Ukraine Space Industry on Verge of Collapse

The first stage of Orbital Sciences Corporation's Antares rocket is shipped out from Yuzhnoye design bureau in Ukraine. (Credt: Yuzhnoye)
The first stage of Orbital Sciences Corporation’s Antares rocket is shipped out from Yuzhnoye design bureau in Ukraine. (Credt: Yuzhnoye)

I was just looking at the website for Yuzhmash, which is Ukraine’s principle producer of launch vehicles. I ran across the following letter to employees published on Oct. 10. It includes this rather prediction:

“Pivdenmash [Yuzhmash] is in deep financial crisis, the main factor which is a precipitous decline in production. The current crisis is not irreversible, but the situation is close to the point of no return.

“The actual bankruptcy of the enterprise will result in the loss of Ukraine’s status as a space power, failure of the obligations of the State to enter into international agreements, irreversible loss of proven technologies.”

This was four months ago. And by all accounts, matters have only gotten worse. The fighting eastern Ukraine has intensified. The government’s finances haven’t improved. And employees were given two-month unpaid leaves in late January. That came after many months of 3-day work weeks and partial pay.

Yuzhmash is involved in the following programs: first stage of Antares for Orbital Sciences Corporation; Zenits for Sea Launch and Land Launch; fourth stage for ESA’s Vega; Dnepr launch vehicle; and Cyclone-4 for Alcantara Cyclone Space.

Russia announced last week that it would no longer purchase Zenit boosters and would end cooperation on the Dnepr program after flying out its manifest this year.

The letter is reproduced below.

About An Open Letter to Labor Collective of Yuzhmash
10 October 2014

Consider an open letter to employees of the enterprise from 09.10.2014 № 101-PPO (Ref. № 3505 from 10.10.2014) Pivdenmash reports the following.

The enterprise has developed really very tense situation. Unfortunately, all of the facts set out in the handling labor collective, untrue.

State Enterprise “Production Association Yuzhny Machine-Building Plant named after A. Makarov” (Pivdenmash) is the largest company of rocket-space industry of Ukraine, as well as an integral part of the economy of Ukraine, therefore, like all other industries, has been influenced by all processes that occur in it. Unlike enterprise space-rocket engineering other countries Pivdenmash has no support in the form of direct government order, which helps to overcome difficulties in the period characteristic of our specialization fluctuations in capacity utilization. Because of the absence of a stable government order company, whose main activity is focused mainly on exports, significantly loses competitiveness in the global market and are vulnerable during economic crises.

Factor of negative trends – landslide production cutbacks due to rupture of ties with traditional customers, who provided most of the orders.

The actual bankruptcy of the enterprise will result in the loss of Ukraine’s status as a space power, failure of the obligations of the State to enter into international agreements, irreversible loss of proven technologies.

At present, the SE “PA YuMZ behalf AM Makarov” is a participant in the high-tech large-scale international projects:” Sea Launch “,” Land Launch »,« Taurus II / Antares »,« Dnepr “,” Cyclone-4 »,« Vega ».

Civic activity of the company includes the production of landing gear for the aircraft AN-140 and AN-148, AN-158 and universal tractors of drawbar category 1.4, ranging from 60 to 100 hp, technological equipment and tools.

Acceptable way out of the situation may become decisive shift Yuzhmash new markets through participation in international projects, a significant change in the range of products, including by bringing to fulfillment of the state defense order. All this is possible if the state support.

Pivdenmash developed a number of measures to overcome the crisis, we attract additional orders, including defense purposes, we expand cooperative ties with other companies, including diversification within our own production, we are also prepared to increase its output of civilian products – tractors, municipal electric transport, to resume production of wind turbines. Developed as several investment projects that have received a positive decision of the State Space Agency and is now considered the ministry.

In order to ensure financial stability and further development of the enterprise Pivdenmash prepared a package of four bills that are currently being developed in the central bodies of executive power and, in the case of a positive decision of the Cabinet of Ministers, will be submitted to the Verkhovna Rada of Ukraine. The need to adopt this legislation is due not only difficult financial situation of the enterprise, but also the need to ensure the implementation by Ukraine of its obligations under international treaties.

Given the foregoing, it can be noted:

  • Pivdenmash is in deep financial crisis, the main factor which is a precipitous decline in production;
  • The current crisis is not irreversible, but the situation is close to the point of no return;
  • Pivdenmash designed by the State Space Agency and the Dnipropetrovsk Regional State Administration supported the package of necessary measures to overcome the crisis;
  • For it is required to overcoming the crisis is an effective government support, in particular, at the legislative level.

  • windbourne

    This is one of the problems with having launch be a gov. program.
    For example, if the US gets into real fiscal problems (and we are headed that way), then they could cut the funding to NASA perhaps in half. At that point, SLS would not fly.

    OTOH, private space continues, esp. since SpaceX is grabbing jobs from all over the world.

  • newpapyrus

    If the US ever gets involved in another civil war, I don’t think the American people are going to be concerned about what Space X is doing.

    And you could easily fly the SLS with half of the NASA human spaceflight related budget if NASA got rid of the wasteful ISS program.

    Marcel

  • mike_shupp

    Huh? Yuzhmush doesn’t have any government orders and it’s been relying on orders from outside the Ukraine to stay alive — with less than stellar success due to the ongoing conflict with Russia and the Western embargo on financing exports from that region. This isn’t anything at all like the pretty libertarian notion of Free Enterprise Triumphing Over Socialism you seem to have in mind. It’s bad to be caught up in a war, that’s all, especially when your side is losing — and that’s been true since long before anyone dreamed of socialism.

  • Valerij Gilinskij

    Stop talking nonsense. Help YUZHMASH very difficult, primarily due to the fact that it is located in a region where there is a war. And this war will determine the economic problems of Ukraine. A proposal to increase spending on useless SLS and Orion – it’s all bullshit.

  • Charles Lurio

    Thanks for setting the story straight Valery – I don’t know what kind of bizarre fantasy world some of these people live in.

    I’m going to add that, of course, the weaker Ukraine is economically, the more it’s marginalized, unable to work with the West independently, and a defacto fiefdom for Putin

  • Grant Kask

    This seams bad for Orb-ATK, How many Antares first stage’s do they have in the US and how what is the state of the renaming CRS-1 cores in the Ukraine?

    Makes one wonder about CRS-2?

  • cdevboy

    This looks pretty bad for Orbital. First they have to change engines (to another imported Russian one) and now their entire First stage is apparently unavailable. It’s pretty clear that Putin is cutting g their use to weaken Ukraine. The Angara rocket is not yet ready to replace anything else. There is no reason to accelerate these moves.

  • Kapitalist

    No, not in half. During the sequestration, when the government couldn’t increase their debt, NASA and NSF lost 100% of their budgets. Science is the first thing politicians abolish. Unless government can increase their debt in an unsustainable way, all of NASA is immediately abolished, says all politicians.

  • mzungu

    Should of kept those nuclear weapons, and should of kept the infrastuture to maintain the ICBMs as well, then at least they would of have some cushions to the down cycles in the civilian side…. and it keeps the bullies out. Bet they feel kind of stupid now…sandwich between 4 nuclear powers with nothing…