Siemens Shared Yesterday's Technology with Sinara

29.07.2010 — Analysis

The Sverdlovsk Region welcomes Ural Locomotives, the joint venture set up by Sinara Group CJSC and Siemens AG. By 2016 the enterprise intends to supply Russian Railways JSC with electric freight locomotives equipped with German induction motors. The Sinara managers talk about a technological breakthrough in the domestic locomotive building. However, experts brought to the "RusBusinessNews" observer’s notice the thirty-year-old age of the "novelty" and assumed that there would be no technology hand-over to the Russians, as it was not feasible for the German party.

The Russian party owns 51% of the Ural Locomotives joint venture, whereas Siemens AG has a 49% interest. The enterprise was set up at the production site of the Ural Plant of Railway Machine-Building (UZZhM, Sverdlovsk Region), which in 2006 started manufacturing of electric freight locomotives with commutator motors. The capacities of UZZhM allow manufacturing up to 60 locomotives a year. Concurrently, the enterprise is getting ready to launch the second line, which will double its capacity, though there is no need in this at the moment: in 2010 the enterprise is planning to manufacture not more than 50 locomotives.

The work on setting up of the joint venture commenced in 2008. Sinara, which started manufacturing of electric locomotives from scratch, decided to challenge the alliance between the Russian Transmashholding and the French Alstom, which embarked on manufacturing of electric locomotives with induction motors. Instead of spending time on designing of their own power equipment, the Sinara management has opted for driving units produced by Siemens AG. The first locomotives of the new generation are expected to receive their motors and a number of components from Germany; later, the production will be commenced in Russia.

However, the setting up arrangements lingered on: experts think that the German company was discouraged by the insufficient number of orders from the railway company. Sinara states that last year the plant manufactured 25 locomotives. The spring of 2010 was more promising: Russian Railways JSC and Sinara signed the contract for the delivery of 221 induction-motor locomotives for the total amount of 42 billion rubles from 2011 to 2016. The railway company also decided to purchase 240 commutator locomotives in 2010-2012 for the amount of 23.2 billion rubles.

The contract numbers convinced Siemens in feasibility of the joint venture. Alexander Saltayev, General Director of Ural Locomotives LLC, informed the UZZhM employees that they will have both work and wages for the next few years and assured that the troubles of the crisis year 2009 were left behind.

Nevertheless, Konstantin Kostrikin, an expert analyst of the Department for Engineering Industry Research at the Institute for Problems of Natural Monopolies, doubts that Russian Railways JSC will purchase 500 locomotives a year within the next two or three years, as it is stated in the Strategy for Development of Transport Engineering of the Russian Federation in 2007 - 2010 and for the period up to 2015. The cutting down of the investment program makes the railway company re-estimate annually the amounts planned for purchases of the new rolling stock. This spring Vladimir Yakunin, President of Russian Railways, announced that the company intended to purchase 732 locomotives in 2010-2011. The lion’s share of the order (566 units) will be given to Transmashholding; 166 electric locomotives will be purchased from Sinara.  

According to Yevgeni Kopein, Chairman of the Board of Directors at Ural Locomotives LLC, the enterprise is planning to produce 50 locomotives with commutator motors this year and 90 locomotives in 2011. In addition, two trial electric locomotives with induction motors will be manufactured till the end of 2010 and another 11 locomotives are planned for the next year. At the same time, despite the signed contract, he was not able to say how many locomotives will be manufactured by the enterprise in 2012: as he put it, the numbers must be specified.

In this connection, experts point out that Sinara and Russian Railways JSC, signing the contract in May 2010, did not expect that it would be fulfilled. Most likely, the numbers stated in it were intended to impress Siemens. It is obvious that the existing facilities will be insufficient so that Ural Locomotives would be able to manufacture 140 locomotives within the remaining year and a half without the second production line being put into operation. Yevgeni Kopein asserts that the necessary arrangements are under way: to double its capacities, the plant needs 459 million rubles. However, in spite of the previous statements, the second line is unlikely to be put into operation in 2010, as there is no need in it.

Rank and file employees of Ural Locomotives told the "RusBusinessNews" observer that the plant was not ready to manufacture 100 electric locomotives a year. According to them, they could hardly arrive at two dozens of locomotives last year, and would have to do their best to make 50 locomotives this year. The main reason for the poor labor productivity is the lack of components and even elementary parts. Experts state that Russian machine-building companies experience problems and lack focus on transport engineering, which affects the delivery terms and product quality. However, it is not the main problem. The cut-downs in the Russian Railways’ investment program make it difficult to do research and development at Ural Locomotives. The threatening loss of the markets compels the enterprise to purchase finished products and technology from foreign companies, although these products and technology can hardly be considered novelties.

Nikolay Manko, Director of the Experimental Design Bureau, says that the federal state unitary enterprise "NPO Automatics" suggested that Sinara should manufacture new electric locomotives based on permanent magnetic excitation that would be able to increase the motor efficiency by 6% as compared to that of the induction motor. However, the Sinara managers opted for the German technology that was developed a few decades ago. The engineers of the Experimental Design Bureau have been told that Siemens has been working on the permanent magnetic motor for 20 years and has not introduced it into mass production so far. Nikolay Manko believes that the chosen position is misguided: the German corporation is testing prototype models and upgrading technology, while offering yesterday’s developments to Ural Locomotives.  

Vitaly Brekson, Head of the Engineering Development Department at Ural Locomotives, thinks that the induction motor is far from being outdated if compared to the commutator motors that are installed almost in all the Russian locomotives. On the other hand, he agrees that excitation from permanent magnets is technology of future. Many countries are interested in this technology, including Russia; however, it is difficult for the Russians to make a competitive motor when they lack a number of technologies, including those that are required for manufacturing of traction converters. The designer is sure that new heights must be conquered gradually. Therefore, the managers of Ural Locomotives keep in view that Siemens will deliver its technology, and the permanent magnetic motor will become the next stage the enterprise will ascend after acquiring the induction motor.

Nikolay Manko is more pessimistic in his forecast. He has almost no doubts that the German concern is not going to hand over the production of components to the Russian company. The expert reckons that there will be no localization of production, as under the contract, 80% of the components for new electric locomotives are supplied by Russian manufacturers. Siemens has agreed to make only motors and converters, which account for more than half of the locomotive price. The localization means reduced participation of the German company in the project and, consequently, in the earnings, which is hardly acceptable to the Germans, taking into consideration Siemens’s share in the joint venture.

Hans-Jörg Grundmann, President of the Mobility Department at Siemens AG, informed the Sinara executives that the cooperation is beneficial for partners, customers and the region on the whole, "as, working with Ural Locomotives, we take responsibility for localization of the production in the Sverdlovsk Region". However, in his conversation with journalists he was more reserved. According to him, successful localization depends not only on competent management, but also on professional engineers. Mr. Grundmann pointed out that he had meetings with lecturers of the Ural Technical University, but they failed to reach any agreement on joint training of transport engineers.

Vladimir Terletsky