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. Last Updated: 07/27/2016

Carmaker Struggles to Shed Soviet Cobwebs

Courtesy of Za RulyomWorkers assembling vehicles at one of AvtoVAZ's production lines for Ladas, where conditions lag behind those at the carmaker's Kalina plant next door.
TOLYATTI, Samara Region -- Walking through the maze of main production lines for Ladas at AvtoVAZ is like traveling back in time.

Workers in mismatched plaid shirts put together the outdated models under Soviet-style banners that read, "Conscience is the best controller" and "Quality is the path to perfection." Hidden in a quiet nook is a red flag with a hammer and sickle. The old shops are dark and smell of chemicals evaporating up from the floor.

This is where Russia's largest carmaker produces the bulk of its vehicles. With equipment dating back to the 1970s, when Italy's Fiat helped the Soviet Union kick-start its car industry, the old shops show a low level of automation and a focus on manual labor.

In 2004, AvtoVAZ added a new, modern line to produce the Kalina, its most recent model.

But even Boris Alyoshin, head of the Federal Industry Agency, acknowledged last week that the plant had yet to complete its transition from the Soviet period.

"Everybody understands that there is a huge amount of problems at the conveyor," he told reporters during his visit to the town bearing the name of Palmiro Togliatti, a founder of the Italian Communist Party who spent time in the Soviet Union.

State arms dealer Rosoboronexport -- whose head, Sergei Chemezov, is an ally of President Vladimir Putin -- took control of AvtoVAZ late last year after the resignation of the carmaker's long-serving chief, Vladimir Kadannikov.

Last week, the new management team said it planned to secure billions of dollars in state support to build a new plant with the capacity to produce 450,000 cars per year and to roll out a dozen new models in a few years' time.

Unlike their Soviet predecessors, who depended heavily on Fiat's support and expertise, the plant's new executives said they would rely on local expertise and cooperate with foreigners only on parts and equipment.

The team is hatching its plans in a 24-story, blue-glass high-rise -- the tallest building in Tolyatti. Towering over the snow-covered plains of the Volga River city, the plant's headquarters seem to illustrate the carmaker's vaulting ambitions.

The management has tightened security at the plant, with police closely guarding the entrance. To get inside, visitors need to pass one of the two dogs that sniff for explosives.

Courtesy of Za Rulyom

New general director Igor Yesipovsky

The plant's new general director, Igor Yesipovsky, a Rosoboronexport representative, told reporters that the security measures had already helped save "many millions of rubles" at the carmaker, which was in the past seen as a preying ground for criminal groups. Driven around the plant in a Toyota Land Cruiser, Yesipovsky was guarded by men wielding assault rifles.

In 2005, a total of 1.5 billion rubles ($53 million) in parts and other products were stolen from the company, Interfax reported, citing an unnamed source. The theft was exposed during a police check, Interfax said.

The new management of the ailing, debt-ridden carmaker, which counts more than 114,000 employees in its ranks and indirectly supports a total of 5 million jobs across the country, said it would do everything it could "to prevent social tension."

Back in the workshops, spanning more than 600 hectares, the workers' moods run the full gamut of emotions, from hope that the new team will lift the carmaker from years of mismanagement, to indifference over the changes, to suspicion toward the new team.

Valery Tsapko, a soft-spoken quality controller, was among those who welcomed the new arrivals.

"The plant should go ahead in terms of quality," he said, adding he hoped the new management would give the plant a fresh sweep.

Just last month, AvtoVAZ recalled several thousand cars because of a steering wheel defect, blaming the glitch on a supplier.

And there were those who, like maintenance man Nikolai Zholobov, distrusted the state-friendly team. The 35-year veteran of the plant, wearing a Lenin pin on his boiler suit, said he did not know what to expect from the Rosoboronexport team.

The old managers "were at least raised here," he said.

Zholobov said he didn't believe in a better future for the plant and didn't know what to do with the 64 shares he owned.

"This is called redistribution of property," he said.

But those who showed mistrust or indifference toward the new managers said they were not sad to see Kadannikov go.

"I saw him only on television," said Vladimir Musiyenko, a senior worker in the plant's more modern workshop, which opened next to the old one in 2004 to produce the new Kalina models.

Money, however, appeared to be the workers' biggest concern.

"People are most worried about wages," said Andrei Chernysh, a senior worker at the plant's new shop.

While the plant's executives said the workers were paid on average 14,000 rubles ($500) per month, the workers said they had to do overtime to receive that amount. And unlike the employees at a Ford plant near St. Petersburg, who launched a work slowdown late last year, the workers are "afraid to strike," Chernysh said.

While some, like Musiyenko, said they were confident AvtoVAZ could assemble better-quality modern cars, others said they did not care what came off the assembly lines as long as they got a bigger paycheck.

"We would pump out even garbage bins," said Pavel Golotin, another worker at the new shop, which is set to produce 60,000 Kalinas this year. "We want to work and get normal wages."

At 28 years old and with a family of his own, he still has to live with his parents, he said, because he cannot afford to take out a mortgage.

At the end of the day, even feisty Zholobov agreed that money had the upper hand over the rest of the issues.

"I couldn't give a rat's ass, as long as we get paid."