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. Last Updated: 07/27/2016

Baltiisky Zavod Harbors Grand Plans for Upgrade

MTThe first of Baltiisky's three Project 1135.6 frigates being built for the Indian navy
ST. PETERSBURG -- Giant plates of welded steel echo the ear-grating sound of metal being hewed. Dwarfed by its size, workers head toward completion of what by May will be the first of two chemical cargo tankers Baltiisky Zavod is building for a Norwegian company.

Outside the hangar, docked in the Neva River, is the first of three Project 1135.6 frigates the plant is making for the Indian navy. Built for foreign customers, the battleship and the civilian tanker are the prime sources of revenue for the plant, which like many companies in the mammoth defense sector has seen little in the way of orders from the state.

But Baltiisky's long-time director, Oleg Shulyakovsky, is not losing heart. Together with plant owner IST Group, whose business ranges from machine-building to mining, he is looking to shake up Baltiisky's infrastructure by overhauling its production line and increasing its capacity.

"The infrastructure is old and we don't have enough capacity to build quickly," Shulyakovsky said.

Baltiisky Zavod, an enterprise with a 145-year history, has built everything in its time from oil tankers to nuclear ice-breakers to submarines. But it has not seen any major repairs for the past 10 years and is stretched to capacity, said the plant's technical director, Yury Rybalchenko.

In a bid to turn things around, Baltiisky is upgrading its facilities, a process that is due to be completed by 2006 and is expected to reduce the time required for fulfilling contracts by about 25 percent, Rybalchenko said.

On the plant's agenda is a three-stage reconstruction plan, including the building of a new frame-making workshop with a covered, automated steel warehouse -- the first of its kind in Russia. Also planned are the upgrade of the assembly and welding workshop, a new 55-meter-high and 240-meter-long hangar, a pipe-processing workshop, and the modernization of its 350-meter-long stocks.

Baltiisky also harbors ambitions to build a dry dock -- Russia's first -- but that remains in the distant future, Rybalchenko said.

The frame-making workshop is expected to be already working at half capacity this summer.

With its opportunities to sprawl cut by the Neva on one side and the city on the other, the plant is demolishing some of the outdated facilities on its 70-hectare property to make room for new infrastructure. In order to build a hangar for tankers and destroyers, Baltiisky wants to knock down a dormitory currently housing 20 percent of its 6,500 strong staff.

The overall modernization will cost around $340 million, some of which will be self-financed, while the rest will be attracted through loans, Rybalchenko said.

Following modernization, the output of processed metal is expected to jump to 60,000 tons per year, more than in Baltiisky's peak year of 1976 when the plant processed 40,000 tons.

Shulyakovsky is confident the demand will be there to meet the increased capacity, which will be more than the current capacity of Baltiisky and two more St. Petersburg shipbuilding firms, Severnaya Verf and Admiralteyskiye Verfi, combined.

The demand will take time to develop, Shulyakovsky said, as Russian shipowners and the navy turn to domestic producers for new ships.

On the defense side, Shulyakovsky plans to participate in a government tender expected this fall to build a frigate for the Russian navy.

The plant is currently working on a $1 billion contract to deliver three frigates to India, two chemical cargo tankers to Norway and a ferry to Portugal, the latter to be launched in July.

Baltiisky is continuing work on the ice-breaker 50 Years of Victory, on which work was temporarily halted due to financial constraints. This year, Baltiisky will get 400 million rubles ($12.8 million) from the budget. Work is to be completed in 2004.

In May, the first Krivak-class 4,000-ton frigate, dubbed Talwar (Sword) is to be delivered to the Indian navy. The second one, Trishul (Trident), is due in fall this year, and the third, Tabar (Axe), will be delivered in May next year.

The first frigate completed the state program of tests in March at the naval base in Baltiisk, Kaliningrad.

The 125.5 meter, state-of-the-art frigate is equipped with advanced weapon systems -- capable of striking naval, aerial and coastal targets -- including the Club-N anti-shipping missile complex, the Puma-Universal artillery system and the Kashtan anti-aircraft complex. It also has a landing pad for the Kamov Ka-27 helicopter.

The frigate, the main source of both work and income for the plant, is also a reproach to the Russian navy.

"This ship, and this series as a whole, is unique in the sense that for the first time in Russia, a foreign customer is getting a ship that the Russian navy does not have itself," Shulyakovsky said. In another first, the ship is fitted with equipment from several foreign countries, including navigation systems and communication systems supplied by India.

Shulyakovsky said this is a serious success for both Russia and India and that more Indian equipment will be installed on the following frigates.

He said that while export contracts account for the majority of revenue, domestic orders will pick up in the future.

For a decade, the Russian navy did not buy a single ship, with the situation changing only last December when rival firm Severnaya Verf laid the keel of the first of a series of naval corvettes.

Baltiisky participated in the government tender to build the corvettes but lost to Severnaya Verf, a result it later contested, albeit unsuccessfully.

It is also awaiting the government's final decision on another dispute over a $1.4 billion export contract to build two Project 956EM destroyers for China.

Severnaya Verf had previously built 19 such destroyers -- 17 for Russia and two for China -- and was widely expected to pursue the next contract. But when a tender was called at the behest of former Deputy Prime Minister Ilya Klebanov, Baltiisky Zavod was recommended as the contractor for the deal.

Kasyanov later ordered a review of the situation, and both firms are still waiting for his decision on who will actually build the ships.