- Title: Ukraine plant sucked into N.Korea missile row has fallen on hard times
- Date: 18th August 2017
- Summary: DNIPRO, UKRAINE (AUGUST 15, 2017) (REUTERS) YUZHMASH HEAD OFFICE DNIPRO, UKRAINE (AUGUST 17, 2017) (REUTERS) UKRAINE FLAG OVER YUZHMASH HEAD OFFICE PEOPLE WALKING OUT OF YUZHMASH HEAD OFFICE BUILDING YUZHMASH CHIEF ECONOMIST, DMITRIY NIKON, SPEAKING TO REPORTER (SOUNDBITE) (Russian) YUZHMASH CHIEF ECONOMIST, DMITRIY NIKON, SAYING: "As of 2017 our financial position has already stabilised sufficiently, we have already signed a sufficient number of new contracts and achieved the possibility to receive the finances to stabilise our current position. And as of 2017, in my estimation, (the outlook) looks much better than it was a year or two ago. In principle, I would say we are on the way out of the crisis that we experienced in 2014 and 2015. DNIPRO, UKRAINE (AUGUST 15, 2017) (REUTERS) VARIOUS OF YUZHMASH FACTORY COMPLEX VARIOUS OF GATED AREA OF FACTORY COMPLEX DNIPRO, UKRAINE (AUGUST 17, 2017) (REUTERS) (SOUNDBITE) (Russian) YUZHMASH CHIEF ECONOMIST, DMITRIY NIKON, SAYING: "At the least we definitely have signed contracts at the minimum extending to 2021, these are already signed." NIKON DURING INTERVIEW (SOUNDBITE) (Russian) YUZHMASH CHIEF ECONOMIST, DMITRIY NIKON, SAYING (ASKED ABOUT PLANS TO INCREASE STAFF WAGES): "Well, we plan to. We plan to." REPORTERS SAYING: 'YES? YOU WILL CONSIDER IT? "Yes, this is possible." REPORTER SAYING: 'AND IT WILL DEFINITELY BE INCREASED? "Well there is a difference between possible and definite. (LAUGHS) But, I would say that there is a high likelihood that we will increase them." DNIPRO, UKRAINE (AUGUST 15, 2017) (REUTERS) WALLS OF COMPLEX WITH BARBED WIRE BARBED WIRE DNIPRO, UKRAINE (AUGUST 17, 2017) (REUTERS) NIKON SPEAKING TO REPORTER (SOUNDBITE) (Russian) YUZHMASH CHIEF ECONOMIST, DMITRIY NIKON, SAYING: "To a high degree the system that existed at the factory during the Soviet Union has pretty much remained in place. So, pretty much, the whole perimeter is guarded by a military unit, which is part of the Ukraine National Guard. An armed security unit operates inside the factory." NIKON DURING INTERVIEW (SOUNDBITE) (Russian) YUZHMASH CHIEF ECONOMIST, DMITRIY NIKON, SAYING: "They work around the clock. With documents, in principle the same regulations remain in place that existed under the Soviet Union, so technical permissions are issued directly to those people who require it. At the end of the working day this must be handed over, all the documentation is secured by an alarm system. In principle we have not had a single instance of a finished product or a document going missing or disappearing." DNIPRO, UKRAINE (AUGUST 15, 2017) (REUTERS) PEOPLE WALKING ALONG SQUARE WITH MODEL OF ROCKET ON DISPLAY VARIOUS OF ROCKET MODEL, READING 'YUZHMASH' PEOPLE WALKING ON STREET VARIOUS VIEWS OF DNIPRO
- Embargoed: 1st September 2017 20:15
- Keywords: missile technology North Korea rocket programme Yuzhmash chief economist troubled factory source Ukraine Dmitriy Nikon
- Location: DNIPRO, UKRAINE
- City: DNIPRO, UKRAINE
- Country: Ukraine
- Reuters ID: LVA0016UOP6BR
- Aspect Ratio: 16:9
- Story Text:The wall around the Yuzhmash rocket factory in east Ukraine is in places overgrown with weeds, a sign of hard times at a plant which a new study says could be the source of engines that power North Korean missiles.
Workers at the plant have had their hours cut and wages are in arrears, but Yuzhmash denies the study's finding that unhappy employees could have been induced to steal engine technology and sell it to illicit arms dealers who passed it on to Pyongyang.
The study by a former U.S. rocket scientist, published by the London-based International Institute for Strategic Studies (IISS), concluded that missile engines used by Pyongyang derive from designs linked to only a few former Soviet factories. It based its findings mainly on photographs taken by North Korea.
A Reuters reporter who visited Yuzhmash in the city of Dnipro this week found staff struggling to make ends meet and facilities falling into disrepair. The only visible security cameras and guards around the plant were at the main entrances.
The average wage is around $160 a month but even that is not always paid on time, he said.
Yuzhmash used to be part of a state-run conglomerate that built rockets for the Soviet space and defence programmes.
When the Cold War ended, it became a Ukrainian state enterprise. Its workforce shrank but it limped on, producing space rockets, mostly in partnership with the Russian plants it had worked with in the Soviet era.
After Russia annexed the Crimea peninsula from Ukraine in 2014, and a conflict began between government forces and separatists in east Ukraine, those ties were disrupted.
Yuzhmash General Director Sergei Voit told workers in January that annual revenue had fallen to a quarter of what it was before the conflict.
He listed problems including "worn-out manufacturing capacity, a hugely difficult situation with personnel ... arrears on wages, power bills and debt repayments."
The plant's chief economist, Dmitriy Nikon, told Reuters that new contracts were being signed with customers, the factory's finances had stabilised and there were plans to raise salaries by the end of the year.
Nikon said that on average staff work three days a week, not just one, and earned an average of around $230 per month.
Defending security at the plant, Nikon said the perimeter and areas inside it were guarded, and staff had to surrender sensitive documents after each shift.
Technology from Ukraine has attracted the interest of North Korea in the past. In 2012, two North Koreans were sentenced by a Ukrainian court to eight years in jail after approaching an employee at a firm affiliated to Yuzhmash seeking secret rocket propulsion documents.
The engine which is the subject of the new study is around two metres tall and one metre across. Yuzhmash's sister company Yuzhnoye, which handles design, said the engines used by North Korea did not match anything the plant had ever produced.
The factory no longer has the capacity to manufacture the RD-250 engines referred to in the IISS report, it said, and all RD-250 engines fit for flight use that it produced had left the factory and been shipped to legitimate clients.
Some U.S. intelligence officials also dispute the findings of the study.
Ukraine is a signatory to an international pact called the Missile Technology Control Regime but the pact has no external verification mechanism.
Ukrainian officials have said the components mentioned in the IISS study were more likely to have come from Russia. Moscow denies this. - Copyright Holder: REUTERS
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