Procurement: The Russian Mess At MAKS


September 20, 2015: In late August Russian military exports suffered a major defeat outside Moscow. Since the early 1990s Russia has held a major aerospace sales event outside Moscow called MAKS. It is an opportunity for Russian aircraft and space equipment manufacturers to show off to an international audience and, more importantly, make major sales. At the 2013 MAKS show Russian manufacturers recorded $18 billion in sales. During the 2015 show the sales were less than half that, with Russian commercial aircraft makers suffering more than their military counterparts. There were several reasons for this, and the Russian aggression in Ukraine and declaration that NATO was trying to destroy Russia played a small part in the sales decline. It is true that many prospective customers, especially from the Middle East, were not in the mood to buy Russian. In part that was because Russia has declared itself an ally with Iran and the beleaguered pro-Iran Assad government in Syria. Iran has become increasingly threatening to the Arab government in the Persian Gulf and buying Russian no longer seemed like the thing to do. The Arabs came to MAKS, not to buy, but to look, leave and thus make a point.

There was another major factor working against Russian salesmen; declining Russian quality and performance. Since the Cold War ended in 1991 the Russian defense industry has been on life support. Many firms have not survived. This has been a problem for the entire Russian aerospace industry because many of the smaller firms make key components. In the 1990s this did not seem like a problem because with the Cold War over it was possible to buy a lot of aviation components from Western suppliers. But the Ukrainian aggression brought with it sanctions and a lot of vital components are no longer available. Then there is the fall in oil prices, which has crippled the Russian economy in general. Finally there is the growing authoritarianism of the Russian government. All this combined to drive a lot of talented Russians out. This has been going on since the 1990s but accelerated in the last year because of the sanctions and recession.

Quality control with Russian aircraft and space vehicles was always a problem and now, with so many good people gone, it is not getting better but worse. A lot of major customers, like India, are looking West. Another major customer, China, has been ordering a lot less because they have stolen a lot of Russian military technology and are now using it to build superior versions of Russian weapons.  All these negative trends came together at MAKS. Worse, the defeat was quite public and very expensive.



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