Ukraine aerospace sector push for Western partners meets with scepticism

London/Washington — Ukrainian aerospace group Motor Sich has little to show so far for a wartime effort to woo potential partners in the West, as it seeks new direction after it lost Russia as its biggest client and had a China tie-up blocked.

The challenges facing one of Ukraine’s best-known conglomerates underline how hard it is for the country’s companies to expand when there are concerns over their track record on corruption and as the conflict with Russia grinds on.

State-owned Motor Sich is Ukraine’s main manufacturer of aircraft and helicopter engines, including for some of the largest cargo planes.

“We want to turn to the West,” CEO Olexiy Nikiforov said in an interview.

For almost a year, he has chased meetings with US defence contractors like Lockheed Martin and RTX at air shows and government events. He hopes to get another chance to make his case for greater industrial collaboration this week when US and Ukrainian defence officials and industry executives meet in Washington for a summit on Wednesday and Thursday hosted by the White House.

Kyiv is stepping up its weapons production and hopes joint ventures with international armament manufacturers can help to revive its domestic industry. But interviews with US defence executives, former US officials and experts suggest many hurdles are hindering progress for Motor Sich.

US businesses are open to future co-operation with Ukrainian firms, but it will take time to prove they can conduct business in a way that complies with US and European regulations, they said.

Legacy Ukrainian defence companies will trigger “red flags” during the lengthy due diligence and compliance reviews conducted by Western defence companies, one US defence executive said. Those issues are not insurmountable but can drag out the approval process for co-production agreements, he said.

Ukraine’s defence industry has had trouble with efficiency and transparency, said Pavlo Verkhniatsky, director of COSA Solutions, a Ukraine-based strategic intelligence firm helping Western businesses enter the Ukrainian market.

“It has baggage and a bad reputation in terms of operating its assets and the efficiency of launching projects, developing projects,” he said.

Ukrainian President Volodymyr Zelensky has repeatedly warned that his administration would not tolerate corruption and has fired officials suspected of it.

Sergiy Korzh, one of Motor Sich’s top board members, said any results from the summit would have little immediate impact. “You can imagine how long it will take for the results of such co-operation to come to the battlefield,” he said.

Headway

Still, Korzh said he had made some headway after a meeting with representatives of the US department of commerce and US companies at the Dubai Air Show last month. He did not give details for security reasons, as the talks related to defence.

Zelensky has made rebuilding Ukraine’s defence and aerospace sector a priority, which includes deeper investment in drone technology.

Ukraine’s government used wartime authorities to wrest control of Motor Sich away from Chinese shareholders, resolving a concern of US defence officials during the Donald Trump administration. The budgetary realities of the war with Russia after the 2022 invasion of Ukraine pose further headaches.

Motor Sich’s earnings have fallen by almost 40% since Russia invaded Ukraine in February 2022, Korzh said. Its production facilities in Zaporizhzhia have also suffered missile strikes from Russian forces, putting equipment and 15,000 workers at risk, CEO Nikiforov said.

US defence contractors have shown little interest publicly in partnering with aerospace companies like Motor Sich on production projects in the immediate term.

Lockheed Martin said in a statement it was “working closely” with the US government to support its response in Ukraine. Lockheed Martin declined to comment when asked about a Motor Sich proposal to outfit Ukraine’s Sea King helicopters with its engines.

When asked for comment about potentially working with Ukraine defence companies, Boeing said: “While we do not comment on rumours of potential discussions or transactions, we continually review our markets and portfolios to ensure we are delivering the best capabilities and value to our customers.”

General Electric and RTX declined to comment. Northrop Grumman did not respond to a request for comment.

While the talks in Washington this week and last month’s Dubai air show contacts are potentially promising, the political realities that Western defence officials are grappling with could hinder progress.

One US defence executive said US weapons makers are closely watching whether the conflict in Gaza, as well as dwindling support among US Republicans for Ukraine, dampens Washington’s appetite for future collaboration with Ukraine.

Reuters