Looking back, Oleksandr Berezhny, the chief operating officer of the German drone manufacturer Quantum Systems in Ukraine, says that everything turned out as if life was preparing him for this position. He has been in the position of Managing Director for almost two years, starting to develop the company for the production of German drones in Ukraine from scratch. Oleksandr Berezhny told dev.ua how it all started, what Quantum Systems has managed to achieve in Ukraine during this time, how the Ukrainian-German company is developing, what problems the Germans had to face in order to launch production in our country during a full-scale invasion, and why it is important to be in the right place at the right time.
The main thing about Oleksandr Berezhny and the prerequisites for his work at Quantum Systems
Oleksandr Berezhny, 44, is an entrepreneur from Zaporizhzhia who began his career in foreign economic activity and then focused on corporate finance and business administration. Oleksandr began rebuilding his career at one of the world’s leading alcohol producers, the largest international alcohol holding in Europe, Global Spirits. Here he rose from manager to head of the foreign economic activity department and member of the Supervisory Board.
A few days after the Full-scale Invasion in his hometown, Oleksandr and his like-minded people founded the volunteer center «Palyanytsya», which later turned into a Charitable Foundation. It was thanks to the Foundation that Oleksandr became involved in many issues of assistance to the Security and Defense Forces of Ukraine. In March 2023, through their efforts, the «Palyanytsya» UAV operator school began its work, opened under the patronage of the Foundation, which became part of the «Army of Drones» project from the Ministry of Digital Affairs. To date, the school has trained more than 2,000 operators.
About working at Quantum Systems
-Tell me how you got into the company
In 2022, the Palanytsia Foundation was engaged in the supply of UAVs and crowdfunding, helping with the supply of the SBU, in particular, the elite special forces unit «Alpha». The military’s request was specifically for the Vector reconnaissance drone, but there was no funding. We contacted Quantum Systems about this, and then the company first brought the Vector UAV to Ukraine and closed about 50% of the check.
When the company began systemically supplying drones from Germany as logistical support to the Security and Defense Forces in 2023, it became clear that certain services needed to be localized for the end user. At that time, we already had good communications with Quantum Systems.
Sven Kruk, Managing Director of Quantum Systems, asked me about my vision for the company’s development in Ukraine and was confident in the proposals. So, until my appointment to the company at the end of March 2023, we came together, it was an evolutionary development of our cooperation.
-What goals did the Germans set for you (and not only) and what difficulties did you encounter while working in the Ukrainian division of Quantum Systems?
Then two years ago, if we talk about global tasks, I needed to deploy a center, which in English sounds like SSTLC — Service, Support, Training and Logistics Center. That is, a center for repair and maintenance, as well as support, training and logistics.
In addition, I was responsible for all administrative obligations related to organizing the process, in particular, opening a legal entity in Ukraine, which was initially registered in my name. After the company exercised a certain option, the Ukrainian legal entity became 100% owned directly by the German company.
The repair shop was deployed very quickly and gradually expanded. Already in early June 2023, the Center for Service, Support, Training and Logistics for the UAV fleet, which is supplied by Quantum Systems to the Security and Defense Forces, was opened .
Accordingly, we launched the company in March 2023, and in April of that year we launched all the repair work and training. And in June, a commission from the headquarters of the German Ministry of Defense visited us with an inspection. Then, based on the results of what was done, we, as a company, immediately received additional orders for the supply of Vector BPAK as military-technical assistance.
-If you summarize the results of your work, how are they reflected in numbers?
For example, last year we repaired about 200 Vector systems, and today over 700 of these systems have been delivered to the Ukrainian military. If we talk about losses, they amounted to about 10% of what was delivered.
The center has already trained 350 Vector pilots who work in the SBO.
Speaking of daily operations, which include all components of SSTLC, here we can say about the fastest organized process:
- The first line of support is direct communication with pilots and command and all complete information from them about the damage. We have our own fleet. The very next day after we learn about the damaged systems, the cars go directly to the LBZ, to the places where we agree with the teams and pick up the damaged UAVs. In addition, we provide constant support to operators directly, there are support groups in Signal, as well as a pilot portal, where you can get absolutely all the information you need for control.
- The second line of support is the localization of the process in Ukraine. If earlier we only collected tickets for damage and sent them to German engineers, now everything is considered in Ukraine. Sometimes we need some help from the German office, but stable support in Ukraine speeds up the process a lot.
If at the end of 2022, in order to repair the Vector, the system had to be sent to Germany. And this, taking into account the decision-making at the level of military logistics and the Ministry of Defense, as well as the settlement of procedural issues, took up to half a year. Now 3-4 weeks is the maximum we have reached.
-What was the most difficult thing for you during this period?
You know, I’ve been in business management for a long time. And all the difficulties for me are mostly tasks that need to be solved.
If we talk about what we faced when organizing Quantum Systems in Ukraine, the main obstacles relate to changes in the leadership of ministries and the country, on which decision-making depended and on which many processes were tied.
In addition, the supply system itself has changed many times. The difficulties were caused by communication regarding decision-making and receiving feedback on our request. Sometimes there was no communication at all, sometimes it was not what we expected, sometimes not from those departments at all. But here, life was greatly simplified for us by the fact that we are members of the Technological Forces of Ukraine, an association that does a lot on the process side.
Sometimes the obstacles are differences in decision-making culture or document flow. To some extent, this is due to the fact that we are a partly foreign company, German-Ukrainian.
However, for now I can say that it’s good that processes are changing, and now they are working, at least predictably.
About the factory in Ukraine
-How did it happen that you went from repair, support, and logistics to localization of production?
To come to the decision to deploy an aircraft manufacturing plant, we went through several stages. We started by simply delivering systems — the deliver stage, then there was the support and integrate stage. And as we went deeper, the volumes and staff organically increased, a center for the latest developments was launched, and it became clear that we needed to get into the production of spare parts.
We needed this primarily in order to significantly reduce the repair time. Because in this case we have the opportunity to independently produce components, wings, stabilizers, tail beams, everything that is needed. On the other hand, we received certain instructions for action from the Ukrainian government regarding the fact that the system is reliable and has a constant need from the troops, but it needs to be localized. Which was done.
-How did the production rollout go?
Having understood localization as our task, we started the process and began to invest our own funds in it. However, since we decided to provide the fleet that was already flying, the German Ministry of Defense included the costs of expanding production in the financing of assistance to Ukraine. Accordingly, now the production of all these spare parts is part of Germany’s international assistance.
The next step was to load this production not only with spare parts, but with complete systems. Thus, we became a full-fledged Quantum Systems manufacturing unit, the same as the facilities in Germany or in the USA or Australia.
-In April, when recruiting a team, it was reported that a factory in Ukraine was assembling drones from ready-made kits from Germany. Have you already localized the production of structural elements?
Now, to participate in a number of programs, it is necessary that production be localized in Ukraine by more than 50%. We have a full cycle. Unfortunately, Ukraine does not have the production of the necessary composite materials, so we import materials — raw materials. And from them we make composite parts of the airframe and then install either foreign electronic components or Ukrainian-made components — cable harnesses, CRPA, diplexers, etc.
For example, we also buy the CRPA (Controlled reception pattern antenna), a protected satellite communication receiver needed for UAVs, from a Ukrainian company. Even though some components for it are purchased in other countries, it is designed according to our specifications by local engineers and manufactured here.
We buy radio modules and certain components through the parent company, because it has significant discounts. However, there are certain components that are very difficult to import directly to Ukraine. For example, the payload is a gyro-stabilized dual camera manufactured by the Israeli company NextVision. In particular, this applies to the lightweight Raptor turret with a dual stabilized EO-IR camera of a large range, which is installed on the Vector. I believe that this is currently the best payload for this class of UAV on the market. However, direct purchase of Raptor to Ukraine is practically impossible. Therefore, accordingly, this payload is purchased by Germany and supplied to us. That is, we do everything to produce a system that works best, and at the same time we try to get into this required 50% Ukrainian minimum.
The following is the process of manufacturing a UAV, which is essentially an assembly of all the components that engineers install into a frame made in Ukraine. Therefore, assembly is part of the production process, which is set up in Ukraine in the same way as in factories in Germany or the USA.
-Quantum Systems launched the Vector UAV production plant in Ukraine in the spring of 2024. And at that time, they announced that by the end of last year, the plant intends to reach production volumes of up to 1,000 drones per year. What production volumes have been achieved?
If we talk specifically about the Vector UAV, then every day we actually produce everything necessary for one aircraft. And all components can be used both for repair and for supply, because the need to produce spare parts has not gone away. Since today we have zero contracted UAVs in Ukraine, we accordingly say that there is capacity. And everything that is produced is currently used as a fleet for spare parts. However, the produced aircraft are assembled, tested and flown. So, now we have the capacity to produce one aircraft per day, and I think that in June we will be able to double this number.
In addition, we are now additionally expanding the production of a new tactical range scout for the platoon or battalion level, Twister. And according to the company’s plan, we will produce it here in Ukraine with subsequent delivery to Germany. The only issue that still needs to be resolved is export. Therefore, we are now also preparing a part of our production for it.
Of course, we hope that Ukraine will also contract this drone, and this product will have the same path as Vector, because it has already aroused a lot of interest from potential users. However, since Germany supplies a lot of things to Ukraine, why not supply something to Germany from what Ukraine has not contracted?
-If we talk about the contracts you are waiting for in Ukraine, are there any clear deadlines?
There are two development vectors here: either funding will be received from partners for the production of Ukrainian systems, and then we will be able to supply them as military-technical assistance.
The second direction of development will be when direct contracting will take place from the Ukrainian side, then we will have the opportunity to make direct supplies. This process is all started, there is adequate communication, we are ready to cooperate and follow the procedure. If I may say so, the rules of this game are already understood and we are becoming a part of this process.
In addition, we see great interest in our drones both in Ukraine as a whole and from individual teams. And it’s good that now they have their own funds for purchases and teams are coming to us with a question about providing commercial offers.
-The next question will return to the news that takes us back to the beginning of 2024. At that time, it was also noted that by the end of last year, the plant intended to employ up to 100 specialists. Tell us how many employees there are now and are there any specifics about their employment at Quantum Systems.
Yes, indeed, there were such plans, but here we are actually slowing down a bit and currently the plant employs about 85 specialists: approximately 30 people in production, up to 15 people in R&D, 10 instructors, 10-12 administrative staff, the rest work on repairs and support. In order to achieve the goals set in the company for this year, we need about 120-130 people. It is worth noting here that the number of employees must correspond to the production load and orders. Because producing for the shelf is interesting if it is later purchased.
But yes, we are currently focused on hiring personnel, mostly in manufacturing professions, for composite production. Another direction of search is assembly engineers and engineers involved in repairs. Accordingly, with an increase in workload and volumes, assembly engineers can join repairs and vice versa.
We have the «strategic» criterion from the Ministry of Strategic Industry and can book up to 100% of employees. But, speaking of difficulties in employment, here we have the same problems as other companies in the defense sector. In particular, we are faced with the fact that the specialists we need have unresolved issues with military registration documents. This can be, for example, if a person for some reason did not update the data. My personal position on this issue is that everyone should have gone and updated themselves. Because with some exceptions, if this did not happen, it means that the person was not active in his position regarding what is happening in the country.
However, we had situations when we needed a person, but they were not booked and had to appear at the CCC. Then we found adequate communication with the CCC, without violating established procedures. We proved to them that we needed a specialist, and after updating the data, we did everything possible to book such a person.
-In April 2024, it was reported that over the next two years the company plans to invest up to 6 million euros in a new UAV production plant in Ukraine. Has the entire declared amount already been spent?
Our task is not to simply take and spend money. There is a certain budget that we operate with. I can say that the amount allocated thanks to German assistance directly for this plant development program, in particular, for the production of spare parts and R&D, is actually at least one time larger.
This is the budget allocated until mid-2026. Accordingly, with these funds, we must expand production, produce aircraft spare parts, and update the component base of aircraft that are already in the air.
About 2 million euros have already been invested in production, and the investment and expansion process is far from complete. Another significant part of the funds used is the SSTLC+RnD program and system upgrades to the latest level.
The most significant expense items:
- Directly putting the premises in order, in particular, creating the necessary microclimate in the composite production workshop, work on storing electricity and a system for automatically switching from centralized power supply to backup (here we are talking about a few milliseconds, otherwise the batch printed on 3D printers can simply be thrown away).
- Investments in the production of a park of molds.
- Expensive equipment, including laser cutters, milling machines for mold production, and more.
- Upgrades of systems of already produced aircraft with new components.
Among other fixed costs are salaries for specialists. Here, regarding the amount, I can say that the average salary of our employees meets the criteria set by the Ministry of Digital Affairs for us to be a resident of «Diya.City».
We are a European business with European approaches and we don’t play with numbers drawn somewhere so that an employee can later add something somewhere, we have everything in white.
About plans and technologies
-In February, information emerged that the company was working on a technology that would allow drones to track artillery by the sound of gunfire. At what stage is the development now, when will it be implemented, how much does it cost, and will the Ukrainian Defense Forces receive it?
Yes, the technology exists, it has already been tested on military training grounds, so far in Germany and Poland. The idea of this component is that you can use different payloads, in particular, electro-optical and infrared. It can also be an acoustic sensor or lidar cameras, which are already used on Trinity aircraft for 3D mapping, so that everything that is placed under the trees can be seen: trenches, trenches, etc.
The technology is currently being planned for use in the new Twister UAV. According to the company’s production plans, in the second half of this year we should start production in Ukraine and complete the integration of the technology with situational awareness systems.
In addition, I can say that deliveries of a new iteration of the Vector UAV with increased capabilities for additional payloads on the aircraft will begin in April-May. And I think that by then, perhaps, we will also be able to integrate this sensor on the Vector.
-In July 2024, it became known that Vector drones were upgraded with artificial intelligence sensors of the Receptor AI type. Are there any plans to introduce other AI technologies? Technical progress does not stand still, can you tell us about the stages of further improvements using artificial intelligence technologies.
Some technologies can be argued about whether to call them artificial intelligence or not. But the first thing I want to talk about, and something that is obviously already being used, is optical navigation as part of a complex of actions against electronic warfare.
Next is target tracking and recognition. That is, part of the complexes that we have to train to simplify the operator’s work. Here we are helped by a certain institution in the Ministry of Defense, which trains our model on its own datasets for certain scenarios.
We are conducting certain developments of using AI to implement a scenario where an operator controls several systems, especially if one of them is a loitering munition. And in this case, artificial intelligence should help, in particular, take over control and perform the operator’s work and duplicate some of his functions. But I hope that at this stage of work, artificial intelligence will not shoot. That is: detection — by AI, identification — by AI, decision-making — only a person.
-What awaits Quantum Systems in the near future?
The next stage is to become a full-fledged Ukrainian manufacturer and a full-fledged participant in the Ukrainian supply system. Accordingly, we are also ready for internal procurement, to contract with the Defense Procurement Agency of the Ministry of Defense and the State Procurement Agency for the Defense Sector. To this end, we have now actively begun negotiations with state purchasers to become part of these internal Ukrainian processes. While these are only negotiations, we have not yet carried out the procurement itself. That is, we have had purchases from Ukraine, but directly of German-made drones. However, now we have already provided information about our capabilities for a year and are submitting commercial offers to the State Procurement Agency.
