Machine building engineering: situation and prospects

July 30. Trans Express Kazakhstan magazine

By Lubov Govorukhina, Maria Yurieva

Machine building engineering: situation and prospectsMachine building is most important for the economy of any industrialized nation, and there is a national programme for its development in 2010-2014 in Kazakhstan.

According to Ardak Tashenov, Head of strategic analysis and analytical monitoring control of EDB, the prospects for the development of machine building in Kazakhstan extended within the framework of the Common Economic Space due to more favorable conditions for the creation of new industries and for the opening of sales markets sufficient for economically viable engineering.

In December 2012 the Eurasian Development Bank in team with the Institute of Economic Forecasting of the RussianAcademy of Sciences has issued a review of industry «Development of mechanical engineering in the states — participants of the EDB.»

Ardak Tashenov outlined conclusions about the engineering industry of our country in the article “Machine Building of Kazakhstan: Challenges and Growth Prospects” (KAZAKHSTAN International Business Magazine №1, 2013). According to the author, in 2010 the value of the gross added value of transport vehicles and equipment exceeded the 2006 figure by 117%. In 2011, Kazakhstan’s machine engineering continued growth in production volumes.

The meeting of Kazakhstan machine engineering Union last May announced an early implementation of the sectoral program for the development of mechanical engineering.

Meyram Pshembaev- chairman of Kazakhstan machine Engineering Union informed that in 12 years the production volume of the enlarged group of machine engineering and metal working went up from 45.8 bn to 657 bn tenge. In the last year alone the production has gone 157 billion up. And this is not the limit. According to our forecasts, this year’s output will reach 820-830 billion tenge, and in 2014 will exceed 1 trillion. tenge, «- he said.

Railway engineering, according to the Programme for the Development of machine engineering is of topmost priority, characterized by high attraction and feasibility. It takes up a small share in the total volume of the world machinery production — about 1%. Despite this, the growth pace of trade in railway machinery and equipment accounts for an average of 23% a year, which is one of the highest indices.

The main factors contributing to the increased demand for the railway engineering products are the increase in cargo turnover and high wear of the railway equipment park.

Given that the wear of the rolling stock in JSC «NC» Kazakhstan Temir Joly «is still high enough, the volume of railway products purchases will remain significant a long time yet.

The company CEO A. Mamin said that, thanks to government support, Kazakhstan has in fact created a new branch of railway engineering in a short term. In partnership with world leaders in railway engineering, such as General Electric, Alstom, Talgo, Siemens, nine large plants have been built to produce high-tech products with high export potential.

These are a large car casting production «Vostokmashzavod», the production of shunting locomotives in Shu, the launched rail and beam production in Aktobe, opening in the capital of electric loco assembly plant, as well as a unique center of transport technology with a dual education system, and other productions.

In December contracts were signed on establishing a joint production of GEVO diesel engines and spare parts between the General Electric, Transmashdiezel and Remlokomotiv the total capacity of 300 units per year. Under the project the first diesel engine is to come off the line in December 2014.

Besides, under the national industrialization Map for 2010-2014, 56 innovative projects are slated in the machine engineering industry out of over 780 listed in it, and about a third of them — in railway engineering. These projects are in the short term.

To say that everything is perfectly smooth in the area in question would be wrong. The Eurasian Development Bank survey points to the predominance of assembly lines and to systemic problems the industry. The most acute of them is lack of facilities for the production of component base, adequate lines collected in the country. For example, the sole national operator of the railway industry – Joint Stock Company ”Kazakhstan Temir Zholy” alone requires spare parts for 2800 points, only 500 of which are covered by local producers. According to Ardak Tashenov, there are other problems that might be aggravated after the accession to the WTO.

The EDB sees real possibilities of machine engineering development in cooperation between the CU and CIS countries. This will support increase in production and export of products, attraction of investments and introduction of new technologies.

The proof to it is the production of railway vehicles together with Russian enterprises, such as for example electro wagon building plant Elektrovoz Kurastyru Zauyty- a JV of JSC «NC» KTZ «, Alstom Holdings  French corporation and Russian Transmashholding JSC. The annual capacity of the plant is 100 sections of electric locomotives. And although they are primarily intended for the growing needs of Kazakhstan’s railroads, it is expected that up to 40% of the plant produce will be exported to the CIS countries.

Regulatory framework within the CU has yet to be harmonized to avoid frictions.

Amendments are to be entered on the Agreement on the rules for determining the country of origin of goods in CIS, and on the decision of the CIS Customs Union Commission in determining the dynamics of the ad valorem percentage, which will ensure the competitiveness of the domestic transport engineering. The JSC «NC» KTZ» has submitted proposals on this issue to the Government.

Besides there are no conformity assessment bodies for railway vehicles. Creation of a test basis, meeting the needs of rapidly growing industry takes a significant investment and professionals.

The industry is short of professionals. Most of them are in retirement or pre-retirement age, and they mostly have experience in the already outdated technology.

It is encouraging that the world’s leading manufacturers like General Electric, Talgo, Simens and Alstom help in training them. Kazakhstan Temir Zholy is tackling it too, opening the training and OJT facilities for it.