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. Last Updated: 07/27/2016

Daewoo Starts Uzbek Autoworks

ALMATY, Kazakhstan -- A Damas microbus rolled off the assembly line this week at Daewoo's plant in Uzbekistan, the first vehicle in an ambitious plan for mass production in the former Soviet bloc.

Daewoo Corp. and the state firm Uzavtoprom each own half of the $658 million UzDaewooavto joint venture, which will build 30,000 microbuses, Tico runabouts and Cielo family cars this year.

Output will rise to 200,000 units by 2000, with up to half earmarked for export to the former Soviet Union, said Heecho Chung, Daewoo's president for Central Asia.

Daewoo has just started production at an identical plant in Romania to supply Eastern Europe. The South Korean company will supply western Europe from an FSO plant in Poland, which it took over recently.

Chung said the strategy was starting to pay off.

"We are now getting proposals from Russia and elsewhere who know we are producing in the former communist countries. They approach us," he said.

The Uzbekistan plant, based at an unfinished tractor works in the Ferghana valley town of Asaka, will be completed when a second assembly line is ready for production this summer.

It will assemble vehicles with 16 percent of their parts from local sources at first, but that number will rise to 72 percent by 2000.

Suppliers will invest $300 million to increase the share of components produced locally, but engine and transmission plants won't be built until after the turn of the century, Chung said.

Out of the 4,000-member work force, 2,500 have already spent up to a year working at Daewoo's car plants in South Korea.

"We operated our lines with Uzbek technicians alone -- the same people, the same production. The quality will not be in doubt," Chung said.

Production at the venture should generate an additional 50,000 jobs in the region at suppliers, the joint venture's general director, Shukhrat Yusupov, told the Pravda Vostoka newspaper.

Under President Islam Karimov, Uzbekistan, a desert state of 22 million people, has pursued cautious market reforms while political opposition has been silenced and the press muzzled.

That has upset human rights groups, but investors have found it possible to strike big-ticket deals with the Tashkent government. Daimler-Benz makes Mercedes trucks, Newmont Corp. mines gold and B.A.T manufactures cigarettes. Chung said Daewoo had invested a total of $1 billion in Uzbekistan. Other projects included televisions, digital switching systems and constructing a textile mill.

"We like to say that Uzbekistan is politically very stable and the government has put a lot of effort into economic and market reforms," Chung said, adding, "The workers are diligent, the technocrats are working hard -- but we had many difficulties during negotiations."