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. Last Updated: 07/27/2016

AvtoVAZ Stops Assembly Line, Denies Layoffs

Carmaker AvtoVAZ stopped its main assembly line for an indefinite period Wednesday morning but denied a minister's warning that the firm was planning large-scale layoffs.

Health and Social Development Minister Tatyana Golikova said Wednesday morning that AvtoVAZ, the country's largest carmaker, was planning to lay off 3,200 people, Itar-Tass reported.

The company has drastically scaled down production since the beginning of the year and has idled many employees and cut workweeks as sales have plummeted and the auto giant has been unable to secure enough credit to maintain operations.

"There are still 12,500 workers that are not working," Golikova said at a Federation Council session.

AvtoVAZ denied in an e-mailed statement that they were planning a layoff, saying Golikova was likely referring to a transfer of 3,000 workers from AvtoVAZ's food service subsidiary to Corpus-Group, a separate company.

The carmaker announced a stoppage of its main assembly line again on Wednesday, citing lack of component deliveries, mainly from SOK Group.

Samara-based SOK Group owns both car and component production sites. AvtoVAZ receives about 35 percent of their total component supplies from SOK, accounting for about half of the parts maker's sales, according to figures from Avtostat, a Tolyatti-based agency that tracks the auto industry.

"We are in talks about resuming component shipments," the e-mail statement from AvtoVAZ said.

The company "hopes component shipments will start by 3 p.m. Wednesday," RIA-Novosti cited an AvtoVAZ representative as saying. Nobody was available for comment at SOK group Wednesday.

The company was also forced to stop its assembly line in February because of a halt in shipments from suppliers. It was stopped on Feb. 5, only to resume again after the weekend on Feb. 9.

The government has approved a bailout package of 10 billion rubles in loans for AvtoVAZ and has allocated 2 billion rubles to subsidize purchases of many of the firm's Lada models, in addition to several other domestically produced cars.

AvtoVAZ employs one in seven adults in Tolyatti, a city of 700,000.