18 January 2017 year “Intelligent Manufacturing” magazine interview with Mr. Mikhail Lifshitz

Today the issue of equipment upgrading is as topical as never before for the domestic power plant engineering industry. Servicing of the most highly effective power generation units constructed under power supply agreements taking into account exchange rates growth becomes very expensive. In 2025, payments under the power supply agreements will cease, and the most highly effective, the newest part of the Russian power engineering industry may face closedown – because the cost of service contracts is too high for it. ROTEC JSC, a member of Renova Group, which has already occupied 20% of the Russian market of large gas turbines servicing, is working to resolve this problem. In addition, the company develops its own capabilities, including innovative ones, to restore turbine parts.

“Intelligent Manufacturing” interviewee is a Renova Group director for development of high-tech assets, Chairman of the ROTEC and of Ural Turbine Works Board of Directors Mr. Mikhail Lifshitz. 

– One of the main events of the year for ROTEC JSC is probably opening of the Gas Turbine Hot Section Parts Restoration and Manufacturing Center in Yekaterinburg city. What are the advantages it gives to the company and to the domestic power engineering industry on the whole? Can the Center be also demanded in engine-building industry – because GTUs as well as aircraft and marine engines are very similar? Does it hold promise for working on the international market?

– We believe that the problem of aging of power units’ main technological equipment can be solved; the solution is called simply — upgrading. The Gas Turbine Hot Section Parts Restoration and Manufacturing Center is our contribution to this process. We restore gas turbine blades – these are very complex technological procedures, for development of which we have involved highly qualified professionals. Subject to normal operation conditions, the turbine blades can be restored 2.5 times on the average. Thus, repair of hot section components is one of the promising areas of our business today. We started to build a plant in September last year and launched it in May this year.

If we talk about the engineering aspect, we can restore an aviation blade, marine and power engineering unit blades too. However, we should be guided by reasonability here. It is more rational to repair the blades of a powerful gas turbine, which are very expensive, while the blade of an aircraft engine is cheaper to change. Moreover, since the aviation world is quite conservative, cooperation in restoration is somewhat difficult.

We cooperate with engine builders, and with aircraft engines maintenance professionals, in particular, we have signed a cooperation agreement with the Ural Works of Civil Aviation.

– ROTEC together with its member Ural Turbine Works (UTW) operates under investment and construction contracts – EPC. Could you tell us about the EPC-contracts which are the most interesting for you?

– One of such projects was the expansion of the Ulaanbaatar TPP. The project was interesting because we needed to install a steam turbine, generator and heat exchange units, which weighted two thousand tons, in the cell between two working turbines. The whole operation was to be done without shutting down the turbines. When we entered this project, many well-known and respected companies in the engineering industry said that it was impossible. We arrived at the site in February 2014, and in March 2015, we installed a 130 MW power unit. Therefore, I am probably the only honorable power engineer of modern Mongolia in Russia. I would also like to note that the Ulaanbaatar TPP project used our Ural turbine, and products from other contractors.

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– How did you get into this business? Judging by the information on the website, you are a flyer.

– A pilot, to be exact. This is my second profession which is not related to the main job. I have been involved in mechanical engineering industry for all my life, I do a business in woodworking industries engineering, which involves delivery of complete factory equipment plus production of grinding and cutting tools. When Renova Group invited me to lead its mechanical engineering branch, I left my partner in my company to be absorbed in a new interesting area.

– But this area is more complex?

– It is hard to say about its degree of complexity. In fact, the complexity is determined by the amount of redivision. Equipment is complex, heavy, there is a lot of it in physical terms, it is more complex in terms of precision machining, from the point of view of thermodynamics. Often calculation of thermal expansions and parts geometry behavior can be a challenge alone in turbine manufacturing.

Besides, creating and maintaining the viability of the equipment related to the infrastructure, the state of which impacts safety of many thousands of people, is a huge responsibility.

– By the way, concerning safe and high quality operation of the power engineering equipment. Please, tell us more about of the “PRANA” system developed by ROTEC. Are there already any foreign counterparts catching up with it? Is it being improved further?

– We are engaged in servicing gas turbines and remote monitoring. This is what makes life easier to a certain extent and reduces costs. We have studied the experience of our western colleagues in this field. After all, Siemens and General Electric and other world leaders in this market have their monitoring systems. Of course, a monitoring system can be bought from a third party. Having evaluated the presented products, we realized that this was not exactly what we wanted, so we started our own development. We believe that the “PRANA” system is a great product, and I think that the secret is that we do not interfere with its developers. They were free of administrative influence and nobody restricted their leap of imagination. By the way, the skill of a leader in this context is to involve the best professionals capable of thinking outside the box and force himself not to disturb them, and if they succeed, then you have a chance to get a unique product.

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Today, there are a lot of people who can forecast the quality of equipment operation, any original equipment manufacturer (OEM) can predict the operation of its product. The only difference is that in 99 cases out of 100 it is work, which involves highly qualified professionals who can assume which disruptions exist and which consequences may follow. At our company, this work is done by a computer.

Initially, the “PRANA” was developed for gas turbines. Today we have a module for the steam turbines, most of which are now in a repair-as-required tacit zone. Bad practice of extending the life on paper has led to the fact that many steam turbines are now operating in a risk zone. Therefore, our system “PRANA” becomes particularly relevant here.

The next modules will be developed for booster compressor and internal combustion engines, primarily for road vehicles, including uninterruptedly operated transport.

The software has a quite serious potential, and we plan to occupy foreign markets too. To do this we actively present the “PRANA” in Kazakhstan, China, Iran and South Africa.

To develop such a system was an objective necessity. Being engineers, businesspeople and the state, we could not fall behind in this area. In mechanical engineering industry we have much to catch up with, but as to mathematics and IT-technologies we are on equal starting positions and Russian professionals are in no way yield to their western colleagues.

One of our new projects is the production of supercapacitors. This is our innovative product developed by TEEMP company – our subsidiary – for several years.

– To a greater extent you are a supporter of upgrading of power generating equipment and its adaptation to new operation conditions. However, in the context of crisis and expensive loans potential customers optimize their cost structure, postpone the dates of technological upgrading. Accordingly, engineering companies have less order volume. Is your company also affected?

– Of course, the crisis causes problems. For example, there has been much change in the value of money. Banks, which have lost the opportunity to raise funds in the West, have significantly become less active in the credit market. We, as a company being a member of Renova group, can use such tools as equity financing or crediting at group bank.

However, the main thing is that the crisis has hit business relations. Often potential foreign partners have to refuse to cooperate, just to ensure themselves against any risks. Of course, we continue to work, but business processes slow down. Previously it took a month to settle a bargain, now we need to work out it for six months.

– UTW and ROTEC dispose of a strong design department. Where do you get personnel from and how do you train them? What are the medium and long-term tasks for your designers now?

– We have few people employed in the Gas Turbine Hot Section Parts Restoration Center due to production automation. We employ highly skilled welders and engineers, about 40 individuals in total.

Our engineering team actively cooperates with American colleagues, and our process engineer is from France. We live in a global world, where competition stimulates companies to involve high-class employees from around the world.

We think that creating internal training mechanisms is not reasonable because of the small number of personnel.

At the Ural Turbine Works a mentoring practice is very well developed: high cost of the equipment and high degree of responsibility of each operator obliges us to do this. Experienced professionals supervise junior staff, helping them to gain necessary knowledge and skills.

We have also signed a contract with Ural Federal University which has a department of turbine engineering. We have classrooms at the Works to teach students. We encourage our employees to develop their skills, if one of them asks us to help in training at specific courses under a particular program, we always support him.

As to the ROTEC employees, if necessary, we send those who wish to train abroad, to our foreign colleagues.

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– What are the Russian companies you cooperate with?

– We have long and successful cooperation with Ural design companies, such as PIC UralTEP CJSC and Urals Power Engineering Center OJSC, as well as with Novosibirsk companies COTES CJSC, E4-SibCOTES OJSC, work with Saint Petersburg company COMTEC. We also cooperate with Ukrainian neighbors – with Institute DniproVNIPIenergoprom LLC, Kharkov Institute for Mechanical Engineering Problems. We are deeply integrated into this environment.

– What is your estimate of the export potential of the domestic power plant engineering industry? What are the main problems of the Russian exporters engaged in the industry?

– The power engineering market today is quite turbulent. To some extent, we all fall a victim to globalization, when our extensively experienced western partners can share the markets. Russia has somewhat lost its traditional markets and domestic companies have to re-conquer them, and to stay in a “catching-up” state for some time.

If we only relied on the Russian market today, it would be much more difficult.

It takes about a year and a half to manufacture a turbine, therefore, consummation of a deal is a long process, it requires designing, complex budgeting, etc.

Today we live in a buyer’s market. A buyer is ready to enter into long cycle contracts only with financing from the supplier; no one pays money in advance. This is a part of our commercial offer. Here it comes to such a competitive tool as the value of money. We enjoy state export support measures, but their effectiveness fall behind from those of our foreign competitors.

– And yet, foreign markets are known to be your target too!

– Ural Turbine Works manufactures products for them, we have a large share of the proceeds from the export to Kazakhstan, Belarus, and we try to enter the Iranian and South African markets. As to gas turbines, we have no such plans yet, because six months is, unfortunately, not enough for such rapid growth.

– Is Iran a promising area in terms of exports today?

– Iran is a very difficult market because of its self-sufficiency. Long-term sanctions have given birth to an independent manufacturing of gas turbines for example. Today, the media has created an image of Iran that does not match reality. Iran is an industrialized country with high level of education.

During the period under sanctions, Iran has built a large number of gas-fired plants in the open cycle, which makes it a very promising partner, since our steam turbines close gas-fired plants in a combined cycle.

– A traditional question – about your plans: what will happen to the company in five years?

– I would like the progress we have achieved not to lose its momentum and continue for the next five years and more.

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