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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle

Economy

Economy

Ukraine aerospace sector’s push for Western tie-ups met with skepticism

An area of Ukrainian aerospace company Motor Sich and association "Corporation Ivchenko" are seen at the annual exhibition of weaponry and military equipment "Arms and Security 2021" in Kyiv, Ukraine June 15, 2021. REUTERS/Gleb Garanich
An area of Ukrainian aerospace company Motor Sich and association "Corporation Ivchenko" a... An area of Ukrainian aerospace company Motor Sich and association "Corporation Ivchenko" are seen at the annual exhibition of weaponry and military equipment "Arms and Security 2021" in Kyiv, Ukraine June 15, 2021. REUTERS/Gleb Garanich
An area of Ukrainian aerospace company Motor Sich and association "Corporation Ivchenko" are seen at the annual exhibition of weaponry and military equipment "Arms and Security 2021" in Kyiv, Ukraine June 15, 2021. REUTERS/Gleb Garanich
An area of Ukrainian aerospace company Motor Sich and association "Corporation Ivchenko" a... An area of Ukrainian aerospace company Motor Sich and association "Corporation Ivchenko" are seen at the annual exhibition of weaponry and military equipment "Arms and Security 2021" in Kyiv, Ukraine June 15, 2021. REUTERS/Gleb Garanich

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Ukraine’s aerospace sector’s push for Western tie-ups met with skepticism. As it seeks new direction after losing Russia as its largest client and having a China tie-up rejected, the Ukrainian aerospace business Motor Sich has little to show for its wartime attempt to attract possible partners in the West. Motor Sich is currently facing a situation in which it is seeking a new direction.

The difficulties experienced by one of the most well-known corporations in Ukraine highlight how difficult it is for businesses in the nation to develop themselves when there are worries over their track record of corruption and when the war with Russia continues.

Motor Sich, controlled by the state, is Ukraine’s primary producer of airplane and helicopter engines. It is responsible for producing engines for some of the largest cargo planes in the world.

In an interview with Reuters, Olexiy Nikiforov, the Chief Executive Officer, it is stated that the company’s goal is to look to the West. Over nearly a year, he has been looking for opportunities to meet with defense companies from the United States, such as Lockheed Martin (LMT.N) and RTX (RTX.N), at air shows and government gatherings.

This week, when defense officials from the United States and Ukraine, as well as executives from other industries, will be gathering in Washington for a conference that the White House will host on Wednesday and Thursday, he is hoping to have another opportunity to present his argument in favor of further industrial collaboration.

The Ukrainian capital of Kyiv is increasing its weapons manufacturing and is also hoping that collaborative ventures with worldwide producers of armaments will assist in revitalizing its domestic sector.

Based on the interviews conducted by Reuters with over a half dozen U.S. military executives, former U.S. officials, and academics, it appears that Motor Sich is facing several obstacles that are stopping it from making progress.

Even though it will take some time to demonstrate that they are capable of conducting business in a manner that is by both European and American standards, American companies remain open to the possibility of future collaboration with Ukrainian companies.

A defense official from the United States claimed that Ukrainian defense firms will raise “red flags” during the thorough due diligence and compliance checks that Western defense companies conduct. According to him, these problems are not insurmountable, but they can further delay the clearance process for co-production agreements.

According to Pavlo Verkhniatsky, head of COSA Solutions, a strategic intelligence agency in Ukraine that assists Western corporations in entering the Ukrainian market, Ukraine’s military sector has struggled with efficiency and openness issues.

“It has baggage and a bad reputation in terms of operating its assets and the efficiency of launching and developing projects,” said the executive.

Volodymyr Zelenskiy, the President of Ukraine, has issued several warnings that his government would not tolerate corruption and has dismissed officials suspected of engaging in such behavior.

One of the most senior members of the board of directors of Motor Sich, Sergiy Korzh, stated that any outcomes from the summit would not have a significant influence right away.

“You can imagine how long it will take … for the results of such cooperation to come to the battlefield,” he told the news organization.

Nevertheless, Korzh stated that he had recently made significant progress following a meeting with officials of the United States Department of Commerce and a few large American corporations at the Dubai Air Show in the previous month. Because the discussions concerned defense, he refrained from providing any specifics for security concerns.

According to a spokeswoman for the International Trade Administration of the Department of Commerce, the meeting was not an official gathering. According to the spokeswoman, a representative from Motor Sich stopped by the ITA booth and gave a brief presentation on their companies’ capabilities.

THE ELIMINATION OF CORRUPTION

Rebuilding Ukraine’s defense and aerospace sectors has become a primary priority for Zelenskiy, including increasing investments in drone technology.

In addition, the Ukrainian government took advantage of wartime authorities to take ownership of Motor Sich away from Chinese shareholders. This addressed a primary concern of United States defense officials under the administration of Donald Trump.

The financial realities of the conflict with Russia that followed the invasion of Ukraine in 2022, which Moscow refers to as a unique military operation, contribute to the additional difficulties that are being experienced.

Because Russia invaded Ukraine in February 2022, Motor Sich’s revenues have decreased by roughly forty percent, according to Korzh, who spoke to Reuters.

According to the CEO of the company, Nikiforov, the enterprise’s manufacturing facilities in Zaporizhzhia have also been subjected to repeated missile strikes by Russian troops, putting the safety of 15,000 personnel and equipment in danger.

Defense contractors in the United States have not demonstrated a significant public interest in forming partnerships with aircraft firms such as Motor Sich to produce projects shortly.

According to a statement by Lockheed Martin, the company is “working closely” with the United States government to support its reaction in Ukraine. When asked about a proposal by Motor Sich to install its engines in Ukraine’s Sea King helicopters, Lockheed Martin declined to comment.

When Boeing (BA.N.) was asked for a comment regarding the possibility of working with defense companies in Ukraine, the company responded as follows: “While we do not comment on rumors of potential discussions or transactions, we continually review our markets and portfolios to ensure that we are providing the best capabilities and value to our customers.”

RTX and General Electric (GE.N.) declined to comment on the matter. In response to a request for comment, Northrop Grumman (NOC.N) did not respond.

While the discussions that will take place in Washington later this week and the interactions that took place during the Dubai air show last month have the potential to be fruitful, the political realities that Western defense officials are currently wrestling with may impede any progress that may be made.

One executive in the United States Department of Defense stated that American manufacturers of weapons are keeping a careful eye on whether or not the violence in Gaza, in addition to the diminishing support among Republicans in the United States for Ukraine, would reduce Washington’s desire to work with Ukraine in the future.


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