After Armenia gained its independence scores of machine-building pants were closed-down and their parts and lathes were sold as scrap to Iran.

The fall in machine tool and electro- technical production was linked to the sector’s heavy usage of raw materials and energy. There was no ferrous metal industry in the country to speak of and no rail link to other CIS countries.

In 1995, with the aim of getting the industry up and running again, mechanical engineering plants underwent privatization, a process since completed. After being privatized the following plants started-up operations: “Electroapparat”, “Steklomash” in Artik, “Avtogen-M” in Vanadzor, “Sevan Instruments”, “Almast”, “Araks”, “Orbita”, “Karmshakmekena”. These plants produce compressors, pumps, automotive parts, pipe frames, generators, precision-tuning equipment, and electric cables, among other machine parts. There are 68 plants presently operating in this sector.

In any case, the management of the two largest mechanical engineering firms in Yerevan, «Interstanok - OJSC» and «ArmenMotor - CJSC» agree that the mechanical engineering sector in Armenia is not developing.

The President of «Interstanok», Mr. Vilik Dolukhanyan states that, «There are still people around who can pass on their expertise in this field, but in a few years there will be no mechanical engineering industry in Armenia to speak of. No investment is being made, the equipment being operated is from the last century and young people have no interest to come and work with us.»

Karen Stepanyan, Director of the Economics Division at «ArmenMotor», says that, « The state of mechanical engineering isn't sufficient. The industry hasn't disappeared, it still drags on, but this is only due to the personal devotion of those involved.»

These observations are borne out by several facts. The export levels of these plants have decreased in the past few years and precious little in the way of investments has been evidenced. The average salary of those employed in the industry is 50,000 - 55,000 drams monthly.

«ArmenMotor», a company that specializes in the production of motors, electric pumps, generators, micro-electric motors and home electrical furnishings, is closed during the winter season. The company cannot afford to heat the plant during the cold winter months and thus some 150 employees go without work.

«Interstanok» produces stone processing machines, woodworking machinery, hydraulic turbines and electric cables, among other machine tools. The temperature on the plant floor stands at -15 Celsius. It's so cold that the ice on the equipment doesn't melt. Some 120 people work in the plant, mostly the middle-aged and those old enough to receive retirement pensions. Young people aren't interested in working in the plant.

Stepan Hovhannisyan, who works at «Interstanok» as a locksmith/trash-collector, declares that, «People don't believe me when I say that I love my job. But God forbid that my boy should have the same job I do. Yeah, it's true that our pay has gone up, but that doesn't mean that guys like me are living any better. Just go to the market, everything is getting more expensive, right?»

Before the rise of the Armenian dram «Interstanok» exported 50% of its product. Now, that amount has fallen to around 15%. The firm's President states, «Starting in 1999 we would export 50 woodworking lathes to the United States every quarter. But after the dram took off it was no longer profitable so we stopped. Only the Director of the Central Bank knows why the dollar's exchange rate fell in Armenia but prices of raw materials and products did not become less expensive as well.»

Occasionally «Interstanok» receive orders from abroad, mostly from Russia. «ArmenMotor» also receives a few orders from overseas as well. The firm sells about twenty motors to «Interstanok» every year and two hundred are sold to a client in the United States. The total number of motors it sells per year doesn't exceed five hundred units. The company will soon introduce Armenian-made meat grinders to the Russian market.

«Last year we made an overture to the government to receive some budgetary funds in order that we could start producing deep-well pumps used in the agricultural sector. We drew up a draft outline and even made a few of the pumps for experimental purposes. The government refused to participate. Today, those same pumps are being imported from Moldova. The units being imported are neither technologically superior nor more competitively priced than the pumps we had initially proposed. Who does the government think they are assisting with such an approach?” asks Mr. Stepanyan. 

The directors of these firms underline the fact that the levels and irregularity of domestic and foreign product orders does not allow for capital accumulation nor does it permit them to make investments in the business as needed. They also state that these difficulties are propounded by a host of other problems.