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High-Level Advisory Assistance on Converting a Former Military Enterprise Into a Wheelchair Manufacturing Facility

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High-Level Advisory Assistance on Converting a Former Military Enterprise Into a Wheelchair Manufacturing Facility OCCASION This publication has been made available to the public on the occasion of the 50th anniversary of the United Nations Industrial Development Organisation. DISCLAIMER This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not constitute an endorsement by UNIDO. FAIR USE POLICY Any part of this publication may be quoted and referenced for educational and research purposes without additional permission from UNIDO. However, those who make use of quoting and referencing this publication are requested to follow the Fair Use Policy of giving due credit to UNIDO. CONTACT Please contact [email protected] for further information concerning UNIDO publications. For more information about UNIDO, please visit us at www.unido.org UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna International Centre, P.O. Box 300, 1400 Vienna, Austria Tel: (+43-1) 26026-0 · www.unido.org · [email protected] .. Restricted. For l'NIOO only. 20ll-18 17 October 1993 •. >riginal: &iglisb ARCTIS Ltd 7. Promyshlennaya: Apt.I0-203r 1~5.St.Petersburg. Russia Mailing address: POBox 500. 198095.St.Pctcrsburg.Russia Tel.: (~2) 252 9587.Faxffcl.: (812)1862830 ' The Execution of Services Related to High-Level Advisory Assistance on Converting a Former Military Enterprise into a Wheelchair Manufacturing Facility. Final Report Project Sl/USR/92/801 Contract 93/055 ARCTIS contact person: .Mr.Guennadi Belik. Vice-President • St.Petersburg. Russia Restricted. For n 1:roo only. 17 October 1993 Original: English Table of Contents Page • Introduction 1 The activity of ARCTIS. UNIDO Subcontract t No 93/055/VK I. Selection of a Russian partner for the project 2 2. Assistance to UNIDO exp~rts 2 3. Human resources 4 ·t Basics of the Kirovski 7.avod s 5. Economic Situation in St.Petersburg' 6 Annex I. A letter of Deputy Mayor of St.Petersburg l\lr.V.Putin to Prime-Minister • of Sweden Mr.Bildt (English translation) Annex 2. Study Tour Nomination Forms Annex 3. Study Tour Final Report St.Petersburg. Russia • For UNIDO only ..\RCTIS.Final Report. Introduction UNIDO Project Sl/USR/92/801 In 1991 according to the Con\·ersion Through Enterprise De\'elopment Program (tTED) de\'eloped by UNIDO. a company ARCTIS was set up in l'O\.,peration with the St.Petersburg • l·ity authorities. One of the objecli\·es of the company is allracting foreign investments lo the conversion sec.:tor of the military-industrial comple'\ of St.Pt:tcrstiurg. • In the stream of this acti\'ily in of IQ9~ l ;~llDO initiated the project of pnwiding high-le\'d ad\ isory assistance to one of the St.Pcterstiurg enterprises in scttilng-up a whcekhair manufacturing. In the framework of implementation of this project two l iMDO experts were sent to St.Petersburg: Mr. Tord Larsson. an international '-·onsultant in wheelchair manufacturing. and Mr. Heinz Semerad. an international consultant in industrial restructuring and business creation. They performed the e\·atuation of industrial and human potential of rhe Kiro\'ski Zarnd. which was proposed by ARCTIS a~ a company for project implementation. Their work ended with the pre-feasibility study. in which the positi\·e conclusion regarding existing favourable conditions for the project implementation at this plant was made. The experts also formulated recomendations for restructuring of the KirO\·ski Z·wod and steps necessary for successful project implementation. ARCTIS ha\'e pro\'ided the necessary consulting and organizational assistance to the experts. Conclusion. The fulfillment of the UNIDO project Sl/l!SR/9~1801 task has shown that the concept of \TED • Program as applied to the conversion sector of the milirary-industrial complex in St.Petersburg is correct and justified. The idea of the dewlopment of small and medium-sized businesses at former mililary-industrial enterprises finds support and approval by both industrial managers and the city authorities. The fac:r confirming this is rhc consent of the city authorities and the top management of the KirO\·ski Zarnd to set up the Industrial Park for small and medium- sized businesses with foreign partners within the territory of the Kirovski Zarnd. Due to the efforts of the UNIDO experts and the project backstopping officer Prof. Mikhail Boutoussov and ARCTIS the main objectives of the first stage of the project have been reached: the information of UN experts concerning the great demand of high- quality and relati\'el} ine,pensi\'e wheelchairs in the Russian market has been confirmed. This is \\ hy setting-up of one more wheelchair manufacturing facilit\· in Russia is needed. It was found !hat technclogical and human potential of 1he Kirovski iarnd enables to organize this type of manufacturin'g. A new faclor} will use only Russian raw materials and components. \\ hich is a very important cost­ reducing factor. Considering the fact that lhe conversion sector of the local military- industrial complex posesses large surpluses of titanium it is po-;sible to make a c:onc:lusion that in the future some wheelchairs could he made of titanium. That \Hmld increase the potential of export of these wheelchairs to developed Western c:ounlrics. although mostly they will he exported to developing counrries. Preliminary calculations of experls ha\'l' <ihnwn high l'ost-cffedivcncss of planned manufacturing. which makes the project attractive for priv;-ite imestors. The Kirovski Zarnd is • very interested in further cooperalion in rhis projel·t \\ i1h bolh l iNffX) and one of the Western comanies which has rhe modem technology of\\ hl·ckhair manufal·rnring and is able 10 invest sufficiently in the project (minimum lfSf)4 min>. The Swedish l"ompany ERACARt: could • become sur:h partner. This company meets all rcquircmcnls and has c\pressed rcadyncss to participate in lhc projel"I. Although. lo ARCTIS opinion. this compan} would need !he l INJDO support. while scrching financing for 1he second •;t:l~e of 1he projc'-·1 f prcparalion of the business-plan. provision of the in\'esrment loan). AR< ·ns i1sclf is ready 10 participare actively in the next slages of rhe project provided this imolvcmt'nt is rnmpensated adequa1cly. For UNIDO only ARCTIS.Final Report. This report contains the information regarc!ing the lJNIDO sub-contract pcrfonned by ARCTIS. It also contains some additional cata concerning the economic situation in the conversion sector of the military- industrial cornplex and the Kirovski Zanxl. • The activity of ARCTIS. UNIDO Subcontract No 93/055/VK • Project Sl/USR/92/801. • 1. Selection of a Russian partner for the project. According to the contract the ARCTIS role was to identify an enterprise within the military­ industrial comple~ of St.Petersburg. which. in the framework of conversion of defens"' production. would be interested in setting-up the wheelchair manufacturing and which would have appropriate production facilities. According to the recommendations made by the Committee for the Economic Development of che Mayor's Office of St.Petersburg fr•e machine-building enterprises were studied: ARSENAL Bolshevik. Metallitcheski Zavod. N!ITRANSMASH. Kirovski Zavod. A plant that has met the strict criteria (optimal size of rec.tuired in ..·estments. available infrustructure. experience in large-scale manufacturing of wheeled techniques. highly qualified personnel) is the Kirovski Za\'Od Joint-Stock Company. This enterprise used to be one of the world's most famous manufacturers of tanks before 1989. Currentlv tt.e total conversion of the defense-orientated manufacturing is being perfonned. The project <if wheelchair manufacturing completely fits into the concept of plant's con\'ersion and therefore the top management of the company ex.pressed the will to implement this projecr. • The decision of opting out for the Kiro..-ski Za\'od was made for the following reasons: this is one of the most well-known and respectable enterprises in Russia: successful implementation of the project would gain good publicity in the country and demonstrate efficiency of efforts of UNIDO as regards to assistance in conversion process in Russia; Kirovski enjoys the support • of the Russian Government and city authorities of St.Petersburg. which would help draw the attention of Western inverstors to the participation in the project. 2. Assistance to UNIDO experts. ARCTIS assisted UNIDO experts <Mr.T.Larsson and Mr. H.Scmerad) who. while being in St.Petersburg were gathering and analising information necessary for the project implementation. To assist the experts in a proper way ARCTIS has assigned rwo highly experienced Russian consul rants ( Mr.Lourier and Mr.Berezo.,ski l who are familiar with both Kirovski Zavod and wheelchair manufacruring very well. Due to rheir efforts the actual evaluatic..,n of the situarion was made rather fast. The experts were aquainled with the technologi"·al and production potential of the plant. they were also !"hown the production areas on which the wheelchair manufacturing will be based. In order to give the experts the possiblity to familiarize themsel\·es with the Russian market of wheelchairs and potential competitors. ARCTIS organized visits to two wheelchair factories: DAB f ntemational I St.Petersburg) and ATO STA WROWO (Vladimir Region). Discussions with the management of those enterprises have .issured that the decision taken by lJNfDO regarding !he organi1ation of another wheelchair planr in Russia is correct.
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