Kryukiv Railcar considers shifting to military machinery production

Ukraine’s biggest railcar producer, Kryukiv Railcar (KVBZ UK), can restart production of military machinery if respective state orders come to the company, President Volodymyr Prykhodko told journalists on Feb. 9. The company produced more than 20 types of military machines in Soviet times, he said. He highlighted that the company is suffering from the closed Russian market for freight railcars (it supplied about 9,000 railcars p.a. to Russia in the best times) while domestic demand for them is insufficient.

In 2014, the company’s freight railcar plunged 55% yoy to 2,406 units. It also produced a single passenger railcar (compared to 74 units in 2013) and modernized 95 subway cars for Kyiv last year. The company got an order from Kyiv to modernize another 50 railcars in 2015.

Alexander Paraschiy: Indeed in Soviet times, most railcar and tractor plants also specialized in the production of heavy military hardware(Russia’s Ural Railcar is the biggest tank producer in Russia now). However, after the so-called “civil conversion” of the mid-1990s, a lot of military-heavy enterprises refocused on civil equipment and goods output. Nowadays, it’s hard to say whether Kryukiv Railcar has preserved its ability to produce armored vehicles in mass production.

A “military conversion” could take time to establish, but possibly the plant can perform some minor tasks for the defense ministry (including the modernization or repair of equipment and production of components). If the military conflict in Donbas – which presumes large state military orders for industries – doesn’t last long, Kryukiv Railcar cannot count on military demand to turn itself around. Clearly, the company only can improve its capacity load in the long term by securing large commercial orders, possibly via cooperation with EU-based producers, given that the Ukrainian market is too small for the company and the Russian market does not look accessible anymore.