Russian foundries: facing the challenge of freedom.

Four years after the breakup of the U.S.S.R., these authors traveled in Russia to report on the trials facing its foundry industry.

Much has changed in the four years since the fall of communism in eastern Europe and the breakup of the U.S.S.R. The 1991 creation of the 12 newly autonomous nations of the Commonwealth of Independent States (CIS) divided up much of the industrial might of the former superpower. In Russia, the process of privatization and the excruciating steps toward a market-based economy have brought on severe fiscal hardship. Russian industry is left to grope its way to efficient global competitiveness.

The Russian foundry industry has not escaped the general crisis, and the last four years have been a continuous test of survival for foundries and the equipment manufacturers that supply them. In the new market economy, many factors have reduced the castings shipments from the nation's foundries, including changes in legislation, tax laws and a general breakdown in the Russian economy. By the end of 1993,casting production had plummeted 38% (Fig. 1). The last three years have seen a 40% reduction in the people employed by the foundry industry. Russian foundrymen have had to learn new rules, decide on a new strategy and choose new partners.

[Figure 1 ILLUSTRATION OMITTED]

The state of the general Russian economy is not likely to change any time soon, due to the sheer size of the country, popular resistance to the painful measures necessary and a traditional Russian tendency to start slow. Economists predict continued fiscal malaise through 1996, followed by 10 years of slow growth. During that time, it is likely that 30-35% of all Russian foundries will close.

Production

At the moment, Russian foundries are overproducing, as evidenced by high inventories. This problem is largely due to a lack of creditworthy customers. Many foundries have had some success in adapting to the continuous change. While Russian casting shipments continue to decline (Table 1), Russian foundries are reaming to work smart and are becoming more efficient. In many places, the workforce has been halved and worker productivity has risen dramatically (Table 2). On the strength of this, a few casting firms have even begun to expand. There is reason to believe 1996-97 will see the beginnings of industry growth.

Table 1. Foundry Production (1000s Tons)

Year  Total for                Cast Iron
      all Castings
                     Total    Gray   Ductile   Malleable
1991   15,000        11,996   9671   383       942
1994   9500          6518     5631   247       640

Year   Steel    Nonferrous

1991   3765      942
1994   2300      640
Table 2. Foundry Production Per Worker (Metric Ton)

Year               Foundry Type
       Cast Iron   Cast Steel   Nonferrous
1991   64.1        44.0         18.6
1994   71.0        44.3         20.9

For that growth to occur, however, there will have to be a reduction of the hyperinflation gripping Russia (30-35% a month in the not so distant past). The foundry industry itself will have to undergo restructuring, particularly in the portion previously dedicated to military work.

Not surprisingly, broadening production capabilities and looking for customers are not familiar tasks to Russian foundry executives, but there are some encouraging examples. One of the largest military-industrial companies, Degtyarev Defense Plant, has successfully substituted baby carriages, motorcycles and tractors for the weapons it used to produce. In Vladimir, a foundry that once produced electric motors for tanks has begun to produce scaled-down motors for refrigerators and washing machines.

While most foundries are still owned by the government, these are many small but growing firms that lease melting furnaces and then purchase facilities and other equipment. These operations are able to compete with large factories due to the low overhead cost of running them. For example, in government-owned factories, overhead is 300-900% because of the large number of managers and supervisors. In small firms, it runs only 50%, and employees enjoy salaries double those of their government-employed counterparts.

Each Russian foundry is capable of overcoming the difficulties, provided they make a strong commitment to the future. The Ural region is a good example, and the Middle Ural has led the way.

The Robust Ural Region

Since the time of Peter the Great (1689-1724), the Ural region has been the center of casting production in Russia. Over the centuries, the region has been a major source of a variety of casting products, from cannon and cannon balls to cookware. Today, more than 50 companies in the Ural have dedicated, captive foundries to fill their needs for castings.

A heavily industrialized area, there is enough business in the Middle Ural that it manages to be somewhat self-sufficient. It is the home of some of the giants of Russian industry: Uralmash, a heavy machine plant; Turbomotorniy Zavod, a turbine producer and pioneer in diesel design; and Uralchemmash, which manufactures chemical equipment. Their foundries produce a number of very unique types of large-castings made from high-alloy steels, thin-walled nonferrous components, and castings for aviation, chemical and mining industries, among others.

The Uralmash plant designed and produces a special autoclave for the magnesium treatment of ductile iron. Another example of a high-quality specialty product is a 2-meter diameter x 1.5-meter thick diecast wheel.

Casting processes used by firms in the region are diverse:

Investment Casting--Uralmash, Kalinin Machine Building Plant, Irbit Motorcycle Plant, and others;

Diecasting--Turbomotornity Zavod Kamensk-Uralsky Foundry and others;

Semicontinuous and Centrifugal Casting--Sinarsky Pipe Plant.

While not immune to the problems of the rest of Russia, some of the corporations in the Ural have acted decisively for their survival, responding quickly to the 1991 revolution. It is not uncommon for a large Russian manufacturing entity to employ 50,000 people. But Uralmash, for instance, cut its work force by half (to 25,000!).

In the last few years, many foundries there worked to create a new generation of management--younger people less tied to the old status quo. These individuals are looking outside Russia for the direction they must move, attending courses and consulting experts in Europe and the U.S. Uralmash is currently involved in a program to send industrial students to U.S. universities to learn management, economic and technical skills.

Foundry Equipment Suppliers

One of the crises now facing the Russian casting industry is the availability, affordability and quality of capital equipment for foundries. Out of 11 factories making casting equipment in 1991, only two--Amurlitmash in Komsomolsk-on-Amur and Siblitmash in Novosibirsk--remain in the country. The other nine plants ended up in other CIS states. Therefore, it is now urgent to determine the need for casting equipment over the next 10 years, and to determine the number of factories that will be needed.

The quality of foundry equipment is also an issue, as Russian casting technology is behind that of the West, and most of the equipment used in Russian foundries is domestically made. However, several new models of equipment have recently become available that are closer to American or European quality.

Amurlitmash is one of the technology leaders within the country producing foundry equipment, particularly shotblast units. The firm's products are used in the majority of Russian foundries and also are exported. Though functionally competitive with their western counterparts, these machines are very heavy, and the weight and cost of the extra material cuts into their market competitiveness.

Russia is currently behind in developing equipment for coldbox coremaking with a gas-based catalyst. To catch up, NIILitmash is working on a variety of units for introducing [SO.sub.2] gas to the core. At the Central Research and Development Institute for Metallurgy and Materials (CRDIMM), work is underway to manufacture equipment for vacuum casting, as well as for a low-temperature molding process intended to reduce energy costs and environmental impact.

The research center has also designed and produced several advanced vertical and horizontal centrifugal casting machines. These machines are in use at Penzadizelmash and the Volga Metallurgical Plant to make cast iron sleeves for diesel engines. Vertical centrifugal machines for developing ringshaped castings weighing up to 400kg were tested at Uzlovoy Machine Building Plant, and compared favorably to forgings.

The Science of Castings

On the whole, the quality of Russian castings is declining, in part because the commercialization of science in Russia has left little funding available for metalcasting research. Another serious problem is a severe "brain drain," as a large number of knowledgeable foundry specialists are migrating to the U.S., Israel, Germany and Australia.

While the number of foundry science students has been steadily dropping since the late 1970s, those that do emerge from Russia's higher education and technical institutions are highly skilled specialists and engineers. They are educated in the areas of alloy production technology, foundry design, automation and mechanization of production processes, foundry machinery and tooling design, production economics and other useful specialties.

At the graduate and post-graduate level, Russian institutions are establishing a broad spectrum of cooperative activities with foreign foundry education specialists to carry out joint research in theoretical and experimental casting science. There are more than 30 universities engaged in these activities, supported by almost 50 science councils for defending theses. This differs from the U.S., where the university is the only organization that determines and defines the method of thesis evaluation.

Foreign Opportunities

Unlike many of the country's heavy industries, Russian foundries can be competitive in a world market for castings that remains strong and stable. Orders for Russian castings are coming from Austria and France, with Germany being the largest customer. Some of the parts being purchased are:

* gray, malleable and austenitic-bainitic iron castings;

* carbon, alloyed and specialty steel castings;

* aluminum, magnesium titanium and copper alloy castings;

* permanent molds and diecasting dies. A range of Russian-produced foundry consumables and basic supplies that can also be supplied to foreign markets. These include:

* a variety of foundry equipment and instrumentation.

* wooden, metal and plastic patterns;

* inoculants and master alloys;

* inoculating fluxes for copper, aluminum and zinc production;

* activated bentonites and suspensions;

* chemical release agents;

* glass fiber filters for refining steel;

* shell mold and investment casting binders;

* pig iron;

* high-temperature machinery lubricants.

With a well-established industrial base and a strong technological workforce, the Russian metalcasting industry has the tools for survival. If foundrymen and foundry products suppliers can break into the international marketplace, they will have the opportunity to turn survival into success.