OAO Kalashnikov Concern is the leading Russian developer and maker of assault and sniper rifles, guided artillery projectiles, and a broad range of civilian products, such as hunting and sports rifles, machine tools, and instruments.
The Kalashnikov Concern is one of the latest examples of the Russian defense industry’s trend towards the establishment of specialized, integrated, and majority state-owned holding companies. The concern was established with the Izhevsk Machinery Plant (Izhmash) at its core; it acquired its current name on August 12, 2013. The government is now trying to reorganize the concern along the private-public partnership principle.
Background
The importance of Izhmash is based on its role as the leading Soviet and Russian maker of small arms for more than a century.
The Izhevsk State Factory was founded in 1807 in Izhevsk, now the capital of Udmurtiya province, to mass-produce army rifles. During the war of 1812 it supplied the Russian army with small arms and edged weapons.
In 1893 it launched production of the new standard-issue Russian firearm, the famous Mosin 7.62mm rifle (of the 1891 design). Production of that rifle ended only in 1947. Since then, the company has become the leading maker of small arms for the Russian army. Its output is higher than that of the small arms factories in Tula and Sestroretsk.
During World War I and World War II, the Izhevsk plant ramped up its production capacity and substantially increased the range of its products. Also, in 1922 it launched production of hunting rifles, and in 1929 it began to make motorcycles and machine tools.
Having become a large defense production hub by 1945, the plant in Izhevsk entered a period of rapid growth and development. It substantially increased its civilian product range, with an emphasis on machine tools and instruments.
In the early 1950s Izhevsk launched production of electro-vacuum devices (magnetrons) for air defense radars. In 1969 its magnetron division started making repair and maintenance hardware for guided weapons.
Between the mid-1950s and the 1970s the Izhevsk Machinery Plant developed and manufactured geo-physical and meteorological rockets, including the S-325B, M-100, M100B, M-120, M-7, and MMR-06.
Many believe that the rapid rise of Izhmash after World War II was made possible by the energetic lobbying efforts of Dmitry Ustinov, who served as Soviet armaments minister in 1941-1953, defense industry minister in 1953-1957, head of the Soviet Council of Ministers’ defense industry commission in 1957-1963, secretary of the Central Committee of the Communist Party for defense issues in 1965-1963, and Soviet defense minister in 1976-1984. In 1966 the Izhevsk Machinery Plant launched a separate facility, the Izhevsk Auto Plant; the project was lobbied by Ustinov.
Nevertheless, the Izhevsk Machinery Plant has never lost its focus on weapons-making. In a landmark event, in 1946-1948 Mikhail Kalashnikov designed a new assault rifle for the 7.62x39 mm ammo (standardized in 1943). Kalashnikov worked at the Central Small Arms Research Range at the time. The project also involved specialists of the No 2 Kovrov Weapons Plant. After the MoD chose the new rifle as its new standard-issue weapon, in late 1947 Kalashnikov was assigned to the Izhevsk plant, where the rifle was to be mass-produced. He went on to work at the Izhevsk plant’s design bureau until his retirement.
Following a series of field tests of the first batch of the rifles made in Izhevsk in mid-1948, the MoD entered two modifications of the Kalashnikov assault rifle into service in mid-1949: the standard AK, and the AKS, which had a steel buttstock. In 1949 the Izhevsk plant and another weapons factory in Tula began to make Kalashnikov rifles in very large numbers.
In 1959 the Soviet defense industry launched production of an upgraded version of the Kalashnikov rifle, the AKM (6P1). The Kalashnikov rifle design was used by the Izhmash design bureau to develop machine-guns chambered for 7.62x39mm ammo (RPK) and 7.62x54mm ammo (PK), although these machine-guns were then mass-produced by other companies.
Another important weapon developed by Izhmash is the Dragunov SVD (6B1) sniper rifle that uses the 7.62x54mm ammo. It was designed in 1958-1963 by a team led by E.F. Dragunov. Izhmash has been mass-producing the SVD since 1963.
The Kalashnikov rifle later received a radical upgrade to the AK-74 (6P20) specification, which entered into service with the Soviet Army in 1974 after a competition to design a new generation of automatic weapons for the 5.45x39mm ammo. The AK-74 design was used to create a whole family of automatic weapons, including the shortened AKS-74U assault rifles and the RPK-74 hand-held machine-gun. Izhmash began mass production of the AK-74 in 1974. In 1991 the model was discontinued and replaced with the modified AK-74M version.
In the years after WWII, Izhmash became the leading Soviet developer and maker of sports, commercial, and hunting rifles.
In 1984 Izhmash began preparations for mass production of guided artillery projectiles. It went on to launch production of the Krasnopol, Kitolov, and several other projectiles.
In 1975 the Izhevsk Machinery Plant was restructured and renamed Izhmash Production Company. The new company incorporated the Izhevsk Auto Plant.
Post-Soviet period
The break-up of the Soviet Union, the ensuing economic crises and savage defense spending cuts were a heavy blow for Izhmash. The MoD had accumulated huge stockpiles of small arms at its arsenals, so there was no longer any point in the government placing large orders for new weaponry with Izhmash. The company lost its biggest customer. Its arms export deals were few and far between, especially since it was now facing stiff competition in a purely commercial environment. The market was flooded by Kalashnikov rifles made by foreign producers, mostly from former Soviet countries that acquired the license back in Soviet times. The situation was compounded by the deteriorating production standards at Izhmash itself. There were serious problems with the quality of its small arms. They undermined the company’s competitiveness and damaged its reputation.
In the 1980s the Soviet MoD had launched a program to choose a new assault rifle for the 5.45x39mm ammo because it was unhappy with the performance of the standard-issue AK-74 (especially its accuracy in automatic mode and ergonomics). The competition was announced in 1978, and in 1981 the MoD began testing 12 prototypes as part of the Abakan R&D program. On the basis of these tests, the MoD chose a new design developed by an Izhmash team led by G. Nikonov: the AS delayed-recoil assault rifle. The design was then improved in 1986, and designated as the ASM.
In 1991 the ASM rifle passed state trials, but it entered into service with the Russian army only in 1997; it was designated as the 5.45mm Nikonov Assault Rifle, 1994 Model (AN-94 Abakan, 6P33). The Izhevsk Machinery Plant began to produce small batches of the AN-94 in 1998.
The MoD could not afford to place large orders for the AN-94, and the whole program was not regarded as a priority because the Russian armed forces had much bigger problems to deal with. The AN-94 was not popular with the troops, either, because it was less simple to operate and maintain than the AK-74. As a result, production of the AN-94 all but ended after 2000, and it is no longer regarded by the MoD as a serious contender for any future contracts. Limited numbers of this assault rifle are still being used by various MoD and Interior Ministry special task force units.
In the early 1990s Izhmash developed and launched production of the “100 Series”, a modified Kalashnikov version that has proved very successful. The series is essentially an export version of the AK-74M, modified to use other types of ammunition. The model range includes the AK-101 (6P43), which is chambered for NATO-standard SS109 5.56x45 ammo, and the AK-103 (6P45), which uses the old Soviet 7.62x39 ammo (adopted as standard in 1943). It also includes the AK-102, AK-104, and AK-105, which are modifications of the AK-101, AK-103, and AK-74M, respectively, with their barrel shortened by 101 mm.
There are also the AK-101-1, AK-102-1, AK-103-1, AK-104-1, and AK-105-1 modifications, which have a simplified firing mechanism than supports only the single-shot firing mode. The AK-101-2, AK-102-2, AK-103-2, AK-104-2, and AK-105-2 have a modified firing mechanism that supports a three-shot burst mode. The AK-103-3 is an updated modification with an ergonomic pistol grip, an additional safety button, Picattiny rails on the body and the fore-end, and a removable bipod (that also serves as the front grip).
The AK-105 is used by the FSB, the Interior Ministry, extra-departmental security, and other Russian uniformed agencies. The FSB and the Federal Protection Service also use limited numbers of the AK-103 and AK-104. There is significant demand for the 100 Series Kalashnikovs in the foreign markets, with exports growing in recent years. Most of the customers are third-world countries. The most popular model is the AK-103 chambered for 7.62x39mm ammo. The largest contract was placed with Rosoboronexport in May 2005 by Venezuela, which has bought 100,000 AK-103 rifles, an AK-103 production facility, and an ammunition factory. The value of the contract was 431m dollars. The projects to build the production facilities in Venezuela fell well behind schedule, and local production of small batches of the AK-103 began only in 2014. The Venezuelan facility’s annual output will eventually reach 25,000 AK-103 rifles and 60m rounds of ammo. Large deliveries of the AK-103 were also made to Libya just before the fall of the Gaddafi regime.
In the late 1990s Izhmash also developed the AK-107 rifle (for 5.45x39 ammo) and AK-108 (for NATO-standard 5.56x45 ammo). Both versions are also known as the Alexandrov-Kalashnikov rifle. They use a balanced automatic firing mechanism that emulates, to some degree, the solutions used in the AEK rifles made by the Kovrov plant. Neither of the two models seems to have attracted any great interest from domestic or foreign customers, and there is no evidence to suggest that they have entered mass production.
To summarize, neither the AN-94 nor the 100 Series rifles have managed to generate large domestic contracts for Izhmash. In 2009 the company announced plans for a deep upgrade of the AK rifles, known as Series 200 – but for now, these plans remain on paper.
The company’s survival in the 1990s and 2000s was largely made possible by the success of its commercial and hunting rifles in foreign markets. One of the most successful products was the Saiga family of hunting carbines. Based on the Kalashnikov assault rifle design, they are chambered for 7.62x39 ammo, and entered production in 1992. Izhmash then went on to develop and launch production of a whole range of Saiga carbines, both rifled and smooth-bore, and chambered for various ammo types. These carbines are exported to 27 markets, including fairly large exports to the world’s biggest market for commercial small arms, the United States. In 2011 Izhmash sold 442m roubles worth of small arms to U.S. customers. In recent years, up to 90 per cent of its civilian small arms output was destined for the United States.
On the whole, however, by the late 2000s Izhmash had entered a period of deep decline. Russia was in real danger of losing one of its most important defense companies, along with all the expertise residing at Izhmash. The company’s payroll collapsed from 40,000 in 1989 to 4,700 in 2013. The average monthly wage stood at only 14,000 roubles in 2011.
The former Izhevsk Auto Plant became Izhmash-Auto, an independent company, in 1996. In 2000 it was privatized, and then went bankrupt. In 2010 it was acquired by the Russian Technologies state corporation, and transferred to the operational control of AutoVAZ via the United Auto Group division.
In the end, the government also came to the rescue of Izhmash itself. In 2008 it was designated as the lead company of a new holding division within Russian Technologies specializing in close-combat weapons systems. The holding includes several other large makers of small arms, ammunition, and close combat systems, such as the Izhevsk Mechanics Plant, the Vyatkskiye Polyany Molot Machinery Plant, the Koshkin Automatic Lines Design Bureau (Moscow Region), and the Progress Technology Research Institute (Izhevsk).
It was announced at the time that the new holding company controlled 95 per cent of the domestic Russian market for military small arms, and more than 90 per cent of Russian exports in that category (via the Rosoboronexport intermediary).
In 2010 Russian Technologies conducted an audit of the Izhmash group, which revealed a dire state of affairs. The group included about a hundred different legal entities, some of which were in the process of bankruptcy and liquidation. Most of the 32 divisions that were still alive and kicking had a multi-tier management structure, with a lot of duplication and high overheads. As of early 2011, the Izhmash group had a debt burden of 19bn roubles. Some of its divisions had wage arrears of up to six months. Most of the group’s machinery and equipment needed replacing, and the facilities that were still up to date were working at 20 per cent of their capacity at the very best.
In early 2011 Russian Technologies appointed Maksim Kuzyuk first deputy director-general of Izhmash. He was tasked with improving the group’s finances. He oversaw the process of restructuring Izhmash via a series of bankruptcies and mergers. As a result of that process, by 2011 he had transformed the group into a single legal entity, OAO Izhmash Research and Production Company, fully owned by Russian Technologies. In 2011 the latter appointed Kuzyuk director-general of that new company. In the first quarter of 2012 it took over all the existing contracts, assets, and personnel of the old Izhmash divisions, and launched another round of restructuring.
Dmitry Rogozin, who was appointed deputy prime minister in 2012, was actively involved in the Izhmash rescue effort.
Finally, on August 12, 2013 the Izhmash Research and Production Company was rebranded to become OAO Kalashnikov Concern, in honor of the creator of that company’s most famous product (Mikhail Kalashnikov died in November 2013).
Current state
The Kalashnikov Concern is the lead company of Russian Technologies’ small arms division, which also includes four other companies mentioned above.
In September 2013 Russian Technologies decided to transfer a 49-per-cent stake in Kalashnikov to private shareholders using the public-private partnership principle. The private investors are Andrey Bokarev, president and co-owner of Transmashholding; and Yuri Krivoruchko, director-general of Aeroexpress and a member of the Transmashholding Board of Directors. Under the terms of the deal, Bokarev and Krivoruchko paid 2.5bn roubles into the Kalashnikov Concern’s authorized capital fund, using their own money and bank loans to finance the deal. The 2.5bn was used to pay off some of the Kalashnikov debts and finance the company’s development program. Russian Technologies still retains a 51-per-cent stake in Kalashnikov.
Russian Technologies is planning to invest 1.2bn roubles in Kalashnikov over the next two years; another 1.2bn roubles will be invested by private shareholders. Russian Technologies also says it will spend more than 4.5bn roubles on upgrading the Kalashnikov production facilities by 2017.
In January 2014 Yuri Krivoruchko was appointed director-general of the Kalashnikov Concern, while also retaining his de facto control of Aeroexpress. Krivoruchko has close ties with Russian Technologies. In 2006 he served as the main expert and consultant of the Rosoboronexport department for regional and offset programs. In 2006-2009 he was deputy director-general for sales and post-sale service, executive director for sales, vice president for sales and marketing, and senior vice president for sales and marketing at AvtoVAZ, another Russian Technologies division.
One of Krivoruchko’s advisers at the Kalashnikov Concern is Aleksandr Shemyakin, a former officer of the Main Intelligence Department (GRU) of the Russian General Staff.
In accordance with the small arms industry development strategy developed by Russian Technologies and the Russian Ministry of Industry and Trade, by 2020 the Kalashnikov Concern should become the leading Russian developer, maker, and supplier of small arms to foreign markets, and provide the full range of services for its products throughout their lifecycle, including disposal. The concern will continue to pursue R&D projects to develop future weapons systems. The revenues of its small arms division are to increase fourfold by 2020 to 24bn roubles (meaning that the figure stood at 6bn in 2012). Its annual small arms output is to increase by 200 per cent to 1.9m units, with a similar rise in productivity to 2.5m roubles per employee.
The Kalashnikov Concern’s R&D division, the Design and Technology Center, is led by Designer-General Vladimir Zlobin. He worked at the Sports and Hunting Weapons Central Design and Research Bureau (TsKIB SOO) in Tula until 2011; he was in charge of designing special weapons systems for the FSB, so information about most of the projects he was involved in remains confidential.
When the government launched the restructuring and rebranding of Izhmash, the company was in a difficult financial situation. According to its 2012 Annual Report, it made a net loss of 403m roubles that year, with revenues standing at only 1.16bn roubles. The value of its net assets was negative (minus 439.6m roubles, with an authorized capital of 100,000 roubles) and the company was saddled with almost 8.8bn roubles of long-term and short-term debt as of December 31, 2012.
In 2013 the Kalashnikov Concern made a net loss of 1.7bn roubles. It supplied 231m roubles worth of weaponry to the Russian MoD that year, including 192m delivered under the defense procurement program.
In early 2014 it was announced that the concern would spend 1.3bn roubles of the 2.5bn generated by additional share issues on repaying its debts to Sberbank. As of early 2014, those debts stood at 2.1bn roubles. Kalashnikov also needed 750m roubles to fulfill its obligations to Rosoboronexport.
The aggregate payroll of all Kalashnikov divisions is 20,000 people. As of 2013, 4,700 of them were employed by the head company (Izhmash), and another 7,000 by the Izhevsk Mechanics Plant.
In the spring of 2014 Kalashnikov reported fairly good Q1, 2014 results. It produced 31,000 small arms over the reported period. The figure represented 41 per cent of the entire 2013 output, and an increase of 230 per cent compared to Q1, 2013. Commenting on these results, Krivoruchko said that “the concern has been tasked with ramping up its annual output to at least 150,000 units, and the Q1 results demonstrate that we are on track to meeting that target. That kind of output will enable us to meet the entire domestic demand and increase our exports”.
Krivoruchko added that the key objectives for 2014 included integration of the various Kalashnikov divisions into a single operation, cost-cutting, optimizing the corporate structure, improving efficiency and financial indicators, entering new markets, and effective management of the Kalashnikov brand. The output target for 2014 is about 200 aircraft cannon and at least 150,000 military and civilian small arms.
In 2016 Kalashnikov intends to launch a new ammunition facility in Izhevsk, worth an estimated 2-3 billion roubles. The facility will produce approximately 10 ammo types of 4.5mm to 14.5mm caliber.
The Kalashnikov Concern is one of the Russian companies on which the United States imposed sanctions in July 2014. These sanctions could have a major adverse impact on the company’s economic situation in the coming years, especially since the U.S. market is so important for the Kalashnikov commercial weapons range. It cannot be ruled out, however, that Kalashnikov will be able to save some of its U.S. sales by using intermediaries or launching local production in the United States.
Key programs
AKM and AK-74M assault rifles: Despite their obsolescence, these weapons still account for the bulk of Kalashnikov’s military weapons sales in the domestic and foreign markets (though the actual sales volume is not large). Both models are made by the head company of the Kalashnikov Concern, i.e. Izhmash The company is working on an upgrade program for the AK-74M under a contract with the Russian MoD.
AN-94 and AK 100 Series: See technical details on these weapons in the Current State section of this article. We believe that the AN-94 has been discontinued. It has been reported that Kalashnikov is working on an MoD-commissioned upgrade program for the AK 100 Series. The AK-103-03 chambered for 7.62x39 mm ammo is currently being tested for the role of an auxiliary weapon in the Ratnik future infantry gear kit.
AK-12 assault rifle: This is a modern, “fifth-generation”, weapon chambered for 5.45x39 mm ammo. There are also plans to develop versions for 7.62x39, NATO-standard 5.56x45 and 7.62x51, and Grendel 6.5x39 mm ammo. Led by V. Zlobin, the AK-12 development program has been ongoing since 2011. It is essentially a deep upgrade of the classical Kalashnikov assault rifle design. The AK-12 is a basic platform that will later be used to develop a family of about 20 different modifications for the civilian and defense markets. These modifications will include a shortened version of the rifle, a submachine gun, a hunting carbine, and a shotgun.
The AK-12 entered an MoD comparative trial program in 2013 as a component of the Ratnik infantry gear kit. Its competitor in the program is the A-545 balanced-action assault rifle developed by the Degtyarev Plant. The A-545 is an upgrade of the AEK-971, which is made in Kovrov. (Degtyarev Plant also offers the A-762, a modification of the A-545 chambered for 7.62x39 mm ammo, as an auxiliary weapon for the Ratnik kit). It has been reported that the AK-12 was not initially allowed to participate in the state trials program because it failed to meet several requirements. In the end, it was allowed to participate on the condition that Kalashnikov itself would provide the necessary financing.
According to unofficial reports, the military had initially stated their preference for the A-545 as the main Ratnik weapon, but the AK-12 still has good chances of winning because of the Kalashinkov Concern’s substantial political leverage. Formally, the winner is to be announced in late February 2015 – but it cannot be ruled out that, regardless of the MoD’s decision, the AK-12 and the AK-545 will be slugging it out for a long time to come.
Sniper rifles. Izhmash began small-batch production of the SV-98 and SV-99 sniper rifles in the early 2000s. The former is chambered for the 7.62x54 mm ammo (there are also versions for the NATO-standard 7.62x51 and Lapua ammo); the latter uses 5.6 mm ammo. Both rifles are used by the Interior Ministry and security services. In 2013 the SV-98 model received an upgrade. Kalashnikov also continues to make the SVD sniper rifle and its SVDS modification.
Submachine guns. Izhmash makes relatively small batches of Bizon and Vityaz submachine guns for the Interior Ministry and security services. Both models use various types of 9 mm ammo. The AK-9 is a new silent model chambered for 9x39 mm ammo. All these submachine guns are based on the AKS-74U design.
Pistols. The Izhevsk Mechanics Plant makes PM, PYa, and PSM 9mm pistols; MP-71 service pistols; MP-412 revolvers; MTsM, MR-35M, and MR-438 sports pistols; as well gas and air guns and non-lethal pistols.
Grenade launchers. The Kalashnikov Concern has developed the GP-34 sub-barrel 40 mm infantry grenade launcher that can be mounted on all types of assault rifles. There is no information to suggest that the system has entered production.
Special-purpose weapons. In September 2014 Kalashnikov CEO Krivoruchko said that the company was developing two special-purpose assault rifles for the FSB, and a range of automatic weapons on the basis of the AK-12 design for the Federal Protection Service. The new weapons will use 7.62x39 mm ammo, and replace the AK-103, AK-104, and AKS-74U models.
Aircraft cannon. In the early 1980s Izhmash launched production of the GSh-301 30mm aircraft cannon, which was developed by the Tula-based Instrument Design Bureau (KBP). All MiG-29 and Su-27/Su-30 fighters can be equipped with the cannon.
Remote-controlled turrets for armored vehicles. Divisions of the Kalashnikov Concern are known to be developing these systems, but they have yet to be demonstrated to the public.
Sports weapons. The Izhmash sports range includes the TsV-55 Zenit 7.62mm rifle; the Rekord and Rekord-CISM rifles; various modifications of the Biathlon-7-2, Biathlon-7-3, and Biathlon-7-4 rifles; SM-2, Ural-5-1, and Ural-6-2 small-caliber rifles; and Saiga-12 Model 340 and Saiga-MK-107 rifles and carbines for shooting practice.
Hunting weapons. The Kalashnikov head company offers the Medved, Saiga, Tigr, and Korshun self-loading rifled carbines; Bars, Los, Sobol, SM-2KO, and BI-7-2KO rifled magazine carbines; and Saiga-series self-loading smooth-bore carbines.
The Izhevsk Mechanics Plant offers a broad range of smooth-bore hunting rifles, including the MR-18M, MR-133, MR-153, MR-155, MR-27M, MR-43, and MR-233. It also offers MR-94 combined rifles, MR-18MN, MR-161K, MR-142K, and MR-143 hunting rifles (the latter being the hunting modification of the Mosin rifle); the MR-221 Artemida SbS gun; and the OP-SKS, which is the hunting version of the Simonov self-loading carbine.
Repair and maintenance hardware for guided weaponry. The Izhmash division of the Kalashnikov Concern makes STOR repair and maintenance systems for guided weapons; KPM testing appliances; MTO maintenance appliances; KRAS auto diagnostics and repair stations; AKIPS automated mobile measuring and testing stations; MZIP spare parts storage and transportation vehicles; and MU calibration appliances.
Guided artillery projectiles. The Izhmash division continues to make the Krasnopol 152mm guided artillery projectiles developed by the Tula-based Instrument Design Bureau (KBP).
Missiles. In July 2013 the Kalashnikov Concern signed a 12.8bn-rouble contract with the Russian MoD to make a large batch of the Vikhr-1 9K121M (AT-16) guided anti-tank missiles developed by KBP. The missiles will be used to equip new Ka-52 attack helicopters. Final deliveries are to be made by the end of 2015. Kalashnikov planned to produce the trial batch and complete trials by the end of 2013.
The annual value of the contract is roughly the same as the entire annual turnover of the Kalashnikov Concern was before the signing of that contract. None of the Kalashnikov divisions has any prior experience with guided anti-tank missiles. In November 2013 Oleg Bochkarev, deputy head of the Russian Cabinet’s Defense Industry Commission, clearly stated that the Vikhr-1 contract was essentially a form of government assistance to the Kalashnikov concern. “The large contract for Vikhr-1 guided missiles will stabilize the company,” Bochkarev said.
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