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. Last Updated: 07/27/2016

ZiL Boss Calls for Massive State Support

The new chairman of the ailing ZiL truck factory called for massive state support Thursday and decried the results of the factory's privatization, signaling a return to Soviet-style management for Russia's first large company to go private.


"We demand that the government freeze or delay the payment of our debts," said Alexander Vladislavlev, a proponent of strong government control over the economy who was elected chairman of ZiL's board of directors in May.


"The state is supposed to support the enterprises that make up the basis of the nation's industry," he said, very much in the style of ZiL's previous managers, who came to rely on state support as demand for the factory's medium-sized trucks shrank. "That's what the state is for."


Only a few months ago, ZiL management announced a massive restructuring program that it said could result in the firing of as many as 20,000 workers out of the 85,000 it then employed.


But Vladislavlev played down the need for layoffs, saying that 20,000 workers already had left ZiL in the past year due to low salaries of about $60 a month. According to Vladislavlev, ZiL now employs "only" 70,000 people.


"Too many have left, so now we're in danger of simply losing the factory," the board chairman said. "The factory is not just the equipment, it's the people, and it's the best ones who are leaving."


Since it went private in June of 1993, the company has fallen on hard times, cutting back to a four-day work week and frequently sending its workers on partly paid "vacations." ZiL's traditional customers in the agricultural and military sectors are no longer able to pay for its products, leaving the company with huge debts to suppliers.


Vladislavlev, who is also second in command to industrial lobbyist Arkady Volsky, head of the conservative Civic Union, laid blame for ZiL's predicament on the government's privatization program.


"The privatization we had was meaningless," he said. "The state simply gave up its property rights. We didn't get a real owner capable of investing in the reorganization of production."


He said that since the sell-off was for vouchers, not money, it did not bring in the funds necessary to improve the company's economic situation. He added that the State Property Committee had set the value of the factory, which has extensive assets in the form of machinery and real estate, at a mere 2.9 billion rubles (about $2.9 million).


Vladislavyev's claims were echoed by Moscow Mayor Yury Luzhkov during a visit to the factory Wednesday. Luzhkov said that all the shares issued by ZiL in exchange for vouchers should be recovered and then put up for auction again at a thousand times their old price.


"That would be the key factor in resolving ZiL's financial problems," said Luzhkov, a steadfast opponent of the voucher program.


Vladislavlev said ZiL needed state support to diversify its production of trucks, making more small vehicles for private farmers and traders, and to develop a nationwide network of dealerships.


The board chairman said the government could foster demand for ZiL trucks by financing agricultural producers and the military.


President Valery Saikin also suggested Russia extend credits to CIS countries to buy ZiL trucks, saying companies in the ex-Soviet republics wanted to buy them but could not afford to


"That's the way it's done throughout the world," he said. "When one country gives another a credit, it's only right that it should point out how that credit should be spent."


Vladislavlev said the government has already agreed to support one of ZiL's production lines -- the one making official limousines for Russian leaders. ZiL is planning to introduce a new modification of the limo instead of the currently used ZiL-115, based on a 1962 model.


Saikin said Deputy Prime Minister Oleg Soskovets, who visited the factory Wednesday, "liked" the new model, of which only a pilot copy exists now, and said the government would purchase between 20 and 30 of the imposing, hand-assembled cars a year.


Vladislavlev, however, said that asking for state support was not the only measure ZiL took to stay afloat. He said the company had invited former Chrysler president Lee Iacocca, famous for bringing the U.S. automaker out of crisis in the late 1970s with massive aid from the government, to act as a consultant.


According to Vladislavlev, Bertrand Hanon, ex-president of the French carmaker Renault, was already working in Moscow as an adviser to ZiL management.