Engineering industry of Ukraine: industries and current trends

The engineering industry of Ukraine is traditionally considered the leading industry and engine of the economy. Here are concentrated large high-tech enterprises in the automotive and aircraft industries, 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. For agriculture, more advanced tools and partial mechanization were also needed.

The first agricultural machinery factory was opened in 1840 in Mliev. Large enterprises were the Aleksandrovsky plant in Yekaterinoslav (present-day Dnepropetrovsk), the Hughes plant in Donetsk, the Dneprovsky plant in Kamensky (now Dneprodzerzhinsk), and steam 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 of Soviet 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 Kiev Armored Plant (1935), etc. After the war, high-tech engineering industries were developed: aviation, rocket and space, automotive, defense industry, heavy engineering, instrumentation and others.

general characteristics

The observed trend in the development of engineering in Ukraine indicates a radical breakdown and restructuring of the entire structure of the industry. Against the background of disruption in relations 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 the diversification of production in the future.

There is an exact answer to the question “Describe the sectoral structure of mechanical engineering in Ukraine”. The machine-building complex of Ukraine includes more than 20 specialized industries, 58 sub-sectors. In fact, all existing types of 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-sized, and 9,287 are small. The structure employs about 1.5 million employees.

Production analysis

According to the information of the State Statistics Committee, the volumes of production of the engineering complex in 2011-2013 against the backdrop of the entire industry are as follows (see table):

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

Export and Import Analysis

In recent years, exports of engineering products mainly fell 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 the export of industry products.

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 engineering complex in 2015 were replaced by stagnation of the industry.

Engineering products of Ukraine, which are 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).
• Instrumentation ($ 0.2 billion).
• Ships ($ 0.1 billion).

Engineering centers in Ukraine

Traditionally, most enterprises in the industry are located in the central and eastern parts of the country. They gravitate to cities with a million population and the Donbass industrial region. The largest engineering clusters are Kiev, Dnepropetrovsk and Kharkov.

The main engineering factories (Ukraine):

• Rocket and space and aircraft industry: Kiev ("Antonov"), Zaporozhye ("Motor Sich"), Dnepropetrovsk ("Yuzhmash").
• Automotive industry: Zaporozhye (ZAZ, IVECO-Motor Sich), Kremenchug (KRAZ), Cherkasy (Bogdan), Lutsk (LuAZ), Kiev (UkrAvto).
• Transport engineering: Kharkov (KhTZM named after Malyshev, KhTZ named after Ordzhonikidze).
• Shipbuilding: Nikolaev ("Ocean", Plant named after the 61st Communard), Kherson (KhSZ).
• Heavy engineering: Mariupol (Azovmash), Kramatorsk (Novokramatorsky engineering plant), Donetsk (NPK Mining machines), Sumy (NPO Frunze), Kharkov (Elektrotyazhmash, Turboatom), Kiev (Bolshevik) ), Dnepropetrovsk (Dneprotyazhmash).
• Railway transport: Dneprodzerzhinsk (Dneprovagonmash), Kremenchug (Kryukovsky Carriage Works), Lugansk (Luganskteplovoz).
• Electrical Engineering and Instrument-Making: Zaporozhye (Zaporizhtransformator), Odessa (Telekart-Pribor).
• Household appliances: Donetsk ("NORD").
• Metalworking: Kharkov (HARP).

Automotive industry

The automotive industry of Ukraine has rich traditions. Industry enterprises produce a full range of military and civilian products. It covers a wide range of organizations involved in the development, production and sales of motor vehicles, passenger cars 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 has been only 0.8-0.6%, and less than 0.4-0.3% in the creation of the national gross domestic product. 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 employees in the country.

In the “passenger cars” segment, there is mainly a large-assembly assembly of foreign brands of the middle class (C, B) with a low level of localization and added value created in Ukraine. In total, 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 readily bought abroad by both eastern and western partners. They produce: excavators, loaders, buckets, molds, converters, self-propelled ramming, drilling, tunneling, foundry, road machines, elevators, aggregates for grinding, sorting, grinding, processing, mixing soil, ore, stone, and other mineral substances.

Aviation industry

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

• regional passenger and transport aircraft;
• aircraft engines and units;
• airborne electronic equipment focused on the use of satellite communications, navigation and surveillance systems;
• helicopters and aircraft of small aviation, in particular unmanned aerial vehicles.

Promising developments include:

• An airplanes of various modifications.
• Aircraft engine manufacturing.
• Helicopters

Other industries

Machine tool industry ensures the development of all branches of mechanical 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).

Instrumentation 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 Electronmash in Kiev. A wide range of electrical and other devices are produced in Kiev, Kharkov, Ivano-Frankivsk, Lviv, Sumy, Cherkassy, ​​Zhytomyr, Lutsk.

Agricultural engineering of Ukraine provides farmers with the necessary equipment. The enterprises of this industry are located in areas of consumption of finished products. Powerful tractors are produced by Kharkov Tractor Plant. Kirovograd plant "Red Star" produces seeders. Beet-harvesting complexes are being built in Dnepropetrovsk and Ternopol, combine harvesters in Kherson (Slavutich) and Alexandria (Lahn), corn harvesters in Kherson, tillage machines in Odessa, Kiev, Berdyansk, Slavyansk. Machine-building for livestock and feed production is concentrated in Uman, Novograd-Volynsky, Nizhyn, Kolomyia, Bila Tserkva.

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

Transport engineering produces locomotives and wagons. Locomotive building centers are Lugansk, Kharkov (mainline 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 the machine-building industry of Ukraine can be when integrated 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 countries, starting 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 the export of engineering products and a decrease in the negative balance of foreign trade with European countries in engineering products.

According to statistics from the State Statistics Service of Ukraine, machine-building accounted for 18.3% of exports and 23.8% of merchandise imports in 2014, and for the first half of 2015, respectively, 11.7% and 20.8%. In 2015, the trend towards a decrease in the turnover of the industry continued. At the same time, the share in the EU in the total structure of export of engineering products increased from 30.4 (2014) to 43.4% (first half of 2015).

Statistics and Trends

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

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

Prospects

Ukraine, whose engineering is sufficiently 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 machinery products. The largest volumes of products are imported from:

• Germany (in the amount of $ 577.9 million).
• Poland ($ 255.1 million).
• Italy ($ 160.9 million).
• Czech Republic ($ 116.8 million).
• France ($ 101.4 million).

Practice shows that signing an Association Agreement provides more benefits than risks. Further development directly depends on how quickly the engineering of Ukraine switches from the topic of risks to the topic of opportunities.

The risks

A significant obstacle to expanding the volume and improving the structure of mutual trade in engineering is the presence of technical barriers to trade between Ukraine and foreign partners. Risks are associated with the possibility of partial loss of certain engineering industries that worked primarily on the Russian market and according to their technical regulations. High-tech industries turned out to be especially vulnerable: in the aviation sector, defense industry, 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 the business model, the transition to a process model for managing problem solving. Most flexible companies are characterized by a model that combines the main processes: managing the product life cycle, developing new products, managing customer relationships, managing sales and orders with supporting processes. In any case, the engineering industry of Ukraine is waiting for big changes. What will they be - time will tell.