Russia: AvtoVAZ Workers Stage Large Protest against Feared Cuts
Russia: AvtoVAZ Workers Stage Large Protest against Feared Cuts
Date posted: 2009-08-07 17:58:00.0
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TOGLIATTI, Russia — More than 2,000 workers for Russian auto giant AvtoVAZ demonstrated here on Thursday, railing against massive pay and production cuts, as the credit squeeze continues to take a toll on the domestic auto industry. The country’s biggest automaker, which builds Lada cars, reportedly intends to cut production and pay in the coming months.
The protesters gathered in a square near the city’s prosecutor’s office, waving placards that called on the government to take over the automaker and to investigate an alleged misuse of funds by the company’s management.
Thursday’s demonstration was organized by Yedinstvo, the 10,000-strong automaker’s independent labor union. Union officials said there will be more protests in the future unless the automaker reverses course.
AOA AvtoVAZ, Russia’s largest carmaker, is jointly owned by the state corporation Russian Technologies, Troika Dialog Investment and French automaker Renault, with each controlling a 25 percent stake and numerous small stakeholders holding the remaining 25 percent.
The automaker currently employs 105,000 workers, down from 160,000 in 2006, and is the region’s largest employer.
The protests came amid a crushing economic downturn that has seen massive job losses and still threatens thousands more jobs nationwide. Mikhail Shmakov, head of the Federation of Independent Trade Unions, said as large a number as 40.3 percent of the 400,000 workers expected to be laid off across the country within the next few months may come from the Volga region where AvtoVAZ is located.
Pyotr Zolotarev, the head of the Yedinstvo Independent Trade Union at AvtoVAZ told Inside Line that his union, along with others, has discussed with AvtoVAZ management the possibility of safely laying off thousands of workers. “My understanding is that the company administration wants to lay off as many as 50 percent of the plant’s workforce, although a final decision has not been reached yet,” Zolotarev said.
AvtoVAZ officials have denied any plans to lay off workers.
Earlier this year, the Russian government tried to prop up the auto giant through a cash infusion. The company was granted the equivalent of $117.5 million in interest-free loans in April as part of a $734 million bailout plan.
During a visit to the automaker in March, Russian Prime Minister Vladimir Putin not only promised a state bailout to the tune of $2.6 billion but also assured workers that they would keep their jobs. However, despite government assurances, the automaker has continued to suffer huge losses as sales plummet and the competition strengthens.
The company stopped production on December 26 last year, citing shortages of component parts. It resumed operations in February but workers were placed on a six-hour workday that lasted until July, when the auto giant introduced a 20-hour work week. The reduced work regime could last until next February, industry experts say.
In a hastily arranged press conference on Thursday, Vladislav Kapustin, the regional energy and industry minister, said ongoing restructuring in the factory should enable the company to pick up steam and retain its workforce at the current level.
Nikolai Karagin who heads the larger, official-leaning trade union said it was time to engage the factory administration in a realistic way, while acknowledging the bad economic situation. “These days, a constructive dialogue with the AvtoVAZ administration could yield more results than mass meetings and protests,” Karagin said.
AvtoVAZ Vice President Sergei Naumov dismissed rumors that the company is headed toward bankruptcy and mass layoffs.
However, industry experts said the current auto market crisis and protests such as Thursday’s could do just that, by encouraging stakeholders like Renault to pull out.
“That would be a deadly blow,” said Konstantin Romanov, an automotive analyst at the Moscow-based IC Finam. “There is also a real danger that constant production stoppages and stiff competition from other automakers would eventually squeeze the automaker out of the market, probably within the next five years.”
Inside Line says: By all accounts, this is a pivotal moment for Russia’s largest auto company. — Tai Adelaja, Correspondent