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. Last Updated: 07/27/2016

ZiL Introduces 4-Day Week

Truck manufacturer ZiL has instituted a four-day work week due to shortages of parts, materials and cash, a Moscow Transport Ministry official said Wednesday.


Oleg Magura, the ministry's auto industry expert, said that ZiL's production line, which normally makes 140, 000 trucks a year, switched from two shifts to one on Tuesday. He said that declining sales and outstanding debts have left the 108, 000-employee company unable to pay full-time wages.


ZiL's move comes only three weeks after Moscow automaker AZLK, which manufactures 110, 000 Moskvich cars a year, was also forced to cut production and switch to a four-day week. AZLK has already shut down its main production line twice, in January and in February, because its main engine supplier halted deliveries.


Magura said that suppliers had delayed deliveries of parts and materials to ZiL and AZLK pending payment of past-due debts. The automakers, in turn, have not received payment from customers for finished vehicles.


The Russian government has sought to shelter local manufacturers like ZiL and AZLK by increasing taxes on imports. Earlier this week, the government doubled excise taxes on imported trucks to 70 percent and raised the tax on imported compact cars from 35 to 50 percent. Taxes were also increased in April.


Despite the protective taxes, both factories have suffered a sharp decline in sales this year as their prices to consumers have risen.


ZiL raised the price of its trucks by 70 percent Nov. 1, setting the price of its latest model at 13 million rubles ($10, 800). The basic ZiL model now costs 5. 55 million rubles.


AZLK raised its prices earlier this year, but postponed a second hike Nov. 15 fearing a further decline in sales. Even though its basic model, the Moskvich, is currently among the cheapest in Russia, AZLK is notorious among Russia's car owners for poor quality.