Izhmash Officially Bankrupt

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I reported back in 2009 that Russian state-owned arms maker Izhmash, manufacturer of the AK-xx and Saiga rifles, was facing bankruptcy. The company is now officially bankrupt (Google translation follows) …

The claim of bankruptcy “Izhmash” gave the company “Izhstanko”, which concern owes 814,000 rubles. The procedure for external monitoring was introduced in the company in August 2011. The court bankruptcy manager “Izhmash” appointed member of the non-profit partnership “Moscow professional self-regulating organization of arbitration managers’ Artem Kuznetsov.

During 2011 net loss “Izhmash” was 2.43 billion rubles. During the year production at the company fell by 45.5 percent to 1.7 billion rubles. Group revenue grew by almost 1.7 times to 3.13 billion rubles, while production costs increased by 1.5 times.

The growth of production of sports and hunting weapons is almost four times (up to half a billion rubles) has not helped the company make a profit. On January 1, 2012 payable “Izhmash” amounted to 5.3 billion rubles, of 2010 it grew by 19.5 percent. Debts of the enterprise customers, by contrast, fell by 15.2 percent to 2.7 billion rubles.

The new Izhmash АК-12

By the sounds of it the company needs to be reorganized from a WWII/cold-war weapon mass production manufacturer to a modern sporting goods manufacturer that does defense contracts on the side. $179 million USD of sporting good sales is nothing to scoff at.

Unfortunately I believe that the Russian government will bail them out and the old dinosaur will continue to focus on the more sexy, but shrinking, market for its AK rifles and continue to use dubious strong arm tactics to force companies to pay royalties for a 70 year old design.

[ Many thanks to everyone who emailed us about this. ]

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Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


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  • jdun1911

    Bad management and could not change with the time.

  • Lance

    I doubt Izhmash will go under the company has gotten a HIT when the Russian military stopped buying AK-74Ms for a 3 to 4 year period. But The company is selling AK-103s to Ethiopia and Libya had sales too. CIS states except for Ukraine who has the FORT arsenal buy rifle from Russia so no I doubt they go under. BUT many countries are finding it cheaper to buy from ARSENAL in Bulgaria and Cuiger in Romania which are more economical than higher price Russian arms so this isn’t helping them either.

  • Mark

    #1 Ship some spare machine tools to right to work US state.
    #2 Bring over some of your Russian workforce
    #3 ?????
    #4 Profit

    They are getting $1000 or more all day for Bulgarians here. We’d pay $200 more for IzmashUS versions.

    • Chase

      And if they did any hiring at all, I would love to get one of those jobs. I’d camp out on the sidewalk to apply for a job cleaning toilets at Izhmash USA. And I’m a Stoner AR guy!

  • http://elastomatik.wordpress.com/ Edgar Castelo

    Gosh… Does that mean Government intervention, aka Bailouts, only makes things WORSE?
    Who knew… ;)

    • W

      yup. who would have thought?

    • Nater

      Not necessarily. No doubt you’d be singing a much, much different tune if the credit markets had frozen solid in late 2008/early 2009. We all would be. The Crash of 1929 is not what caused the Great Depression. The ensuing credit crunch is what send the nation, and much of the world, into the worst economic malaise in recorded history. It was getting to that point at the end of 2008. Businesses run on credit and they simply couldn’t get any. A few weeks of that and things would have spiraled completely out of control. Runs on commercial banks and lack of basic consumer goods (food included) would have followed shortly.

      The bailout, as it was passed, was definitely a very flawed piece of legislation. That said, action itself was very definitely necessary. Of course, you do have a point, in a way. Idiots like those than repackaged consumer debt to be sold for a profit, no matter how risky, along with those that insured such investment instruments are free to do it again. And they will do it again. Deregulation has allowed them to grow so large that those left in political power have no choice but to bail them when they eventually fail.

      The big lesson? Unregulated markets will fail. It’s not a question of if, but when. I find it rather ironic that unrestrained capitalism fails for just about the same basic reason as pure socialism; greed.

  • Billy Bones

    Seems like an excellent opportunity for the Cerebus Group to get into the AK biz.

  • Esh325

    Kind of old news now. From what I understand, Izmash is in the process of of reorganizing under a parent company, in which they can modernize. They aren’t going away.

  • Devon

    Hmmmm…I wonder if I should pick up another Izhmash Saiga on the cheap? I bought my Saiga AK conversion new for $450.

  • Chase

    They’d probably be less insistent about collecting royalties if they’d been able to do so for the first 40 years. See, during that time, they were in Soviet Russia, where Party “royalty” collects YOU.

  • wbantam

    thats alot of rubles!~ bill b.
    sugarman1266@yahoo.com

    • Yuri

      814,000 rubles is $30000 dollars

  • Max

    As someone already posted, it was simply to start anew. The bankruptcy procedure that happened was identical to that the General Motors have gone through. GM is dead? Nope. Alive and kicking with some impressive models.

    Basically IzhMash went through administration, deep restructure, modernization, product development programs were started. IzhMash is certainly NOT dead.

  • William

    Sell Russian AKs in US at reasonable prices/ sell AK74 magz at 19 bucks a pop, INSTANT LOTTO WINNER…optionally they can move all production to the US and I wont complain