MSHAK - Technology Innovation Center
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integrate Armenian skills with the western technologies, Mshak offers a unique
platform. Its proposed innovation center will operate like a technical one-stop-shop providing a highly skilled gateway to enter FSU markets. High precision processes of National Semiconductor have already been cost-effectively outsourced to Mshak. Adapting state-of-the-art motion control technology allows western firms like Delta Tau to access FSU markets. Innovating costeffectively will enable western firms to compete internationally and profit from Russian and CIS technology markets. Company: Mshak JSC Amount: $9.3m Tenor/Terms: To be determined: Loan and/or equity participation or grants Documentation: Business plan for Technology Innovation Center Distributorship agreements: Delta Tau Data Systems, Surfware and Solidworks (USA) General contract & purchase order of National Semiconductors (USA) Engagement letter of Sterlitamak Machine Tool Enterprise (Russia) for Mshak (Armenia) with Siemens and Heidenhain (Germany) Use of funds: Administration $1.0 million Export market development $1.0 million Research and Development $3.2 million Demonstrative workshop $1.5 million Design facility (RF/Wireless) $0.6 million Business integration (Armenian) $2.0 million Total $9.3 million Legal Status: Joint stock company Technology Partners and Clients: Delta-Tau Data Systems, Los Angeles, California (software, automation control projects in CIS countries); National Semiconductor, Irvine, California (equipment and engineering service supply, design and research services); MTS, Minnesota (amplifiers and servomotors) Numerous FSU industrial units such as GAZ and Nijhni-Novgorod Automobile Manufacturing Company Current Operations: Mshak modernizes and retrofits industrial equipment with computer controllers. It has a unique market for such equipment automation projects that require design and implementation of automation pilots, particularly for the machine tool manufacturers of the CIS region. In one project, it developed automation control components for complicated machines processing automobile spare parts for Nizhni-Novgorod Automobile Manufacturing company GAZ. Using Group CTO Machine Processing it collaborates with number of Russian manufacturing, processing technology, lubrication and cooling systems companies. It also offers state-of-the-art design and testing of industrial software as well as integrates unique machine and production line automation solutions for international clients requiring specialized design and manufacturing of key high precision components. A recent contract develops special equipment for National Semiconductors that automates their print line in the production cycle of Low Temperature Co-fired Ceramics for housing semiconductor circuitry. Sales and Marketing Plan: During 2001-2006, Mshak plans to facilitate approximately $150 million in precision technology exports catalyzed by its Technology Center. By integrating the operations of (a) technology providers from Armenia; (b) operations of its functional lines; and (c) key western technologies acquired through clients and partners (e.g., numerical control systems) Mshak expects to generate direct and indirect profits from this $150 million exports (see business plan). As Mshak Technology Center will also offer a platform to develop high technology-based precision equipment and after-sales support service for world-class manufacturers prospecting the FSU markets, additional contract revenues could be generated. The business plan is designed to: (a) develop export markets; and (b) integrate domestic businesses. The plan relies on investing to develop software, hardware, control and digital systems that integrate with both (a) industrial units in Former Soviet Union, and (b) high precision technology needs of major western firms Active in Russia, Mshak expects to expand its motion control device sales and its technical cooperation through established distribution networks. As most sophisticated projects require integrating computer-based controls in unique manufacturing applications, its business plan focuses on centrally providing R&D to site-support units to integrate western IT and technology solutions with yet-not-obsolete Soviet technologies, costeffectively. Attaching a competitive edge to FSU technologies is a skill that Armenian engineers can readily re-orient with western advances at the Modern Technology Center. With this plan Mshak expects to integrate technologies at three levels: (a) product (e.g., control systems for machine tooling), (b) project (e.g., multi-company level processing technology assessments for GAZ, Russia), and with the Modern Technology Center integrate these Armenia based functions with international industry (e.g., through distributorships and technology outsourcing arrangements for world-class suppliers like Delta Tau and National Semiconductor). Business plan: 2001-2003: Establishment of the Technology Center (including domestic business support services) 2001-2006: Establishment of export marketing (Russia and USA) The target markets of the project are the following: Description Markets US$ m Computer Numerical Control systems (software and hardware) Armenia 0.5 CIS and Middle East countries 13 North America and Europe - Industrial Automation equipment Armenia 0.5 CIS and Middle East countries 20 North America and Europe 47 Technical consultancy, training and support services Armenia 0.5 CIS and Middle East countries 1.5 North America and Europe 3 Industrial computer aided design, engineering and manufacturing CAD/CAE/CAM services Armenia 0.5 CIS and Middle East countries 3 North America and Europe 15 Dies and moulds Armenia 1.5 CIS and Middle East countries 10 North America and Europe 11 Automobile parts Armenia - CIS and Middle East countries 15 North America and Europe 10 Data above indicate the potential expected to be realized by Armenian companies using innovation center facilities. Armenian providers of turn-key solutions would be completely equipped to offer flexible design approaches used in solving integration problems that maximize the value of the project to leading western technology developers. Additional details are available with Messrs. Levon Poghosian and Armen Gyokchyan. Competition: Mshak has replaced CNC drives and motors in FSU and competed successfully with leading manufacturers like Siemens, Fagor and Heidelhein. In other areas, National Semicondutor has awarded LTCC and wireless technology contracts in favor of Baccini (Italy), Darpa (USA) and Nikko (Japan) to Mshak. Investment, Capital Cost and Financing Structure Proposed: Details in business plan available with Mr. Levon Poghosyan, President, Mshak jsc Other Project Details: The strategic objective of the Center is to act as an international corporate catalyst for industrial development --- optimally integrating available domestic human, capital and technology resources with state-of-the art technologies provided by western technology leaders. This advances the long-standing technical expertise and industry recognition of Mshak s pool of engineers and avionics industry experts from FSU into modern-day competitive numerical and precision machine processing industry sectors of the west. Mshak, currently operating at the premises of the famous Yerevan Institute of Mathematical Machines, will establish and expand new and existing infrastructure as an operational technology transfer gateway to FSU market. Its market strategy relies on a pool of old-Soviet trained engineers and new-western trained managers to jointly harness the technology experience and potential of Armenia. To offer Armenian intellectual value-additions for modern internationally competitive technology seekers Mshak will integrate resources at the proposed center by developing the operating structure that already serves the following functions: Upgrading yet-not-obsolete technical resources of Armenia and the FSU by integrating advanced computerization-led applications developed in the west; In-sourcing internationally competitive high-tech contracts from world-class companies for costeffective servicing from Armenia; Distributing a combination of product, project and systems related services to clients in both FSU and North America. The current operating revenues of Mshak during 2001 are expected to be $4.0 m of which $1.5 m are from exports of computer controlled systems to machine tooling operations in Russia and Ukraine and $ 2.5 from high precision technology development contracts with USA based companies. Based on the above strategy the various components of the Technology Innovation Center are expected to develop technology exports from Armenia and generate incomes as follows: Marketing and Export Development Facility revenues (5 year estimate: $0.875m) would be realized from enterprises with export potential as fees for developing export plans and international business consulting. Research and Development revenues (5 year estimate: $6m) for the centre would be realized from training in CAD, CAE, CAM and fast prototyping services. Demonstration Workshop Revenues (5 year estimates: $6.8m from automobile spare parts and $4.7m from Dies and Moulds): provides a space for testing solutions in real manufacturing processes and to pilot successful implementation. Based on the marketing research of international clients and the demand for automobile parts and moulds would be initially exploited. Radio Frequency and Wireless Design Facility revenues (5 year estimate: $0.9m) are expected from contracts (e.g. for international firms like Raytheon, Northrop Grumman, Ericsson and Cisco for marketing low-cost upgrades to installed aviation and communications systems in FSU). It is planned to become self-financing after one year and be acquired by an international firm. Business Integration Service revenues (5 year estimate $1.7m) from supporting and developing small and medium size companies to become internationally and commercially oriented. Financed appropriately, its consulting and technology-solution services would be aimed at increasing competitiveness and export volumes of Armenian enterprises. Point of Contact: Mr. Levon Poghosyan, President Mr. Armen Gyokchyan, VP Finance & International Relations Mshak JSC #3 H. Hagopian Street 375033 Yerevan Armenia Tel: 374-1-27 69 91 374-1-27 85 37 Fax: 374-1-27 40 70 URL: www.mshak.am E-mail: levon@mshak.am agyokch@mshak.am |