Toy Car Production Could Come to Tolyatti

It’s not exactly Christmas in Tolyatti, but the home to ailing carmaker AvtoVAZ got a bit of welcome news Tuesday when the Industry and Trade Ministry and a top toy maker said they were planning to create a new production cluster there.

AvtoVAZ workers treated the news with a healthy dose of skepticism, and everyone involved conceded that the project was in its planning stages. But the proposal — which comes as the state is looking for ways to cope with failing factories to prevent social unrest — could help diversify Tolyatti’s economy away from a reliance on the auto giant.

“We plan to create a complex of factories and a design bureau to produce high-quality, inexpensive toys in Tolyatti and create more jobs,” Grand Toys chairman Alexander Molvinsky said in an interview Tuesday.

“What we need is long-term loans, which we hope the government could help us get, subsidized rent prices and a simplified certification procedure for our products. They could be anything from toy cars to bicycles,” he said.

The Tolyatti-based company, founded in 1999, imports toys from Belarus, China and Poland, and sells toys made in Russia through its chain of 50 Begemot stores in as many regions. Molvinsky said the backing from the Industry and Trade Ministry, which has been looking to boost the country’s light industry, came as a surprise.  

The thought of building a production cluster first came to Molvinsky two years ago, and he made a proposal to the National Association of Toy Producers.

“We hadn’t heard from the association until last night, when they told us our project had been supported by the government,” he said. “While the economy was booming, not that much attention was paid to us. But when the crisis comes, you get to the smaller scale.”

The Industry and Trade Ministry said Tuesday that the government had approved Molvinksy’s projects and that they would get state support.

Earlier this year, the government promised to buy 1 billion rubles ($32 million) of national handicrafts to support the industry, following an emotional plea from nesting doll producers and others to help them survive the crisis.

“This is all at the very early stages. We still have to work things out,” a ministry spokeswoman said, adding that she could not say whether the ministry was ready to provide all the support Grand Toys was seeking.

The project became public Monday, when Deputy Industry and Trade Minister Stanislav Naumov mentioned it in a speech at a conference for small businesses.

“The aim of the cluster’s creation is to replace imported goods, decrease the prices for toys and make competitive and efficient goods,” Naumov said.

He said the government planned to increase the volume of Russia’s market for toys and other children’s goods by 50 billion rubles ($1.6 billion) to 170 billion rubles by 2012.

Workers at the country’s largest carmaker, however, did not share his optimism.

“The idea seems ridiculous,” said Alexei Gorodnov, 31, who works at AvtoVAZ’s press shop. “Anyway, China will still make toys better and cheaper than we will. And I don’t believe the government will give enough support to the startup businesses. I don’t believe in anything now, frankly.”

Many workers at the plant are in a similar mood after AvtoVAZ, Tolyatti’s largest employer, said it planned to fire 5,000 workers from its staff of 100,000 by the end of the year. In a sign that the figure could still rise, the Health and Social Development Ministry said in a statement Tuesday that it would create 20,000 jobs in the Samara region “specially for AvtoVAZ employees.”

AvtoVAZ’s three main owners are state corporation Russian Technologies, French automaker Renault and investment bank Troika Dialog, with stakes of 25 percent each.

The car factory’s workers are welcome at the toy factories, Molvinsky said. “It is not that difficult to retrain a carmaker to be a toy maker,” he said. “We may employ a few thousand people at our cluster.”

He said he could not give exact investment figures or number of jobs because he still had to write a business plan.

Potential participants in the cluster said they were ready to move as soon as the park was built.

“If favorable conditions such as low rent and good distribution channels are created for us, we are ready to move to Tolyatti,” Lyudmila Balgurina, chief executive of Tula-based toy maker Detskaya Igrushka, said Tuesday.

“Our sales are down 50 percent, and getting together with other producers would mean beating the crisis for us.”