AK-47 Manufacturer Faces Bankruptcy

September 30, 2009 — -- Even in his old age, Mikhail Kalashnikov still worries about the invention that defined his life. At a conference on the 60th anniversary of the weapon that he invented in 1947 -- the Avtomatni Kalashnikova (Automatic of Kalashnikov) or AK-47 -- the elderly weapons designer, who is still chief designer for the state controlled company that makes the guns, lamented that, "there are counterfeits all around the world now which are plainly not of the same quality as the Russian example."

The legendary Kalashnikov is a Russian export success story. The guns are used by 60 armies worldwide, account for up to 80 percent of all assault rifles and are known as the weapon of choice for terrorist groups and rebel movements. But the Izhmash Arms factory in the central Russian city of Izhevsk, where Kalashnikovs are manufactured, has long been concerned about forgeries.

According to Izhmash Arms' parent company, the Rosoboronexport State Corporation -- which has a monopoly on supplying Russian arms to the international market -- there are about eight countries in which dozens of businesses are making their own versions of the Kalashnikov. And they are doing this without passing on any licensing fees to the Russians.

And now it appears that the financial difficulties facing the weapons manufacturer have reached crisis point: its very existence is threatened. A businessman in Izhevsk has filed a motion to declare Izhmash Arms bankrupt because of outstanding debts of around 8 million rubles (around €180,000 or $265,000). The case has caused a sensation in Russia because for a long time the Russian armaments industry has been one of the only industries considered competitive on an international basis. And Izhmash, which was founded in 1807 by Russia's royals, is one of the largest firearms manufacturers in Russia.