Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Fire-Ravaged Factory Seeks U. S. Help

The huge KamAZ truck factory, devastated by a fire last month that caused $1 billion in damage and threw the Russian trucking industry into disarray, has turned to a U. S. engine maker for help rebuilding the plant.


A source close to the negotiations said that the U. S. engine manufacturer Cummins Diesel is likely to land major contracts for the rebuilding of the plant and for the supply of engines to the crippled KamAZ factory.


A Cummins official, who declined to be named, said this week that the company had signed a confidentiality agreement with KamAZ.


Nikolai Bekh, KamAZ's general director, said in a recent announcement, "Our foreign partners have offered us help and we intend to turn to the foreign suppliers who initially helped us equip the plant".


Cummins Diesel, the world's biggest independent engine manufacturer, set up a joint venture in November 1991 at the Tatarstan plant to develop a KamAZ truck with a Cummins diesel engine. About a dozen prototype models have been completed.


The fire started on April 14 with a short circuit in the plant's electrical system in the engine and transmission assembly plants of the modem KamAZ truck works at Naberezhnye Chelnye in Tatarstan, which makes 90, 000 long-haul trucks every year.


The plant's electronic sprinkler system failed, allowing the blaze to spread to the bitumen on the roof of the factory complex. When the last flames were extinguished a week later, a square kilometer of plant had been gutted. KamAZ had no insurance.


The loss of the plant, the producer of Russia's best heavy engine and transmissions, has hit KamAZ itself and at least three other big vehicle producers.


The Moscow Raw Materials and Commodities Exchange reported that in trade this week the price of KamAZ trucks jumped 60 percent in expectation of shortages.


The Lviv bus factory in Ukraine and the UAZ military truck factory rely almost totally on engine blocks from KamAZ. The Moscow-based ZiL truck manufacturer also buys about 6, 000 KamAZ engines.


But the worst effects could be felt in the Russian military, which relies on ZiL and UAZ for its trucks.


Bekh, KamAZ's general director, called the fire a "national disaster".


He put the cost of the fire at 150 billion rubles ($180 million), but Western industry sources have put the cost of rebuilding a modern plant at nearer to $1 billion.


KamAZ still has a stock of engines to keep its truck assembly line going, and has redeployed workers to an engine rebuilding plant with the capacity to produce 40, 000 engine blocks a year.


Sources said Cummins Diesel was also likely to gain work as a contractor in the reconstruction of the plant, built in 1970.


Several other Western firms have shown an interest in the Russian heavy vehicle industry, which offers cheap labor but which is blighted by poor product design and by a lack of good diesel-powered engines.


The U. S. firm Caterpillar Overseas has worked with the ZiL truck plant in Moscow supplying equipment and helping ZiL build a diesel engine block. The German firm Daimler Benz recently signed a contract for the partial assembly of its buses at a plant at Golytsino near Moscow.