Sukhoi Group: Post-Soviet Transformation
In this article the Sukhoi group stands for the entity of design bureaus and industrial facilities that develop and manufacture Sukhoi combat aircraft. Besides, in 1996, the group also integrated the Beriev Aircraft Company (Taganrog) - the developer of Be amphibious aircraft.Sukhoi group in 1992
At the beginning of 1992 the Sukhoi group consisted of the following elements:
· JSC SUKHOI Design Bureau (Moscow) - the Su aircraft designer.
· Novosibirsk Aviation Production Association (NAPO), one of the biggest military aircraft building plants in the Soviet Union. In the early 1990s it had the latest equipment and prepared for the serial production of the Su-27IB/Su-34/Su-32FN attack fighter.
· Irkutsk Aviation Industrial Association (IAIA) that earlier produced MiG-23 fighters and MiG-27 fighter-bombers (very complex from the technological point of view.) At the beginning of the reviewed period it manufactured a two-seat trainer version of Su-27 fighter - Su-27UB. The serial production of Su-30 two-seat fighter was being prepared.
· Komsomolsk-on-Amur Aviation Production Association (KnAAPO) serially manufacturing Su-27S and Su-27P single seaters was preparing to launch the serial production of Su-35 (Su-27M) - an overhauled version of Su-27. Besides, KnAAPO is the manufacturer of the Su-33 (Su-27K) naval fighters.
· Tbilisi Aviation Plant (Georgia) - the manufacturer of Su-25 ground attack aircraft.
· Ulan-Ude Aviation Industrial Association that along with helicopters manufactured Su-25UBK trainers.
Before 1992 companies of the group had exported big numbers of Su-17 (Fitter), Su-20 (Fitter), Su-22 (Fitter), Su-24 (Fencer) and Su-25 (Frogfoot) fighters and bombers. There had been no deliveries of aircraft of the Su-27 (Flanker) family. There is no reliable statistics on aircraft export deliveries prior to 1992 in open sources of information.
In the early 1990 the main Sukhoi model range consisted of the Su-27S air superiority fighters ordered by the Air Force, the Su-27P interceptor ordered by the Air Defense and the Su-25 ground attack aircraft. The industrial facilities of the group were preparing for the transition to the serial production of new modifications that were in fact overhauled versions of the Su-27 fighter: Su-35, Su-30 and Su-34. As the Russian Air Force virtually stopped aircraft procurements, the production of these modifications was never launched, except for small batches exported to other countries.Exports
Warplanes of the Su-27 family are believed to have good export prospects. According to estimates of the US Teal Group published in 1995, up to 500 units for a total of $17 bln1 may expected to be sold within the next 15 years. The experience of sales in the 1990s gives reason to believe that these estimates were quite accurate if the production under license in China and India as well as deliveries of ready fighters are taken into account. In any case Su fighters undoubtedly have much more favorable prospects than the MiG-29 family.
The export deliveries of Su-27 are summed up in the Table 1.
At the moment combat planes of the Su-27 family are taking part in a tender of the South Korean Air Force for a heavy fighter of the 4+ generation. An order for up to 140 aircraft worth up to $6 bln is in question. The competitors are F-15K, Rafale, Eurofighter and Su-35. The Russian side has offered a large-scale offset program and technology transfer. If won, KnAAPO will carry out the contract.
In August 1999 there appeared signs that in updating its Air Force Malaysia opted for fighters of the Su-27 family. Malaysia’s Prime Minister Mohamad Mahathir visited KnAAPO where he was shown the plant’s output.
Source: CAST database
In summer-autumn 1999 Sukhoi AMIC and MAPO MIC competed for the right to deliver Su-33 or MiG-29K ship-based fighters for the Admiral Gorshkov aircraft-carrying cruiser that as expected is to be transferred to the Indian Navy in the next few years. Sukhoi had the following advantages in the competition:
· Su-33 ship-based fighter had been commissioned by the Russian Navy and serially manufactured at KnAAPO,
· KnAAPO plant is in operating condition, has not stopped functioning after 1992 and has standing orders,
· Su-33 fighter has potentially greater capabilities and a greater upgrading potential than MiG-29K.
However, Su-33 had the following drawbacks as a candidate in the Admiral Gorshkov competition:
· an excessive weight and size that may have a negative impact on its application from the deck of the aircraft carrier and aircraft-carriers with a smaller displacement under development for the Indian Navy,
· the need to upgrade the aircraft to make it multirole and equip it with up-to-date on-board systems.
Evidently the big size and weight of Su-33 made its homebasing on the Gorshkov technically impossible. Even though neither the contract for the ship, nor for its airwing has been signed, it is believed that the smaller and lighter MiG-29K has better chances.
In September 1997 a contract for the delivery of 12 Su-30KI multirole fighters to Indonesia for up to $500 mln was practically ready. However, due to the financial crisis Jakarta cancelled the contract. At the moment there are signs of the revival of interest in that country in the issue of rearming its Air Force.
In the mid-1990s talks were held with the United Arab Emirates on the possible delivery of Su-35/37 fighters. An experimental fighter prototype 711 applying the thrust vectoring technology and painted in yellowish-brown desert colors was demonstrated at air shows in 1996-1997. However, in 1997 the UAE announced that it had chosen F-16 Block 60 and Mirage 2000-9 for its Air Force. Besides, in 1998-1999 later unconfirmed reports appeared that the Greek Air Force showed interest in fighters of the Su-27 family. Later Greece also opted for a combination of the French Mirage 2000-5Mk.2 and the US F-16 Block 50+.
Syria, Iran, Pakistan, Brazil and the United Arab Emirates have been showing interest in aircraft of the Su-27 family. For various reasons contracts with them are unlikely.Russian Defense Ministry orders
Though in general fighters of the Su-27 family should form the core of the Russian Air Force fleet, their procurements virtually stopped in 1992. The Air Defense reportedly placed an order for several Su-27 in 1995, but no payments were made. According to some reports, the Air Defense received 10 Su-27 fighters from KnAAPO.2 Besides the Navy received 24 Su-33 aircraft in 1992-1997.3 By now the Sukhoi Design Bureau and the plants in Komsomolsk and Irkutsk have developed several projects of upgrading Su-27S and Su-30 fighters. As it is evident that in the next few years the Russian Air Force will be financing only the upgrading of its fleet, this will be the main source of receipts of Sukhoi group industrial facilities from domestic clients.
Besides, the Air Force may have partly funded the R&D for the S-37 experimental aircraft with a forward swept wing. The Sukhoi Design Bureau is conducting R&D on other projects at its own initiatives and finances them with export returns, primarily receipts from license projects. The Navy is funding the development of the Su-33KUB ship-based fighter-bomber. At the moment one such aircraft is being tested on the deck of the Admiral Kuznetsov aircraft-carrying cruiser.4 Three more Su-27KUB are under construction in KnAAPO.5
According to Sukhoi AMIC press secretary Alexei Bogatyryov (he held the post at the time when Alexei Fyodorov was AMIC General Director, and simultaneously was a member of the UNEXIM Bank press service), government funding constituted 10-20% of orders placed at serial plants.6 Fyodorov said that in 1997 Defense Ministry orders guaranteed the operation of 10-20% of the capacities at serial plants.7 Novosibirsk did not fulfil commercial orders at all and state orders guaranteed the operation of 100% of its capacities.Institutional dynamics of Sukhoi group
Members of Sukhoi group constituting AMIC
Sukhoi Design Bureau
At the beginning of 1994 Sukhoi Design Bureau was corporatized into a joint-stock company with a 50% + 1 share stake remaining the state property (submitted to the AMIC charter capital), 14% being acquired by UNEXIM bank, 25% acquired by Inkombank and 10% owned by the staff. After the bankruptcy of Inkombank its stake mostly likely became the property of the State Investment Corporation. According unofficial reports, General Designer Mikhail Simonov who for a long time was also the general director of the bureau owns a significant part of the staff’s shares. The bureau has personnel of 2,500. Evidently the bureau has stable funding thanks to royalties on aircraft sales and the license contract with China as well as financing from India for developing the Su-30MKI fighter and from China for R&D on the Su-30MKK fighter-bomber. In 1991-1998 Mikhail Simonov attempted to launch simultaneously the development of the entire gamut of defense aircraft and several dual-purpose projects. Thus, in addition to new aircraft of the Su-27 family the bureau is designing S-54 supersonic trainer, its S-55 fighter version and S-56 deck version, S-80 passenger/cargo aircraft. It is also conducting advance design operations on the KR-850 extra large civil jet (an analog and competitor of the European A3XX project). To give an idea of the risks related to this aircraft project, it should be said that Boeing corporation, for instance, dumped the idea of such a plane while Europeans estimate the program at $15-17 bln. Besides, the bureau at its own initiative is conducting R&D on the S-37 fifth generation fighter prototype.
Since 1993 the state has had a 14.7% stake in it that is owned by Sukhoi AMIC. Until 1997 40% of the plant’s shares were controlled by JSC “Belukha” through proxies. Shares of JSC “MBV” (19.91%) and JSC “Triang” (19.95%) are in question. Probably in 1997 Belukha sold its stake to Rossiisky Kredit bank. After the bankruptcy of Rosiisky Kredit caused by the 1998 financial crisis its shares have been gradually accumulated by the Irkutsk plant management, unofficial sources say. It is believed that IAIA President Alexei Fyodorov was closely connected with UNEXIM Bank. For instance, it was reported that IAIA owed the bank $100 million.8 The plant has a staff of 12,500.
In 1997 it delivered eight Su-30K fighters to India. In 1999 under an additional contract it delivered 10 more such aircraft. Besides, in the 1990 the plant delivered some 12 Su-27UBK trainers to China, six to Vietnam (four under contracts and two as additional deliveries to replace the ones lost in the crash of an An-124 transport plane that was carrying the trainers to Vietnam). In December 2000 IAIA transferred to China eight more Su-27UBK trainers under a December 1999 contract for 28 such aircraft by way of payment of Russia’s debts to China.
In addition to fighters Irkutsk is working on the Be-200 amphibious aircraft. The plant together with the Beriev Aircraft Company set up the “Beta-Ir” JV to build and commercialize the Be-200 amphibious aircraft with a basic price set at $20-22 mln. In 1997 a contract was signed on the delivery of seven such aircraft to the Russian Ministry for Emergency Situations.9 The Be-200 project has financial support from Menatep bank that offered a $10 mln loan.10 The plant is also preparing to launch the production of the Yak-112 four-seater that is now undergoing certification tests.
KAAPO is a state-owned unitary company with personnel of 15,000. In 1992-1995 it manufactured 36 Su-27SK fighters for China, in 1995-1997 six for Vietnam. Since 1998 it has been manufacturing components under the license contract with China. In December 2000 it shipped the first 10 Su-30MKK fighter-bombers to China under the August 1999 contract for the delivery of about 40 such aircraft to the Chinese Air Force. The plant also intends to manufacture Be-103 six-seat amphibious aircraft.
NAPO is a state-owned unitary enterprise with personnel of about 10,000. It specializes in the production of Su-24 frontline bombers and is preparing to launch the serial production of fighter-bombers of a new generation Su-27IB (Su-24, export version Su-32FN). The plant has no orders for such aircraft at the moment. Its financial difficulties lasted throughout the 1990s and only in 1999 the $12 mln contract with Algeria for three Su-24 bombers somewhat improved the situation. A new $120 mln contract for 22 such aircraft was signed with Algeria in 2000. Besides, NAPO is preparing to launch the serial production of the An-38 medium range aircraft.
The Beriev Aircraft Company – the designer of amphibious planes and AEW aircraft. A 38% stake in it is in trust management with AMIC.AMIC formation and development
On August 26, 1996, the president signed a bill on the formation of the state unitary enterprise Sukhoi Aircraft Military Industrial Complex. The complex consisted of the Sukhoi Design Bureau, NAPO, IAIA, KnAAPO and the Beriev Aircraft Company. The participation of the design bureau from Taganrog can be accounted to the fact that it is the designer of Be-200 and Be-103 amphibious aircraft the production of which should be launched at IAIA and KnAAPO. KnAAPO and NAPO were transformed into state unitary enterprises – subsidiaries of AMIC. The federal stakes in the Sukhoi Design Bureau, IAIA and the Beriev Company were contributed to the AMIC authorized capital. AMIC received its registration certificate in April 1998. It is indicative that the serial plants that manufactured Su-25 ground attack aircraft did not join AMIC. On the one hand, this can be attributed to the absence of foreign orders for such aircraft. It is known that mergers gain momentum with the placement of major export orders. On the other hand, the special stance of Vladimir Babak, the chief designer of ground attack aircraft who is trying to form a separate corporation - Shturmoviki Sukhogo (Sukhoi ground attack aircraft) - may be another possible reason.
AMIC brings together three join stock companies (the Sukhoi Design Bureau, IAIA and the Beriev Aircraft Company) and two state-owned enterprises – KnAAPO and NAPO. The government stakes in Sukhoi, IAIA and Beriev were contributed to the AMIC authorized capital to exercise control over them, while KnAAPO and NAPO joined as subsidiaries of AMIC. The companies of the complex retain their legal and economic independence, but the head company was given the right to control their operating strategies. The official idea was that the formation of AMIC would allow its members to pursue a united technological policy, pool the scientific potential of the design bureau and design offices at the plants, optimize the fulfillment of foreign orders at the industrial facilities, concentrate export returns for strategic R&D projects and pursue a united marketing policy of promoting Su and Be aircraft on world markets.
At the time of the AMIC formation it was assumed that corporatization with the government retaining a blocking stake or golden share would be the next stage. On December 27, 1997 the government passed bill #1650 “On the transformation of KnAAPO, NAPO and AMIC state enterprises”. Under the bill in 1998 KnAAPO and NAPO should have been corporatized with 50% + 1 shares being transferred to AMIC.11 And AMIC itself should have been transformed from a state-owned unitary enterprise into an open joint-stock company by the end of 1998. However, the task remains unfulfilled, mainly due to a series of Cabinet crises in 1998-1999 and resistance from governors in Novosibirsk region and Khabarovsk territory.
As in the case of MiG group immediately after the formation of AMIC conflicts began between the managing company and the group members. At the first stage the greatest resistance to corporate development came from the Sukhoi Design Bureau. The confrontation between Chief Designer and General Director of Sukhoi Design Bureau Mikhail Simonov and the first General Director of AMIC, Alexei Fyodorov, was the most visible manifestation of the institutional conflict. KnAAPO and NAPO, the administrations of Khabarovsk territory and Novosibirsk region where the two industrial facilities are located also resisted the formation of AMIC.
In 2000-2001 the greatest resistance to corporate development came already from KnAAPO the management of which supported by the governor of Khabarovsk territory resolutely opposed the idea of turning the enterprise into a joint stock company.
As a result of the conflicts AMIC operations especially in the first two years of existence were virtually blocked. In 1997 - the beginning of 1998 AMIC operations were funded from the IAIA budget. In 2000-2001 the role of AMIC started growing given the growing acuteness of the task of developing the fifth generation fighter because it is believed that only a corporate entity is capable of implementing the expensive project of developing a qualitatively new fighter the concept of which lies outside the limits of the Su-27 family.
In addition to the tension between the central managing company and the group members (the design bureau and plants) there is also serious competition between Irkutsk and Komsomolsk-on-Amur. Until 1999 they operated on different markets and with different goods. Irkutsk was working on the contract with India and delivered two-seat versions of fighters to Vietnam and China. Komsomolsk manufactured only single seat aircraft. However, in August 1999 a contract for the delivery of Su-30MKK two-seat fighters was signed with China. Manufacture orders were given to Komsomolsk that had traditionally worked with China but had no experience of making two-seat fighters. Thus to a certain extent Komsomolsk intruded in the market that used to be controlled by Irkutsk.
Besides, a rivalry has started between Komsomolsk and Irkutsk on the concept of upgrading Su27/30 fighters for the Russian Air Force. Irkutsk has offered the avionics developed by the Russian Avionics Design Bureau and Aerospace Equipment Corporation and installed in Su-30 prototypes under numbers 302 and 597. Meanwhile, Komsomolsk has suggested as the basic version of upgrading fighters of the Su-27 family the concept implemented in the Su-30MKK fighter developed for the Chinese Air Force. The displays of the aircraft were made at Ramenskoe Instrument-Making Design Bureau. So far the Air Force command has spoken in favor of the Irkutsk version but the decision may be revised in the case of the possible replacement of Air Force Commander-in-Chief Anatoly Kornukov and Air Force Chief of Armaments Yuri Klishin.
Sukhoi group development dynamics
Evidently the Sukhoi group has always had a higher development potential than the MiG group. Back in the 1950-60s the Design Bureau led by Pavel Sukhoi developed much more complex and technologically advanced systems. However, the MiG group had a much higher lobbying potential. The thing is that the Soviet Air Force gave preference to simple and cheap aircraft, which the Soviet military-industrial complex could manufacture on a mass scale. MiG fighters were that very aircraft, while Su-7, Su-11, Su-15 and especially Su-27 were marked by technical and engineering perfection and in this sense were closer to the Western concept of developing more expensive but also more effective aircraft. The relatively successful use of the MiG-21 fighter in Vietnam prompted the appearance of a certain legend about MiGs. However, already at the stage of developing third generation fighters (MiG-23) there appeared signs of stagnation and degradation in the MiG group. As for the school of Pavel Sukhoi, its impact is still felt in the Sukhoi group. Mikhail Simonov played an important big role in keeping up the innovative dynamics of the group.
Since 1992 the main efforts of the Sukhoi Design Bureau have been concentrated on the development of new aircraft within the concept of the Su-27 family. On its basis the Su-30 multirole fighter was developed (the Su-30K basic model, the Su-30MKI modification for India, the Su-30MKK for China), the Su-27IB/Su-32FN/Su-34 frontline bomber, the Su-33 naval fighter and the Su-33K-UB two-seat naval trainer. All of them belong to the heavy combat aircraft class. The S-54/55/56 line is especially interesting from the viewpoint of diversifying the list of goods developed at the Design Bureau. It is a family of light aircraft (a trainer, light fighter and deck fighter) also developed on the basis of Su-27. However, work on the project has been virtually frozen.
Besides, the Design Bureau continues efforts to improve the Su-25 ground attack aircraft. The Su-25T model has been developed to use a wide range of high precision air-to-surface weaponry, and the Su-25TM version (Su-39) with the Kopyo radar and a capacity of applying the entire range of air-to-surface and air-to-air weaponry, including RVV-AE missiles with an active radar homing warhead.Upgrading options
Until 1999 the plants of the Sukhoi group and Sukhoi Design Bureau paid relatively little attention to retrofitting the Su-27/Su-30 fighters on the fleets of the Russian and foreign air forces. Firstly, the number of such aircraft abroad was quite insignificant. Secondly, the biggest purchaser of the aircraft – China – was interested in the acquisition of serial Su-27SK and Su-27UBK fighters and trainers almost identical to those used by the Russian Air Force. The demand in Vietnam was almost identical. The requirements of the Indian Air Force led to the development of a qualitatively new cockpit display and the overhaul of the Su-30 airframe (the installation of the horizontal fin assembly and engines with a controlled thrust vector). Thirdly, the Russian Air Force until 2000 did not raise the question of upgrading the Su-30 and Su-27 aircraft at its disposal.
However, beginning with 1999 interest in modernization started growing given the growing number of Su-27 and Su-30 aircraft delivered to foreign clients. In August 1999 at the air show in Zhukovsky a modernized version of Su-30 (board number 302) capable of carrying air-to-surface weaponry and R-77 (AA-12) medium range missiles was shown. A version of Su-30KN developed on its basis but optimized for anti-ship missions was demonstrated in September 2000 at the show in Gelendzhik. And finally in February 2001 the Russian Air Force officially announced that it was choosing this modification as basic for modernization of the fighters of this type it had at its disposal. The Su-27UB trainers earlier delivered to China and Vietnam and also the 18 Su-30K fighters delivered to the Indian Air Force may be upgraded according to the same pattern.
1 INFO-TASS electronic database, Vega base, 20.06.1997
2 Izvestia, 25.07.1997, p. 5
3 INFO-TASS electronic database, Vega base, 29.09.1999
6 Lada Klokova, “AVPK Sukhoi: Surovye budni”, Kompaniya, #6, 26.02.1998, p.26
7 INFO-TASS electronic database, Vega base, 08.01.1998
8 Segodnya, 13.08.1997, p. 7
9 INFO-TASS electronic database, Vega base, 14.08.1998
10 Moskovslii komsomoletz, 27.10.1997, p. 3.
11 Kommersant-Daily, 31.01.1998, p. 5
12 Flight International, 26.02-04.03.1997, v. 151, #4563, p. 8.
Centre for Analysis of Strategies and Technologies (CAST)