TOLYATTI, Russia - AvtoVAZ, Russia's largest automaker, may be famous for
producing a car that inspires fewer sales than jokes. ("The new Lada Kalina can
go up to 100 kilometers an hour ... if you push it off a cliff.") But that
hasn't stopped the company from attempting to inject a little racetrack sex
appeal into its day-to-day assembly.
When fresh Ladas roll off the production line here at the massive AvtoVAZ
plant, they head straight for a spin around a track built on the company
compound. One by one, the boxy cars head out
onto the track for a series for identical maneuvers - a figure of eight here, a
speedy drive down the straight there.
Every car that is made at this factory in Tolyatti - Russia's "motor city",
located 800 kilometers southeast of Moscow - takes a test drive on the AvtoVAZ
track. Watching the action from a top-floor office in the plant's
administrative building, spokesman Igor Burenkov says that when the track is
working, it means the factory - and by extension the town - is working as well.
"From this side, you can see the track. It's also visible when you drive past,"
Burenkov points out. "Tolyatti residents have a saying that if you can see
cars, then things are OK. If not, then there's nothing."
Kremlin support
The past year has seen fewer Ladas going through their paces at the AvtoVAZ
track. The global economic crisis hit the Russian automaker hard, with sales
dipping to a 13-year low last year, prompting layoffs, a month-long production
freeze, and a government bailout plan.
Russian Prime Minister Vladimir Putin has overseen a multipronged attempt to
rescue the country's auto manufacturers. The government this week launched a
"cash for clunkers" program, announcing it will offer discounts of up to
US$1,700 to Russians looking to trade in old cars for new ones.
That followed a plan unveiled last week to invest almost $20 billion over the
next decade to overhaul the Russian auto industry and bring cars like the Lada
- derided by one auto expert as "outdated, unreliable, and of inferior quality"
- up to European standards.
Russia is even taking on a Formula One sponsorship in its gamble to resurrect
the AvtoVAZ brand. Putin announced this month that the country is sponsoring
its first grand prix racer, Vitaly Petrov, who is leading the F1 team for
France's Renault, which owns a 25% stake in AvtoVAZ. Petrov's car and uniform
featured the Lada trademark on his debut in Bahrain this month.
Such efforts are being watched closely in Tolyatti, whose survival as a
one-industry town - or "monogorod", as it is called in Russian - depends
entirely on the success of Putin's government initiatives. One out of every
seven residents in this Volga River town of 700,000 works for the automaker.
Burenkov, who was brought in together with a new company president at the
height of the crisis last autumn, says the fate of the industry and the city
are intricately intertwined.
"Tolyatti is not called a monogorod for nothing. We would love for it to be a
stereogorod, but for now it's a monogorod. One day maybe it'll be a quatro. But
that's all in the future," Burenkov says. "The reality today is that this is
how it is. [This company] is everything for Tolyatti. The city's well-being
depends on the well-being of AvtoVAZ."
A few minutes later, Burenkov's image appears on a television in his office.
Perhaps not surprisingly, the spokesman's TV is tuned to the factory's own
station, which broadcasts to the entire city. AvtoVAZ also has its own radio
station and newspaper, all meant to keep the population attuned to the
factory's pulse.
Still your father's Lada
Even before the crisis, some half-hearted attempts were made to reform AvtoVAZ
- Renault and General Motors were both brought in for joint projects - but as
long as domestic sales remained strong, there was little compelling reason for
change.
Lada models are still among the country's top sellers - particularly the
Priora, Samara, Kalina, and the classic Niva four-wheel drive. (Putin himself
purchased a Niva last year in a public show of support for the ailing
automaker.) But the company, which was founded in the 1960s to manufacture
export vehicles based on models from Italy's Fiat, has watched its European
market dwindle to sales of just 7,300 cars last year.
Foreign automakers are also making incursions into Russia, eating away at
Lada's domestic market. More than 1 million foreign cars - mainly from Hyundai,
Chevrolet, and Kia Motors - were sold in Russia in 2009, a number that is
expected to grow this year as cautious consumers return to car shopping.
In such a climate, AvtoVAZ will continue to suffer by comparison until it
undergoes a serious reform. "It's clear that the models produced can't
compete," says manufacturing analyst Sevastyan Kozitsyn of the
BrokerCreditService investment firm. "Why? Because most of them were designed
in the period between the 1960s and the 1980s - in the last century."
Hard times in motor city
AvtoVAZ is pinning its hopes on a new low-cost car using Renault technology and
an infusion of cash from the French automaker. It is also hoping to divest
itself of the huge social costs it traditionally paid for medical care and
sports clubs for its employees. Many of those expenses have been offloaded on
the Tolyatti city administration, with a tentative pledge from the federal
government to provide funding.
The company has also laid off thousands of workers, including many approaching
retirement age. Other factory workers have seen their wages cut by up to half,
and their shifts reduced for months at a time.
One AvtoVAZ employee, Maria, who asked that her last name not be used, has
worked at the factory for 25 years. Her wage has been halved to less than 2,500
roubles (US$85) a month, an amount she describes as barely livable.
"Someone asks, 'Do you have anything left?' I've got two eggs, two pieces of
cheese, a slice of bread, and tomorrow I don't know what I'm going to do,'" she
says. "'If they don't pay us, that's it. At my place, the mouse has already
hung himself in the refrigerator.'"
As patience wears thin in Russia's motor city, the government and AvtoVAZ must
hope that the latest initiatives - including the new low-cost Lada-Renault
model - are quick to gain results. Otherwise, says Kozitsyn, both the automaker
and the city it supports may fail.
"If you save AvtoVAZ, you save the city," the analyst says. "Two problems will
be solved."
Copyright (c) 2010, RFE/RL Inc. Reprinted with the permission of
Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW, Washington DC
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