Soviet military firm becomes hi-tech star

  • 2001-03-01
  • Ilze Arklina
RIGA - It's no secret that the otherwise backward Soviet Union had a highly advanced military industry and its scientists competed one-to-one with their Western counterparts. Ten years after the empire's collapse, one Riga-based company that was active in the military sphere has found itself successfully privatized and highly competitive in the West.

The hi-tech Sidrabe, a supplier of vacuum coating equipment and technology, is based in an industrial zone in the Latgale district of Riga, a 15-minute drive from the city center. Founded in 1962 as the Special Design Office of Vacuum Coatings to produce equipment for silver-free mirror manufacturing, Sidrabe became the parent organization for designing vacuum deposition-based materials for the Soviet aerospace and defense industries.

"We were the leading enterprise of the kind in the Soviet Union, working mainly for the aerospace industry," says Sidrabe President Edgar Yadin.

After Latvia restored its independence in 1991, the company lost all of its military contracts and was on the verge of bankruptcy. Yadin, then chief designer at the company, kicked off the company's path to privatization on behalf of its employees.

For the next few years the company, in order to keep its leading scientists at work, manufactured surfaces for glass tables and packaging for foodstuffs. Still, 340 workers had to be laid off and those who remained had to work for six months at a time without getting their monthly paychecks.

Things improved in 1994 when the Dutch VacuMetal and U.S.-based Sheldahl companies placed their first orders with Sidrabe. The company gradually managed to attract more foreign investment, and now it is 90 percent owned by U.S. shareholders. Sheldahl and the investment fund New Century Holdings are the largest stockholders, with 34 percent and 43 percent, respectively.

"The survival phase of our company is over," Yadin said triumphantly. Indeed, last year's turnover was 2.4 million lats ($3.8 million), twice as much as in 1999. Planned growth for 2001 is 5 million lats.

"Today, we work for the West," he continues, stressing that Sidrabe produces unique vacuum-deposition equipment and technologies which are used in a wide range of industries and research programs, including electronics, solar energy, mobile telephones, automotive, construction and furniture.

Among Sidrabe's customers are companies such as the 3M Corporation, Sigma Technologies and Alien from the United States; VacuMetal, Akzo Nobel and TNO from the Netherlands; Hueck Folien from Austria and Polysack Plastic from Israel.

The company has held an ISO9001 certificate since 1998, which will be extended to ISO9001/2000 this year, as well as the European CA certificate on security.

"It was an eye-opener for me," the U.S. Ambassador to Latvia, James Holmes, who visited the company Feb. 22, told The Baltic Times. "The quality of the technology was very impressive."

"I knew there were some hi-tech companies in Latvia, but I've been told that most failed to privatize in a rapid fashion, lost their technological edge and employees, and weren't able to develop Western markets. To see an exception to this was very impressive," he said.

The U.S. investment fund New Century Holdings has been a Sidrabe shareholder for four years. "We were suggested to invest in this company as in a totally unique venture, and this decision has proven to be right year-on-year," Karlis Cerbulis, the fund's president, told The Baltic Times in a telephone interview.

He said there are only four such companies in the world, with the other three being in Great Britain, Germany and Japan.

Last week, the company's workers completed a new, $2.7 million vacuum web coater for ITO films, which will depart for Taiwan in couple of weeks. The equipment will be used to coat films for touch-screens used in mobile phones. In May, a team from Sidrabe will go to Taiwan to finish the training of personnel to service the coater.

"We had to compete with companies from Germany, Great Britain, Italy and Japan, and we won the tender," Yadin said. He rejects the suggestion that it happened because of lower prices offered by the Latvians.

"Our prices are at the same level as the others. We tailor the suits that suit the customer. A Dutch company needed equipment for multi-layer nickel coating onto roll dielectric polyurethane and announced a tender to suppliers. Several companies applied. Then the customer asked for samples of the product. We were the only ones to provide samples and we got the contract."

Cerbulis testifies to the Latvian company's professionalism.

"Sidrabe assembles the equipment on its own premises, tests it and hands it over to the client with all the scientists present to answer any questions. It's really unique."

He continued, "Sidrabe is unique because it can do the research following the customer's ideas. It's rare to see a company so perfectly staffed by qualified scientists and research equipment."

Sidrabe employs 210 people, including 40 researchers and 40 designers. "We try to give all the 'unqualified' work to our sub-contractors," Yadin explains.

For the Taiwanese coater only a third of the assembly was done in Riga. Yadin cooperated with companies in the Russian cities of St. Petersburg and Rzev, and the programming was done in Belarus. "It's not like in Soviet times. There's no need to do everything by ourselves, so we use all we can," he stressed.

Yadin, a stocky, silver-haired, energetic man in his fifties, has worked at Sidrabe for almost 30 years. He says that now there is a problem finding new specialists to join the team.

"As soon as there's someone qualified enough to work for us, he's scooped up by a bank the next day. And there he sits and writes checks, but they can pay him twice as much as we can," he explains bitterly.

A quick tour of the labs adds to the impression of being invited to a wizard's workroom where miracles are made from old, Soviet equipment by bleak-looking scientists with a nonchalant attitude to fashion.

Sidrabe's lithium project, which the house scientists have been researching for five years, has produced battery material which doubles the capacity of conventional rechargeable batteries to be used in mobile phones, laptop computers and so on.

"We coat lithium on polythene," Yadin says. "No one else has such technology."

But he is skeptical of this ultra-modern technology being sold and put into use immediately. "All producers have their manufacturing up and running. It would take a lot of time and money for them to reorient themselves to an essentially new technology," he says.

The lithium project is being supported by the U.S. government, Cerbulis explained. He stressed that the distinctly "old" appearance of the research equipment at Sidrabe is deceptive. "They actually create the 'insides' of these machines anew for every project," he said.

Another project under research is to create pigment that changes color when seen from different angles. "Similar stuff is used for $100 and $50 bank notes," Yadin says. "It's very expensive, at $2,000 a kilo. But ours will be 10 times cheaper." It probably won't be used to print dollars, but it will be used in cars, plastics, even lipstick.

Cerbulis declined to predict which of Sidrabe's many research projects is the most promising. "All have great potential and it's hard to say which will turn out to be the best."

"Our interest lies in the future of the enterprise. We are looking forward to the time when it dawns on the world markets that Sidrabe is a stable and potentially highly profitable company. It's happening step by step," Cerbulis said.