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The General Director of JSC Kirov Machine-Building Plant answered questions about development plans

General Director of «S.M. Kirov Machine-Building Plant» JSC Ahmet Islam Bolenhanuly told about the current situation at the plant and its further development plans.

Interview with Kamilla Ormanbetova

What is the history of the enterprise and what does it do today?

In October 2022, we marked the 80th anniversary of the plant. October 26, 1942 is considered the day of its foundation.

As a whole, the history of the plant, its production development were determined in full measure by the events of past years and the tasks faced by the country and the Republic.

During the years of the Great Patriotic War, the plant had to quickly master the production of a wide range of weapons and armament for the needs of the front. Therefore, already in 1943 the plant began to produce the first samples of naval weapons and prepare them for the tests in real conditions.

In the postwar period the shipyard developed as a leading enterprise of the shipbuilding industry in intensive renewal of the range of weapons produced and in extensive serial production of various mechanisms for ships and submarines.

In addition to the defense industry products, the production of civilian products was also developing. It produced a number of items for the needs of the agriculture, milling and food industries.

The plant had mastered the production of numerous consumer goods: from spare parts for agricultural machinery, grain loaders, lathes for school workshops, washing machines, irons, gas cookers, dishes, meat cutters, juicers, souvenirs, furniture, table safes, physiotherapy medical lasers, laser impulse dental units, ozonators for medical needs, compressors for refrigeration units, to the supply of own color and steel castings to the enterprise. The manufactured products were exported to various Republics of the USSR, as well as to foreign countries.

Today the company is profitable, with annual dividends and income tax paid. Most importantly, we have managed to retain our core competence - manufacture of products for sea-going ships. Today the enterprise renders services in repair of different products. In addition, the shipyard produces and supplies spare parts, fixtures, fittings, and products for military and civilian maritime needs.

We have great opportunities for increasing the export potential of our services and products by expanding the geography of countries where cooperation is possible. For this purpose, a lot of work is planned to provide the enterprise with highly qualified personnel through cooperation with leading research institutes in different countries, and to provide training and internships for our specialists.

Are there any plans to expand production?

The team is continuously working on the possibilities of organizing the production of various products. We are currently negotiating the possibility of local production of spare parts and components for the needs of the automotive assembly industry.

As for civilian production, we are negotiating the production of safety barriers for motorways and partial participation in a project for the development of electronic industrial detonators. We are also considering the possibility of organizing the production of electric two-wheelers; the company also continues to work on the production of mobile spiral barriers, special safety barriers for emergencies, and armored cable lugs for NAC Kazatomprom JSC's subsidiaries and affiliates.

What is planned in terms of improving the social situation of the enterprise's employees?

It has to be clearly understood that the infrastructure, equipment and everything else in the company is worthless without the people who work here. Therefore, I, as a manager, need to improve constantly conditions for the staff. In the mechanical engineering industry as a whole, there is a big lack of qualified staff and we simply have to react to this fact. Considering current trends, there is an urgent need for internal development of the company and, to this end; we plan to gradually implement environmental, social and corporate governance criteria.

Within the framework of improving social situation of employees, we are planning to carry out many activities ranging from providing hot meals, sending promising young specialists for internships, providing social medical package to possible social support for the purchase of housing as part of the programs with Otbasy Bank JSC.

In general, issues relating to the social situation of the plant's employees are always a priority for the plant's management. On behalf of JSC «NC «Kazakhstan Engineering», this year we have increased salaries by 10%, and next year we plan to increase salaries by another 20%.

What is the main specialization of the plant today?

Previously, the main specialization of the plant was the production of naval weapons and submarine products. The plant was military, which means it was a part of the military-industrial complex of the country.

Currently the emphasis is shifted to the production and supply of items aimed at repairs and upgrades. Production of weapons is not carried out. The plant is not an enterprise of Kazakhstan's military-industrial complex.

However, the factory is constantly looking into the possibility of organizing the production of various items.

We are currently negotiating the possibility of local production of spare parts and components for the needs of the automobile assembly industry. Besides, we are currently exploring various possibilities to manufacture safety barriers for public roads, to assemble equipment used in airports, to manufacture spare parts and components for the needs of railways, to manufacture products for public utilities and various products for mining and oil companies.

The main criteria for project selection are internal plant resources, market volumes, production margins and export potential.   

Is the factory state-owned? Are there plans to privatize it and transfer it to the private sector?

The plant is state-owned and is part of JSC NC Kazakhstan Engineering. The enterprise is included in the privatization plan of the Government until 2025. However, there are certain nuances, without understanding which it is impossible to draw any correct conclusion.

Historically, the plant's operations have developed a certain uniqueness and Kazakhstan, as a state, has an obligation to its partners to retain the plant's specialization. Therefore, for any private investor interested in privatization, this would be a binding obligation.

In addition, the land plot on which the plant is located is not owned by the company, but was transferred by the Almaty City Akimat for a fee-based long-term use until 2029.    

The area of the enterprise is specific due to the geographical position of the country, lack of maritime infrastructure and the activity of local businesses in the seas. All this significantly narrows the range of potential investors interested in privatizing the enterprise.

Now, there are no specific individuals interested in privatization. On the other hand, we are currently working on the possibilities of partner business co-operations in terms of joint projects with companies from near and far abroad countries. This possible cooperation mainly covers such issues as technology exchange, joint projects, new solutions and products within the plant's core competencies.

There is a perception that part of the plant's territory will be transferred to private commercial entities. Is this true?

No, it is not. Some people are trying to manipulate public opinion by expressing false information.

As mentioned earlier the plant is owned by the state and is part of the National Company Kazakhstan Engineering JSC. To "transfer something to private structures", it is necessary to make a decision with the approval of the supervising ministry, in our case, the Ministry of Industry and Infrastructure Development of Kazakhstan. Further, at positive decision on putting an object on privatization, it is necessary to make valuation of the enterprise, then it is necessary to inform about planned auction, which should be at least two interested persons, then by increasing of price the winner of auction is defined.

As mentioned above, the land plot has been granted by the Almaty City Akimat in the form of a compensated, long-term lease until 2029. The transfer of the land plot is not possible without stopping the activities of the plant, which in turn contradicts the commitments made to preserve the specialization of the enterprise.

Each of the discussed scenarios of transferring the territory of the plant to private commercial entities has its own internal difficulties and contradictions, which make it clear that it will not be possible to transfer the enterprise to someone else.

There is also a question of relocating the enterprise outside the city center, but it is a very complicated and complicated process.

The most important thing for us is to retain and develop specialists, people, competences and production capacities.

I want to assure you that neither me, nor the management of our shareholder have any intention or desire to transfer the plant to another business center or residential complex. The chairman of Kazakhstan Engineering and other colleagues talked about it. We will further develop our production and our staff!

Is the Mega Park shopping center located on the former territory of the plant? What else is standing on its former territory? In addition, how big is the territory transferred into private hands?

According to official information, the total territory of the plant was 38.2 hectares. However, part of the territory has been transferred to third parties. Thus, a part of the territory, about 17.8 hectares, has been alienated.

As for what is located on the former plant's territory, the list turns out to be impressive, including Mega Park REC, MBM Kirovets LLP, Atlant residential complex (10 high-rise apartment blocks), 12 months residential complex (12 apartment blocks), 13 facilities of Bat-Cotton LLP, Allux LLP, Surmergen LLP, KazBarit LLP.

Taking into account how the original territory of the plant differs from today's territory, it appears that all the facilities that had access to the roadways (facing Seyfullina Avenue and Makataeva Street) have been alienated. Today, the plant has virtually no direct contact with these streets.

This was done between 2010 and 2016. Now the company is working out and studying the legality of these transactions.

Thank you for the conversation!