UTW: over RUB30 billion orders portfolio is both a challenge and a stimulus to development

29 March 2022

Ural Turbine Works has entered 2022 with a record-breaking orders portfolio. We met with Dmitry Alexandrovich Izotin, General Director at Ural Turbine Works, to discuss what the plant is going to rely on to improve its efficiency, how machine builders take into account the global low-carbon agenda, and what solutions they see to the bottlenecks in production localization within Russia.

— Dmitry Alexandrovich, what is the current state of affairs at Ural Turbine Works?

— We have a record-breaking orders portfolio — over RUB30 billion! The plant has received orders for three and a half years ahead. To be able to complete our current and long-term tasks, we should enhance our own production annually by 20%. Such a load allows us to maintain an investment program and allocate funds in a systematic and competent manner; we were ready to meet increased numbers of manufacturing orders.

We are now mainly working on orders from the Russian energy sector, most of which are projects that are being implemented under the CSA-2 program. The export share in our portfolio decreased this year. This, however, is a typical market story: we completed a number of large-scale projects in Kazakhstan, Mongolia, and Belarus in 2015–2021, then the export share reached 65%. Today, the export markets that are conventional for UTW have declined. At the same time, new projects are under preparation, and we are engaged in a constant dialog with our partners abroad. The number of external projects will begin to increase gradually as soon as 2023 with exports to reach 40% of the orders portfolio by 2025.

— What prospects do you see for the plant on foreign markets?

— We will definitely continue to collaborate with such traditional countries as Kazakhstan, Belarus, and Mongolia. Thus, having successfully implemented the reconstruction project at Ulaanbaatar CHPP-4, we are now discussing participation in the reconstruction of another plant, CHPP-3, as well as other Mongolian projects. We are also looking to long-distance exports with a lot of exploratory work already done in India, China, Indonesia, and Eastern Europe. Requests have been obtained, and negotiations are underway. Say, we balanced four rotors from Romania last year. This year, we are planning to supply oil coolers for the same client.

— Environmental issues are coming to the fore on the global agenda. Is the decarbonization trend included in your plant’s strategy?

— There is no alternative to combined heat and power plants in countries with central heating in the near and middle future. It is therefore appropriate to raise the issue of improving the efficiency of plants, i.e., reducing emissions and using other fuels, rather than abandoning such plants. Even if we use hydrogen or trash, which is a closer example, instead of carbon, we will not eliminate steam turbines. Our contribution is therefore to maximize the economic efficiency of power units in all our projects. And that is what we do in all new projects.

We are now mainly working on orders from the Russian energy sector, most of which are projects that are being implemented under the CSA-2 program.

Here is another instance of new technology — we are now seriously engaged in developing steam turbines to be used as part of power units at small nuclear power plants, on the RITM-200 and other reactor versions. Russia is in the lead in this field. Rosatom’s current plan is to build floating units in Russia and onshore small NPPs in Kirghizia. We will offer our best developments for such units. The more so as we have expertise already — our turbines and heat exchange equipment are running as part of a RITM-200 reactor plant unit in project 22220 nuclear-powered icebreakers (ed. note: this is a new series of icebreakers, Arktika, Ural, and Sibir). Note that the equipment we offer will be used for cogeneration applications, which means that both light and heat will be provided.

— How is the plant coping with Decree 719 of the Government of the Russian Federation of October 1, 2015?

— All projects under the CSA program, which is a significant part of our orders portfolio, are being implemented according to this decree. We are already procuring a large amount of stock material and it is clear even now that we will not be able to receive stock material from Russian steelmakers in due time for 2023–2024 orders. To make it clear, this is a government-initiated CSA program, i.e., neither we nor energy companies can postpone the deadline. Let alone the price of that stock material that is twice as high as the price of castings and forgings from our foreign partners. For our Russian casting suppliers to be able to manage quickly, we frequently have to adopt design solutions that are as standardized as possible. This is also wrong. So, we have approached the Ministry of Industry and Trade suggesting that stock material should be considered Russian if it is made according to the design documentation of a Russian designer and its finish machining and structural welding (rather than repair of casting defects) are done by the turbine manufacturer. After all, it is the design concept and finish machining and welding operations that are the main thing about stock, and those are 100% Russian!

This step will allow stock material to be procured in an open competitive market. Today’s quantity is a temporary demand; it is clear for everybody that when the CSA is over, that demand will fall. Nobody is going to build new casting capacities. The permission to procure stock material from abroad provided that it is rough-machined in Russia, which was valid until 1 January 2022, was also doubtful and, in my opinion, ineffective. I mean rough machining and casting repair are not a sophisticated operation.

I should also note the long-term effects. The foreign suppliers of stock material we worked with are now reorienting their capacities toward other markets and other fields. As a result, besides higher domestic prices and longer lead times for stock material, the export potential of purely Russian products within the meaning of Decree 719 will fall dramatically in the long-term future. Apparently, changes are needed that are to be discussed throughout the power engineering community.

— Tell us about the plant’s investment program.

— We are expecting another boost in the investment program. We should use opportunities as the orders portfolio and our own output are growing. Our plan this year is to invest more than RUB400 million in upgrading and expanding production, which is almost twice more than in the previous year. The program includes quite a large list of activities such as modernization and acquisition of new equipment. Above all, we should proceed with the digital transformation of our company. At first, we introduced a digital product mockup — we changed the design philosophy, not merely switching from two-dimensional to three-dimensional design, but reversing the content of the designer’s job with conventional bottom-up design replaced by top-down design (for details, see EPR Issue 15–16, August 2021). The digital transformation will now go on. We have also included a separate section in the investment program with an impressive amount of money for IT infrastructure development.

The number of external projects will begin to increase gradually as soon as 2023 with exports to reach 40% of the orders portfolio by 2025.

Let me stress that digital transformation is not about replacing people; it is about setting up business processes and information flows at a company. The digital audit we conducted at the beginning of the year shows that every department at our plant sometimes lives in its own world and meetings are the only way to communicate. There is a need for transition to a common digital space that will allow us to solve the problem of getting objective, fast online data.

A uniform integrated system must be provided for planning and logging work time, keeping record of scheduled preventive maintenance, main equipment load, controlling and standardizing processes, electronic shift-day tasks, etc. All operational data must be transferred to the plant management center that will integrate several services and will be located in building 5. This will allow transparency, precise planning of all manufacturing orders, equipment load prediction, and technology compliance monitoring, and will make it possible to take corrective actions in a timely manner and submit online reports to our valued customers.

— How will the plant’s business processes change?

— Our objective is to improve the efficiency of all business processes by 15–20%. This is an ambitious number so we will advance gradually and simultaneously through all processes, from start to finish. Here is an example of fast and efficient decision-making: having audited our packing process, we decided to switch to another timber class used for that purpose, which is permitted by GOSTs. This alone will allow us to save up to 30%; by further changing from board to sheet material in some operations, we will achieve another 5–7% of savings. It has also been decided to look into the possibility of consolidating transport spaces, which can also prove effective.

More than a dozen other improvement programs are currently in progress, covering procurement, logistics, production, process standardization, and staff motivation. We are building development territories within our company plan — these are the parts and areas of the industrial site that will be used for the development of our plant.

We have a global goal — to become a state-of-the-art center for power engineering expertise. We must not search for people; instead, there must be a queue of people waiting to become our employees. Indeed, our plant has ample resources; we should unleash them and channel them into the company’s development.

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