Kamyshov A. A.:

The completed work progress graph shows 1 billion 535 mln Hrn and sales progress graph shows 1 billion 029 mln Hrn for the period from 2010 to 2015, including exported products for 934 mln Hrn.

For the last 6 years in total the company transferred 1 billion 180 million Hrn to the budget, at that we received from the budget 153.6 mln Hrn for the period from 2010 to 2015. In 2015 the company transferred 449.8 million Hrn to the budget and received from the budget 15.1 mln Hrn.

In Sep 2010 the company has 4,584 employees. By 2015 the number of employees increased and reached 5,122. Today 5,324 employees are working in our company. Wages and salaries increased from 3,166 Hrn. (in 2010) to 7,841 per employee (in 2015). Average age of the employees was 46.6 in 2011, while in 2015 it became 44.6 owing to the young specialists who joined the company.

For the period from 2010 to 2015 total financial receipts of the company reached 8 billion 163 mln Hrn., including export receipts of 7 billion 134 mln Hrn. In 2015 the company received 3 billion 486 mln Hrn, including export receipts of 3 billion 120 mln Hrn.

The next graph shows the progress of financing other Ukrainian company-partners by our company. Within this period we provided 1 billion 092 mln Hrn., including 606 mln Hrn. for aerospace companies and 486 mln. for the companies of UkrOboronProm, Ministry of Defense, Ministry of Education, and the National Academy of Sciences.

The next graph demonstrates the details of distribution of the finances our company provided for partner-companies in 2011-2015. 1 billion 847 mln Hrn. were allocated to aerospace companies, 159 mln Hrn. were provided for UkrOboronProm companies, Ministry of Defense companies received 21.5 mln Hrn.,  Ministry of Education companies and the National Academy of Sciences received 31.3 mln and  49.7 mln. Hrn. respectively.

The next graph shows the details of distribution of the finances our company provided for Ukrainian partner-companies in 2015. 606 mln Hrn. were paid to the companies of the Ukrainian Space Agency, UkrOboronProm companies received 93.9 mln Hrn., Ministry of Defense companies were financed with 10.9 mln Hrn., 15.2 mln Hrn. were paid to Ministry of Education companies and 21.2 mln. Hrn were allocated to the National Academy of Sciences, and the rest of the Ukrainian partner-companies received 344.9 mln. Hrn.

So within the mentioned period our company has been actively developing. It is demonstrated by the salaries and wages rise that exceeds the average level of salaries rise in many other industries in Ukraine at least 2,5 times. Besides, quite considerable amount of money was transferred to the budget. The company transferred 448 mln Hrn. to the budget in 2015, when we divide this amount by the number of employees, we receive 87,000 Hrn. paid by every employee of the company to the budget in 2015.

The graphs that show the finances our company allocated to the other Ukrainian aerospace companies demonstrate that our company, in fact, sustain them, because the Ukrainian space program of 2013-2017 envisages 1 billion 120 mln Hrn. from the budget to be allocated to Ukrainian aerospace companies. We saw how much money is paid by Yuzhnoye to the Ukrainian partner-companies. In average we cooperate with 110-120 companies a year, though in 2010 we cooperated with only 73 companies. As per expert analysis our company provides work for around 12,000 people within the aerospace industry and around 20,000 people in other industries.

Tkachenko V.D.:

Nowadays it is prestigious to work in Yuzhnoye SDO not only for the dwellers of Dnipropetrovs’k, but for the young specialists from other regions of Ukraine. As you heard more than 2,000 young specialists joined our company. Yesterday when we received the absolutely unexpected order to suspend our General Designer – General Director from company management, the team was shocked. It was absolutely unexpected and the team did not accept it. In fact Yuzhnoye work team has never been treated like that for the whole period of the company existence. It happened without any preliminary explanations. The management of the National Space Agency has not organized any meetings with us. So there is no pre-history of this issue. That’s why based on the initiative of Yuzhnoye employees we arranged a meeting here and gave our explanation to the team. The employees expressed their negative views on the situation and their resentment. We wrote a letter to the President that has already been sent by e-mail. Now we are collecting the signatures. Around 3,000 employees have voluntarily signed the appeal and the collection of signatures is going on. I assure you there are no indifferent people in our team with respect to this issue. The team resents such an attitude.

Question: Did the National Space Agency explain the reason of such suspension? Were explanations given after the order was released, by phone or some other way?

Tkachenko V.D.:

No explanations were given. We received the order and that’s all.

Question: Any argumentation? What is the reason?

Tkachenko V.D.:

There was no appropriate argumentation. No representative came, no discussion were made. We have not seen anyone from the National Space Agency management here. It is not an appropriate way of replacing a manager of a successful company.

Question: What are the possible consequences?

Tkachenko V.D.:

The consequences might be very negative, not only for the company, but for the whole industry. You heard and I believe paid your attention to the figures presented earlier. In fact, the success of the company is connected, first of all, to the successful international business activity. You know what the image of a brand name means. Yuzhnoye is a brand name, to a large extend, personified by its General Designer – General Director. He started working here as an engineer and reached his current position gaining vast experience and highest qualification as well as excellent reputation all over the world. Owing to his reputation among aerospace community all the international contracts were personified. You know it is not easy to conclude the international contracts for the amounts we mentioned before. The guarantees are needed, and first of all, the guarantees of the person who signs the contract. Our General Designer – General Director is such kind of a person. He is known to the world’s technical and scientific elite. He was elected Vice-President of the International Astronautic Federation in Jerusalem last autumn. He was trusted with certain organizational and managerial issues and everybody in the world recognizes it. We do not understand the attitude of the National Space Agency.

 Question: Do you know who is going to replace him?

Tkachenko V.D.:

We do not know. Nobody asked our opinion, gave any explanation or discussed it with us. I would like to pay you attention to the fact that our company operates based on the certain regulations and company charter. As per appropriate changes procedure the charter is to be submitted to us for coordination and approval. Around 2 weeks ago this charter was changed by the National Space Agency unilaterally. They abolished the position of General Designer – General Director, made some other changes important for our company. At least they could have consulted with us, but they did not. Moreover, the registration of the company charter that was carried out in Dnipropetrovs’k was made unilaterally. They brought the charter, registered the changes in it, without visiting us and showing the charter to us.

Mashchenko A.N.:

The international aerospace community has so close ties that it is very sensitive to any changes. Who is going to work with Yuzhnoye SDO where the head of the company was replaced yesterday, where new head will be nominated tomorrow? What is going on? Some people believe that the state-owned companies are the main sources of corruption in Ukraine. They believe that Yuzhnoye supporting half of the Ukrainian aerospace companies, returning 10 Hrn. to budget per each Hrivna invested into it by state is the company that needs to be restructured, where the top managers need to be changed to improve the management, because the highest salaries in Ukraine, numerous purchase orders and world’s recognition is the result of bad management. We cannot understand it. There is no ground for that.

We have a team and General Designer – General Director who heads the team that are on the same wave and solve difficult and important problems. We used to see the eye of the problems but right now for the first time we are cannot define cause-and-effect relation. You know the phrase “none of us is irreplaceable”, but there are people that need not to be replaced, because the situation is too serious now since it will have an impact on the lives of thousands of people – employees and their families. During this period such kind of changes, though “none of us is irreplaceable”, might be characterized by catastrophic events for Yuzhnoye SDO. I cannot give you any names because we do not consider any other person in principle.

 Question: Theoretically, is there any person in Ukraine who understands the specificity of you design office? Do you know any?

Mashchenko A.N.:

We have world-class specialists in aerospace industry of Ukraine, in Yuzhnoye SDO and other companies, but each of them is doing his or her own job.

Question: Were there any audits in your company which could prove facts about allegedly bad management?

Kamyshov A.A.:

We have regular auditing like in all other companies. We are not forgotten.

Question: Were there any extraordinary findings or cases which could all of sudden lead to such situation?

Kamyshov A.A.:

Nothing extraordinary was neither found nor happened. We had routine audits and like it was the case with other state or private companies very often there were law suits with auditing agencies to prove our case.

Question: Could you site some examples about some of such law suits, some details?

Kamyshov A.A.:

In 2014-2015 we were deputing our engineers to Baikonur launch site and paid them 37 USD per diem. Baikonur is located in Kazahstan, but the launch site is rented by Russia, so we paid our technicians like we did to those who traveled to Russia, while audit agency insisted we should pay them 27 USD since it is in Kazahstan, despite of the fact that in our agreements with the Customer there is a provision that the Customer commits to reimburse us 37 USD per diem. And such cases are more than enough.

Question: What are the risks for the company or for a country in view of this situation.

Kutovoy S.V.:

I will provide you some information which could be an indirect answer to your question. 85-90% of Yuzhnoye income goes to foreign contracts. Amounts in Hrn. were shown in earlier presentation. We have customers in more than 30 countries.  This is confidential information and I can only tell that we had signed several hundred contracts.

Question: What are the most ambitious contracts?

Kutovoy S.V.:

They are many, but I will mention some of them that both, us and Ukraine, can be proud of like the one with Orbital ATK based on which we are to supply the first stage, designed by us and manufactured by Yuzhmash for Antares LV, to US to deliver cargo to ISS. There is another program named Vega under cooperation with a number of European companies. Though Ukraine is not a member of ESA, many European companies have acknowledged our high level of space technology and attractive prices for our products and contracted us to supply engine for stage 4&5 of VEGA LV. There were five successful launches and now we holding talks with our European partners aimed to continue supplies of more engines for European LV. These are just 2 examples. Besides, there are some other older and renown programs like Sea launch, Land Launch (launches of Zenit rocket from Baikonur in Kazahstan). Unfortunately, now these programs are going through hard times as there are difficulties with finding customers and markets, but Yuzhnoye is doing its best to make them successful again.

Question: Last week Ukrainian government passed the law on changes in the system of the state companies management which provides for establishment of the so called supervisory board and apart from it, there are ongoing discussions on the merge of Yuzhnoye with Yuzhmash. Were you told anything about such advisory board or merge with Yuzhmash? Also, rumors say that Mr. Teteruk (Ukrainian MP, former army officer) wants to become a General Director of the company.

Mashchenko A.N.:

In regard to Mr. Teteruk I heard this sort of the so called joke. He visited our facility along with the Space Agency Director as member of the Parliament Security and Defense Committee, similarly he visited US as a member of Ukrainian delegation along with the Space Agency Director and our general Designer/General Director A. Degtyarev.  But I know nothing about his ambitions.

As to the Advisory Board we do not see anything unusual in it as a system and since we have to progress all the issues should be resolved openly. However, there is a saying “If you do not know what to do – do nothing” as a people who have no knowledge in a particular field can bring nothing but damage.

In regard to Yuzhmash I can say this. If you compare Yuzhnoye, a design company and Yuzhmash as a factory which is to manufacture hardware under current economic, financial and market situation you could see that Yuzhmash is facing much more problems on the way of its operation. There are issues with funding, restructuring of the company, search for orders, payments of wages, and etc. But this is a state company and despite of this fact this company was surviving through very difficult times over decades and such situation was deteriorating. This situation in Yuzhmash has an impact on Yuzhnoye as well since we need a plant to be our stable partner in the space business as it was to be for the last 60 years. In view of this situation we are trying to allocate some funds to Yuzhmash to support some joint projects and help them pay salaries.

In regard to the merge. Such discussions are there and attempts to restructure two companies were made by the previous Space Agency Director. However, Ministries of Finance and Justice were against such restructuring until and unless all the plant debts had been settled.

Current management of Space Agency has some other views on the merge, planning to add a number of companies to this configuration. But this idea did not work either. What helped in reality to Yuzhmash was the money allocated by us to pay wages to the workers.

Now in view of this extremely difficult situation and in order for our two companies to overcome current problems we have setup a Board of Directors as only we together can plan and program our future. This board of directors is to have regular sessions not less than two times a month to discuss and resolve all the outstanding issues at this round table in here. We discuss various problems such as salaries, utilities debts, work arrangement, restructuring, and etc. What I mean to say is the two General Directors, Mr. Degtyarev and Mr. Voyt are trying at their best to resolve current problems through the joint discussions and joint efforts to make the loco standing overloaded with Yuzhmash problems move. In brief this all I can say about the situation.

Question: Is  Mr. Degtyarev in the office now or is he on a sick-leave?

Mashchenko A.N.:

Mr. Degtyarev is in the Space Agency now on request of the Space Agency Director. We are even wondering in what status he was called to report there, obviously as a private person since he had been already sacked.

Question: What is the current manpower of Yuzhnoye? You said that almost 3.5 thousand had signed the letter to the President.

Mashchenko A.N.:

We have 5,300 employees in the company. When we had a meeting in support of Mr. Degtyarev I had to even try to suppress some strong emoting demanding to collect a petition to the President of 25,000 signatures and other proposals showing very sincere attitude towards Mr. Degtyarev.

People do understand how the company functions, what salaries they are paid, what privileges and preferences they have, for example they can send their families with children to Lesnoy resort, sea resorts at discounted prices.

Question: What is an approximate back wages debt of Yuzhmash to be settled?

Kamyshov A.A.:

we have financed some of the projects to allow Yuzhmash pay salaries to the workers. Remaining debt amounts to 80 mln Hrn. as per our information. We have remitted nearly 150 mln Hrn. under the current contracts with Yuzhmash.

Question: Did the Space Agency explain the reasons to sack the General Designer? Did you communicate with them?

Tkachenko V.D.:

Nearly 35,000 people worked in the company from its beginning till now and there were 4 General Designers. In average a General Designer worked for 20 years. It takes time to become efficient General Manager of such a company. There are different types of state companies. We cannot compare our company with Ukrainian post office. It is absolutely different objectives, different companies and different spheres of activity. But they try to use one and the same methods for all. It is a mistake. So nobody asks anything, they do not understand the objective.