Home > Russian auto workers protest lay-offs at AVTO-VAZ plant in Tolyatti
Russian auto workers protest lay-offs at AVTO-VAZ plant in Tolyatti
by Open-Publishing - Sunday 8 February 2009Russian auto workers protest lay-offs at AVTO-VAZ plant in Tolyatti
AvtoVAZ Stopping Plant Indefinitely
AvtoVAZ, Russia’s biggest automaker, is stopping its conveyor indefinitely, the company said in a statement Friday evening.
“The conveyor was stopped on Thursday for an indeterminate amount of time due to nondelivery of auto components," the statement said.
The company’s official announcement seems to be at odds with assurances made by AvtoVAZ chief executive Boris Alyoshin to news agencies on Friday morning.
"We’re a little bit behind schedule this week, but we will resume production on Monday," Alyoshin told Interfax.
The company restarted its plant last Monday after a month long extended winter break and announced its plans to produce 32,000 cars in February.
AvtoVAZ began paying suppliers 70 percent of invoices in promissory notes in January, the company said in a statement last month, citing unfavorable economic conditions.
The company’s domestic car sales fell by 6 percent in 2008 to 622,000 vehicles and as many as 100,000 unsold cars piled up in storage late last year.
Although lower demand is a problem that spans across the industry, AvtoVAZ is in a difficult position because its flagship model, the Lada Classic, is no longer competitive, said Mikhail Lyamin, an automotive analyst with the Bank of Moscow.
"The situation on the market is such that nobody wants that scrap metal,” he said, referring to the Lada.
“It is highly questionable whether demand will return to that segment of the market, even with the imposed government measures," Lyamin said.
The government in January raised tariffs on foreign-made cars, with certain duties being hiked as high as 80 percent.
Government officials met with Russian automakers in December and offered to increase government purchases, create a special leasing company to boost sales, and provide 233 billion rubles in direct financial support, loans and leasing arrangement.
Although the company has amassed at least 18 billion rubles in short-term debt to creditors and suppliers, the government is likely to come to the rescue of AvtoVAZ, Lyamin said. "But the issue is not about rescuing the company, it’s about making sure the situation in the region is stable."
AvtoVAZ is the main employer in Tolyatti, a city of just over 700,000 people in Samara region. In January, the plant announced that it would lay off 400 employees.
The company’s workers protested the layoffs in Tolyatti on Friday in front of the entrance to the plant, Interfax reported.