Russian maker of the famed Kalashnikov AK-47 faces bankruptcy
Filed under: Technology, Economy
Izhmash Arms Factory, the sole licensed manufacturers of the famous AK-47 assault rifle, may be facing bankruptcy. Andrei Markin, a businessman in the company's home city of Izhevsk, has filed suit to declare the company bankrupt because of outstanding debts totaling approximately $265,000. While the manufacturer states that its order books are full and that Markin's suit is bogus, there is little doubt that Izhmash -- and the Russian arms industry -- have fallen on hard times.Between 2007 and 2008, the Russian arms industry experienced a 72 percent drop in sales. Although the country is still a world leader in the firearms industry, it is ceding an ever-increasing market share to China, which has demonstrated an impressive ability to reverse-engineer military technology. Currently, Russia is caught between two tough choices: it can either accept a smaller market share, or can make increasingly complex weapons systems available to China. If it follows the latter path, it will do so in the full knowledge that China will continue its reverse-engineering process, stealing an ever-increasing portion of Russia's sales.
The other half of the problem lies in Russia's shift from communism to capitalism. Under the old system, it was in the country's best interests to encourage foreign manufacture of the weapons, and the aggressiveness with which they did so transformed the AK-47 into the world's most popular assault rifle. While arguably less recognizable as the Israeli Uzi or the American M16, the AK-47 is far more common; in fact, some experts estimate that up to 80 percent of all assault rifles are AK-47s.
During the Cold War, when the Kalashnikov was the weapon of choice for America's enemies, the Soviet Union was eager to put the weapons in the hands of people who might use them to muck up western interests. For this reason, the country helped develop factories in Vietnam, China, India and throughout the Eastern Bloc. They liberally exported the rifles to numerous countries, including Vietnam, where they were the weapon of choice among the Vietcong. A few years later, the United States returned the favor, shipping millions of Chinese AK-47s to Afghanistan, where Mujahiddin warriors used them against Soviet soldiers.
Beyond their reputation for incredible durability and extremely long life, AK-47s are also easy to manufacture; while more AK-type guns have been produced than all other assault rifles combined, it's impossible to determine how many of the weapons are currently floating around. Although some experts estimate that more than 100 million have been produced since the rifle was created in 1947, a large part of the accounting difficulty lies in the widespread production of the rifles: AK-47 knockoffs are manufactured in over 20 countries, including the United States.
During the Cold War, when ideology was a greater consideration than lucre, outsourcing the AK-47 was a wise move for the USSR. By moving manufacturing to other countries, Soviet planners encouraged greater closeness with their revolutionary brethren and paved the way for an increased military presence in these countries. However, with the 1991 fall of Soviet communism and Russia's subsequent move toward capitalism, it no longer made sense to allow other countries to trade on a Russian brand. The Izhmash Arms Factory claims a patent on the design, arguing that all foreign licenses for manufacturing the guns expired with the fall of the Warsaw Pact.
Unsurprisingly, Izhmash's complaints have fallen on deaf ears: given the weapon's reputation as the preferred rifle of terrorists and underfunded countries, there is little doubt that the AK-47 will continue to provide big business and a big temptation to copycatters. Unless the company can find a way to provide something that its imitators cannot, the sole licensed producer of the assault rifle is in danger of becoming yet another defunct relic of the Cold War.



























Reader Comments (Page 1 of 4)
10-02-2009 @ 10:49PM
ij70 said...
Us, gun nuts, have been talking about it for a week now.
Reply
10-03-2009 @ 11:33PM
S said...
Who cares? Lets just be glad it wasn't Cerberus' Bushmaster Firearms.
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10-04-2009 @ 2:26PM
atragon said...
WTF is 'reverse engineering'? How about speaking plain English for the rest of us?
Reply
10-04-2009 @ 2:30PM
webo said...
You're kidding right?
10-04-2009 @ 7:35PM
Chuck said...
It's a term that has been around since at least the advent of the personal computer. It is the process of examining a product in detail to determine how it was designed and manufactured. Google it.
10-04-2009 @ 3:08PM
Rick said...
Reverse engineering is the term used when someone takes a product, rips it apart into it's component pieces and duplicates the manufacture of it piece by piece. It is often why the quality is suspect, since measurements and material used are the best guessimates of the copier.
10-04-2009 @ 3:39PM
Noman said...
Take the finished product apart piece by piece drawing your schematic as you go along, until you have the plans to construct one to the original specs. You're welcome
10-04-2009 @ 5:41PM
K9 said...
WTF is "reverse engineering"? Please tell me you are not licensed to operate a motor vehicle in the continental US of A. By the way US of A stands for United States of America.
10-04-2009 @ 5:47PM
. said...
reverse = turned backward in position, direction, or order
engineering = The application of scientific and mathematical principles to practical ends such as the design, manufacture, and operation of efficient and economical structures, machines, processes, and systems.
So if you put the two together you are reversing the order of the design. More simply put, you are taking something apart to see how it works and then stealing the technology to make your design better.
10-04-2009 @ 7:44PM
Keith said...
Reverse engineering involves taking a product apart to find out how it works and then copying it instead of paying for the product.
10-04-2009 @ 2:31PM
webo said...
Is this right? $265,000 in debt? Gee, one would think that this company could be picked up or at least a huge share of it if this debt were covered.
Heck this amounts to a lost weekend at Vegas!
Love em or hate em, an authentic AK-47 is a masterpiece of engineering and mass production. Maybe if they had been made like the early M-16's there would be fewer of them around.
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10-04-2009 @ 2:36PM
john said...
It couldn't happen to nicer people! They flooded the world with this cheap but very effective semi and automatic weapon of war. I hope the ability for anyone else to make it is lost too.
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10-04-2009 @ 2:53PM
JustinOpinion said...
Karma.......GOOD! I hope the manufactureres of the AK47 do shrivel up an die....like all the people that have been killed with their product.
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10-04-2009 @ 3:50PM
ryf4165 said...
You were never a soldier, you douchebag. STFU. If it weren't for guns, where would we be now? The world would be overpopulated, and with no killing, stupidity would run rampant. Nobody wants to admit it, but if there was another World War, there would be plenty jobs to go around. Give me as low a rating as you want asshats, as it does nothing. Or I can repost... ... ... ... ... . ....
10-04-2009 @ 4:08PM
dare said...
wow are we that blind. People will say that is the gun that killed everyone. You may be right, but keep this in mind, If it wasn't the ak-47, then it could have been the ar15,1911a1,fal. Simple point, They will use what they can get there hands on!!!
10-04-2009 @ 2:56PM
LeoK said...
John couldn't have said it better, am a Nam vet. The AK-47 was the weapon that was used to kill many of my brothers in arms. All I can say is that is one company down, now for the rest of them to follow.
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10-04-2009 @ 7:27PM
Bob Young said...
Is this the Leo K that knew my brother Mick from Oregon and served with him in Nam??
10-04-2009 @ 4:08PM
Paul said...
You still have to remember, Leo, that the AK47 was so reliable that we picked up a bunch to use ourselves over there. Mr. Charlie got confused a few times when they couldn't tell who was who during a firefight. Any kind of "gun" is just a tool. Guns don't kill people, people kill people.
10-04-2009 @ 2:57PM
Charlie said...
Maybe the NRA will step in and buy the companie. You can never tell when Bambi might be armed.
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10-04-2009 @ 3:21PM
J said...
Oh, no! Isn't that where they make the Saiga line? This would be very bad news for gun enthusiasts in the US, as those are safe, quality rifles and great deals for the money. I hope there's nothing to the suit.
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