How TMH is Expanding to New Markets-Kirill Lipa, General Director of Transmashholding

As the largest manufacturer of railway transport, it participates in the formation of the most important trends in the urban rail transport market

Kirill Lipa, General Director of Transmashholding (TMH), spoke in an interview with Kommersant about the most important global trends in the urban rail transport market and the main challenges facing the domestic locomotive industry.

General Director of Transmashholding (TMH) Kirill Lipa
General Director of Transmashholding (TMH) Kirill Lipa
Photo: courtesy of the TMH press service

– Today TMH is one of the world’s largest manufacturers of railway rolling stock. What are the main trends in the global market and how do they relate to the current situation in Russia?

– In general, the trends are the same. On the global agenda is an increase in transport accessibility in cities, which cannot be achieved without the development of rail transport. Today, market participants have already realized that the growth rate of the length of highways does not solve this problem at all: the mobility of the population will not grow if the number of cars at the disposal of citizens increases at the same rate. But if you build rail tracks, then the volume of movement of people increases automatically – passengers immediately get the opportunity to quickly and comfortably move within the city and between cities. And in principle, there is no other way to increase transport accessibility in megacities.

– Today we see a completely extraordinary development of the Moscow Metro. What’s new TMH offers for the underground highways of the capital?

– Indeed, in recent years, Moscow has seen record growth rates in the length of the network, and a huge amount of new rolling stock is being purchased. Taking part in various international meetings on the development of transport, I often cite one vivid and simple example: in 2018, 1 million people watched the World Cup without leaving the metro. There is no such thing in any country in the world, and when I mentioned it in Argentina, it was simply incredible for them.

We are the main supplier of rolling stock for Moscow and are actively updating our line of metro electric trains. Last year, the Metrovagonmash plant, which is part of the company, launched the Moscow 2020 train, which is fundamentally new. It is characterized by a number of fundamental technical changes that distinguish this model from all metro trains of previous generations. When designing it, we chose comfort for passengers as our top priority: we made wide doors to facilitate entry and exit from the carriage, organized the ability to move freely around the train while driving, installed more comfortable seats, and significantly reduced the noise level inside the train. We were also ready for a pandemic: all our passenger cars are equipped with air disinfection systems. In addition, we have significantly updated the driver’s cab,

– Are new models being developed?

– Of course, in cooperation with passengers and customers, we develop new models of rolling stock. In my understanding, in terms of passenger comfort, we have already achieved perfection or are very close to it, so the main focus of our further developments is shifting towards improving the operational characteristics of the train. Now we are working on promising models of rolling stock that will provide even less power consumption, greater autonomy in motion, in order to reduce dependence on central energy supply, we are working on a number of other technical solutions that I do not want to disclose to competitors yet.

Of course, we continue to work on improving train ergonomics for passengers and drivers. We have formed a tandem of the best Russian and foreign designers who work together on the interior and exterior of trains. Suffice it to say that our last cars were designed by the same design bureau that designs Lamborghini. But this is what, for example, in the auto industry is called restyling, and the main focus for us has shifted towards technology.

– When can unmanned trains appear in the metro?

– There are no technical restrictions in terms of rolling stock right now. In April last year, we tested the possibility of stopping the train at the station, opening, closing the doors and moving away without the participation of the driver. But the key question is the feasibility of an unmanned metro. Even purely psychologically, it will be very problematic for people to be in a tunnel without a person at the control panel. But the metro is not a taxi: the population of a train can reach up to a thousand people at a time, while you are underground, in a closed, technically saturated environment. The presence of a professionally trained driver is extremely important, especially in the event of any emergency situations.

Here, there is absolutely the same set of questions as in civil aviation: an airplane can fly on autopilot for a long time, but for some reason no one flies without an aircraft commander. Yes, simply because no one wants to fly in such an airplane! Yes, we are ready to develop these systems, but it is not a fact that in the near future they will be applied even in some separate areas. So far we do not even have a request of this nature.

– How are the MCD projects and the Ivolga train developing?

– In full accordance with the plans of the Department of Transport and the Moscow City Hall. If we win the corresponding tender, we will provide MCD-3 with rolling stock. We have already made a prototype of the new Ivolga 3.0 electric train and sent it for testing. At the very beginning of next year, we plan to receive a certificate and will be fully ready for the supply of Ivolga for MCD-3.

As for MCD-4, we are in the process of clarifying the technical specification of the required rolling stock and, as soon as this work is completed, we will begin redesigning.

In general, TMH is able to supply products that are absolutely competitive at the world level in terms of commuter rolling stock.

So far we have the only lacuna associated with the production of double-deck electric trains, but we are also working on this, and such a train will appear in the near future. Moreover, it will be technically more perfect than all those that are operated in Russia today.

– What prospects do you see in the tram segment?

– As I have already said, the city, in principle, will not be able to live a normal life without rail transport.

Therefore, trams today are gradually returning to the routes from which they were previously removed. But if there is no doubt about the very demand for trams, now on the agenda is the question of how they will return there. Will it be a tram in our usual sense, or will it be some kind of hybrid product? It can be, for example, a light rail tram, an overground metro, or a so-called tram train, capable of moving both tram and railway tracks. In this segment, we assume a very intensive development. For us, this is a strategic competence – we will definitely fight for this market, we will invest in it and aim not only at Russia.

– What are the current achievements of TMH in international markets?

– There are traditional markets where we have been successfully working for a long time: we supply mainline and shunting diesel locomotives to Mongolia, metro trains to Azerbaijan and Uzbekistan, diesel locomotives and electric locomotives to Uzbekistan, passenger cars to Kazakhstan, Belarus and other countries of the former USSR. Now we are participating in tenders for the supply of transport to Georgia and Armenia. There are also narrow gauge markets that are historically close to us – Bulgaria, Hungary, where we work on the supply of subway cars.

And there are also completely new markets where we have just started working – these are Egypt, Argentina, South Africa. We have already signed a contract with Egypt for the supply of 1.3 thousand passenger cars with a total value of more than € 1 billion; in South Africa and Argentina, we expect to sign contracts within a month.

But I think TMH’s biggest breakthrough is entering the markets of Western Europe. Last year we won a very significant competition for us in Germany for servicing 78 German and Swiss electric trains (this is 280 wagons). As part of this project, we are building a depot near Munich, where we will provide maintenance services for the rolling stock of the private railway carrier Go Ahead Bavaria. And now we are participating in another large tender for the supply of rolling stock for the countries of Central, Southern and Northern Europe, the results of which will be announced in the near future.

In these new markets alone, the revenue of our international division in 2020 amounted to more than $ 400 million, and in the near future we intend to increase the volume of supplies five to six times – up to $ 2-3 billion.

– Can you tell us more about the hydrogen train project that is going to be operated on Sakhalin?

– In the development of any market and company, it is necessary to separate projects that are implemented in the framework of research and development (R&D), and serial projects that are implemented in the framework of experimental design work. In my opinion, mixing these two types of engineering research can lead to fatal consequences, and I try to avoid this in any case. Hydrogen trains, high-speed trains are just those projects that are being implemented within the framework of research and development, and I do not consider such projects to be serial or industrial.

It is my deep conviction that the choice in favor of hydrogen as a fuel in the economic sense has not yet been made. Despite all the statements that are heard in various countries, the global industry has not yet come to a final conclusion on this matter. Yes, there are promising areas in which there is competition between technologies, not companies. And right now it is still very early and even dangerous to rely on any particular technology for industrial use. We, like all other world manufacturers, are working in these areas within the framework of our research and development.

The hydrogen train is one of them. As you probably heard, our partner and co-owner, the French company Alstom, has already made the first such train and is studying its performance characteristics. And we are planning to convert our rail bus, which is now produced with a diesel engine, to hydrogen fuel cells. It will use hydrogen fuel and special solid-state chemical elements that convert the generated energy into electrical energy. Roughly speaking, we will simply replace the diesel power-pack with this electrochemical battery and we will be able to start test operation right away.

Sakhalin as a pilot test site was not chosen by chance. Firstly, we are already supplying there our rail buses, the design of which is generally well known to local railroad workers. Secondly, the Sakhalin railway is a very compact and isolated railway network, where a relatively small refueling infrastructure will need to be built. The third important reason is the immediate proximity to Japan, which is already very strongly focused on the development of hydrogen energy and can be a consumer of Russian hydrogen as a raw material. And, fourthly, it is the presence of developed natural gas fields Sakhalin-1 and Sakhalin-2, from which, in fact, it is planned to obtain hydrogen fuel.

We are very pleased that the Governor of the Sakhalin Region Valery Limarenko actively supported us in this project and agreed that, in terms of the totality of political and economic prerequisites, this is the most effective testing ground for the operation of pilot rolling stock. Also important is the interest in the implementation of the project from the railways, which was announced by the head of Russian Railways Oleg Belozerov. For our part, we plan to put the hydrogen rail bus on the rails within two years. If the train shows itself efficiently and if our partner Rosatom implements the hydrogen production technology in price parameters comparable to alternative fuels, then only after that it will be possible to talk about some industrial projects.

– What other fundamental innovations in the field of rolling stock is TMH working on today?

– A lot of them. For example, we have a project for a hybrid diesel locomotive that can run on both a traditional diesel engine and lithium-ion batteries. We made a prototype of such a shunting locomotive together with Rusnano and have already shown it at the exhibition in Shcherbinka in 2019. In addition, we have a project of a hybrid electric locomotive that will be able to work from the top current collection using the main contact network, but at the same time it will be equipped with electric storage devices in order to overcome non-electrified sections of the track. We continue to work in these areas today, as well as in some others, which I will not be in a hurry to talk about yet.

– What is the current situation on the freight locomotive market?

– In the field of locomotive building, we have to solve problems of a substantively different nature. The main problem is the very large volume of the fleet on the Russian railway network with a significant service life. In other words, our service company LokoTech, which repairs the traction fleet of Russian Railways, maintains more than 40 types of diesel and electric locomotives of various types that have been produced over the past 30 years or more and are actively operated at the same time. Russian Railways imposes on them absolutely the same requirements for the availability factor as for new locomotives.

The main issue of our locomotive business is due to the fact that Russia was and remains a railway power.

And no matter how the situation with pipelines develops, rail transport remains a key channel for our raw materials exports, which are of critical importance for the state’s economy. And the most complex and technologically advanced product on the railway, which ensures its functioning, is the locomotive. And here our main task is to make a smooth but effective transition from using old locomotives to operating traction equipment of a new generation.

– What is your position on the possibility of liberalizing locomotive traction and opening access to private investments in the locomotive fleet, which has been talked about for a long time in the operator community?

– I will try to operate only with the categories of supply and demand and illustrate the situation from the point of view of the manufacturer.

It is quite obvious to me that the management of the locomotive fleet from a single center will be more efficient than the work of several independent operators. The effect will be comparable to that of dividing the Russian unified railway network into 16 separate railways – it is difficult even to imagine what this will turn out to be for cargo owners. Or, for example, if one locomotive did not return from the trip on time or, God forbid, broke down, a single operator can always fit another one instead. But if there are many such operators, then in order to solve such problems, the number of locomotives will have to multiply. And the capacity of the railway network will not grow so dramatically. As a result, the aggregate load on the Russian economy, let’s call it that, will definitely increase.

For the manufacturer, this is a very bad story: the analogy can be easily seen in the example of carriage building. As soon as the carriage component was liberalized and it became possible to buy freight cars without restrictions, demand rose sharply, supply sharply increased, and prices also increased. As a result, we quickly got rid of the deficit of the wagon fleet, but then inevitably there was a surplus of rolling stock on the network – the wagons simply had nowhere to go. The same thing happened with production capacities, which, in fact, also became surplus.

– In general, the surplus looks better than the deficit. Do not agree?

– Absolutely not. It should be noted here that all this – both the construction of new car-building facilities and the purchase of freight cars – was financed by the Russian banking system. If you look at who owns the carriage factories today, you will not find professional players among them. As a result, they belong to banks, and even the largest Tikhvin plant in Russia today belongs to Otkritie Bank, whose majority shareholder, in turn, is the Bank of Russia. And this, as you understand, is a hidden form of fixing losses received from lending to these enterprises in previous years. I’m not even talking about leasing companies, which inevitably became the owners of large freight fleets and are experiencing problems with their involvement in turnover.

That is why, as a locomotive manufacturer, I am not at all interested in such a sharp increase in capacity utilization and a sharp rise in prices. Because this peak will inevitably be followed by the same sharp decline in price and a reduction in production. As a result, we can get huge problems up to bankruptcy. Moreover, at the time of this fall, one may come under the risk of a complete loss of engineering competencies in locomotive building, which are incomparably more important than assembly technologies, because a locomotive is not only very expensive, but also a very complex, science-intensive product. And if for the production of a freight car you can simply take the design documentation, make the appropriate tooling and start assembling finished products, then such a trick will not work with a locomotive.

But if we talk about the possibility of attracting private investment in a traction fleet operated by Russian Railways, then I am absolutely in favor. And it is quite possible to create such an instrument if you define a financial structure for banks, which, in fact, will finance it, but will be much more protected from possible losses. And the railway operator, in turn, will receive the necessary investments and accelerate the modernization of the traction rolling stock fleet, having the opportunity to solve the most difficult task – to balance the rates of utilization of the old fleet and the release of new locomotives to the network. I am deeply convinced that if such a design were implemented with freight cars, we would avoid all the problems that we see in this market today.

– Next year TMH celebrates its 20th anniversary. Could you briefly summarize the main results of the company’s work?

– The most important thing is that Russia has managed to maintain competence in locomotive building and in rail transport in general. Today, more than 40 thousand people work at TMH enterprises, and another 60 thousand work at LokoTech, these are highly qualified people who form the basis of Russia’s potential in the field of transport engineering. Our path was not strewn with roses and mimosas – it was quite thorny and passed in conditions of fierce competition with almost all global participants in the market for transport engineering products. Today we do not sell a single licensed product, all our equipment is exclusively domestic developments created by Russian engineers and designers.

Of course, this result would hardly have been possible without the support of the state, but, in my opinion, we are one of the best examples of the state approach that our president and government are implementing. We received and receive very correct targeted support both for our research work and for our consumers. We respond to this support by developing and producing new efficient equipment and increasing export deliveries. And the fact that we are among the five largest companies in the world, in my opinion, speaks for itself. (According to the report of the international agency SCI Verkher for 2019, TMH took the fourth place in the ranking of the world’s largest manufacturers of railway transport – Kommersant. )

Interviewed by Alexey Ekimovsky

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