering industry is waiting for big changes. Time will tell what they will be.