UniStor Corp., a computer company that specializes in products for data storage, announced Tuesday that it has joined forces with a Russian company to manufacture disk drives this summer in the former Soviet Union.
The venture, VolzhStor, will make 2.5-inch, 42-megabyte disk drives with Volzhsky Computer Works in Volgograd, the city 1,000 miles southeast of Moscow once known as Stalingrad, which has been known for its large military support industries. The new company would employ 350 former Volzhsky technicians and engineers to manufacture an estimated 65,000 drives.
The drives would be integrated into UniStor's battery-powered, portable hard disks for sale to computer resellers worldwide by the end of 1992.
The partnership is part of the Russian effort to transform its state-run military factories into commercial manufacturing plants.
Volzhsky Computer--a major association of electronics manufacturers under the Russian Federation's Ministry of Electronics--has built a new 20,000-square-foot factory for the venture, while Laguna Hills-based UniStor will provide expertise through 22 engineers, plus an undisclosed amount of capital, UniStor officials said.
The Russian government approved the deal over the summer, while the approvals to export the technology came from the U.S. departments of Commerce and Defense on Jan. 28, UniStor said.
Under the agreement, UniStor will either buy the assembled disk drives from VolzhStor for hard currency or barter the disk drives for such consumer goods as clothes, TVs and other home electronics products. UniStor will then sell the assembled drives to its network of computer distributors and resellers.
"This gives us an opportunity to expand into hard-disk manufacturing, which will ultimately lower the component cost of our finished products by 20% to 25%," said Michael B. Campbell, president and chief executive of UniStor, which assembles computer peripherals imported from Hong Kong, Japan, Malaysia, Singapore and Taiwan.
This venture will transform UniStor into a manufacturer, Campbell said, and will increase UniStor's annual sales to $30 million this year, from $22 million in 1991.
While political instability in the former Soviet Union makes any investment risky, analysts said opportunities available today outweigh the risks.
"There's a huge opportunity for computer and peripherals companies to capture a premier position in the Russian computer market by manufacturing within that market," said Daniel L. Presser, president and chief executive of S/A Technologies Inc., a San Diego company that advises U.S. electronics companies in establishing sales in Eastern Europe and the former Soviet Union.
In October, UniStor acquired technology rights and a manufacturing license from a bankrupt Colorado disk drive manufacturer, PrairieTek Corp., to use its technology in future manufacturing. Part of PrairieTek's technology will be incorporated into the Russian venture, Campbell said.
UniStor will procure the parts from its Asian and U.S. suppliers and ship them to Russia for assembly, he said.
While there are concerns about the Russians' ability to manufacture this type of technology acceptable to standards of the Western marketplace, Campbell said, UniStor engineers will oversee all aspects of the venture's manufacturing.
"UniStor has no plans to compete directly with other disk drive manufacturers and will incorporate Russian-built drives into our new portable disk drive line, or sell them through Russian domestic distribution channels only," he said.
According to Russian officials, technology transfer is high on the list of government priorities. Vladimir A. Levchenko, who heads Russia's Foreign Economic Relations office in Moscow, said his government prefers dealing with mid-size companies such as UniStor because "they do not impose demands and requirements, such as exclusive distribution rights, that larger U.S. firms do."
Levchenko's office monitors joint ventures signed between foreign companies and those in Russia.
Presser of S/A Technologies said Russia represents one of the world's fastest-growing markets for personal computers. Last year, about 750,000 computers were sold in the former Soviet Union, nearly double the number sold in 1990.
"Despite hard-currency problems and political instability, I expect sales to reach at least 1 million by year end," he said Tuesday. "Everyone now is trying to export to that market, but the Russians don't have the hard currency to import.
"By manufacturing locally, this problem is eliminated," Presser added. "They can utilize the very low cost of labor and very high technical expertise in Russia to manufacture a product at quality and cost levels that can be priced competitively in the international market."