YEKATERINBURG – Machine-building plants in the Urals are bracing for a clutch of new orders, but insiders disagree about how the firms' dilapidated Soviet-era production lines can be equipped to cope with the demand.

Increased production at metals mines, and several large-scale construction projects are behind the orders in a region where industrial output for 2001 is expected to be up 7 percent from last year, according to Sergei Vozdvizhensky, head of the Economic Committee on Developing Programs for the Urals, a prominent nongovernmental consulting agency.

"One of the major projects is construction of a nuclear power station at Belaya Yarka," he said. "Others are a steel-rolling mill in Nizhny Tagil, a chemical-weapons processing plant, highway construction in the Khanti-Mansiysk Okrug and the laying of railway tracks between Tomsk and Khanti-Mansiysk – a missing link on the railway between Northern Europe and China."

Speaking at an international exhibition on construction machinery in Yekaterinburg, Vozdvizhensky said there are so many civil construction projects under way that "any number" of machine-building companies can be accommodated. But Western producers, including Komatsu, Dressta, Caterpillar and Donaldson already have a significant foothold, and if the 30 or so local Russian companies are to compete, Vozdvizhensky said,they will need to return to the Soviet system where each machine-building plant was self-sufficient, from assembling machines to making the necessary bolts and screws.

"After the collapse of the Soviet economy, every major plant split into several independent companies, with each taking care of a separate need, from production to marketing and sales," he added. "Unless we work out a situation where these enterprises combine to form new, legal holdings, we won't have reliable, cost-efficient machines capable of competing on the open market with Western companies."

But Vladimir Baskov, director of the Turbomotorny Zavod, which makes motors for agricultural machinery, said most of the firms are suffering from Soviet-era retooling to military production, which means many of their production lines are extremely limited as to what they can turn out.

"The most that the increased economic activity can mean for these plants is that they will make enough money to pay their workers on time," Baskov said. At the moment, average monthly wages of $120 are frequently delayed.

Baskov said plants must capitalize on what resources they have managed to retain in offering their services, premises and personnel to foreign companies. "Turbomotorny Zavod is in the advanced stage of negotiations with several German companies to start production of diesel engines under license to be sold to Russian road-building, agricultural, mining and earthmoving machinery manufacturers," he added, while declining to give details.

Other experts, however, said the best solution to the challenge facing the local machine-building industry was to form joint-assembly operations with Western companies, as Japan's Komatsu has done in the Ivanovovsky Oblast.

"At this point we definitely do not have the resources to develop and market our own machinery for both local and world markets," said Alexander Denisov, president of the National Association of Industrial Marketing, a lobbying group for Russian and foreign companies seeking joint projects. "So, establishing joint enterprises with leading Western producers would be a logical way to get better machinery for our needs."