AvtoVAZ Will Reduce Lada Workforce by Over 25%

Job cuts could be as high as 27,600

By Brendan Moore

09.24.2009

AvtoVaz Lada logoThe largest auto manufacturer in Russia, AvtoVaz, will layoff over 27,000 workers at its Lada plant, the company has announced.

Auto sales in the formerly red-hot Russian market have dropped 54% this year, from 3.2 million units to a forecasted 1.4 million units. Until the current economic meltdown, Russia was expected to become Europe’s No. 1 auto market this year, deposing Germany from that position. That development may now be years away for Russia, as the country has been particularly hard-hit by the economic turmoil in the world.

AvtoVAZ, partly owned by Renault, said this morning that it had reached agreement with the company’s trade unions to lay off 27,600 workers in the next thirty days. The plant has been running at 65% capacity for months.

The plant, located in the Italian-sounding city of Togliatti on the Volga River, churns out Ladas, and has been doing so since the Soviet Union was around. The plant was originally built with Fiat’s help and technical assistance in the 1960’s, as part of the Soviet Union’s master economic plan, which included auto manufacturing. The production facility currently employs around 102,000 people.

Workers at the plant are protesting, and are lobbying for the Russian government to step in and nationalize the Lada plant, but that scenario is very unlikely, although the Russian Deputy Prime Minister, Alexander Zhukov, is trying to put together an aid package for the company.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. To the Lada workers:

    Welcome to Capitalism.

  2. Capitalism!

    All fun and games until somebody loses an eye.

    You kids behave.

  3. Almost 2 years ago, we taught it was a good move from Renault http://www.autosavant.com/2007/12/10/renault-surprises-everyone-and-wins-avtovaz-stake/ Then, the economic turmoil really hit very hard. I wonder if Renault might regret a bit their decision?

    The other Russian carmaker GAZ also reduced its workforce from what I saw at http://news.caradisiac.com/Crise-AvtoVaz-Lada-tranche-large-28-000-emplois-supprimes-578

    We can wonder if a consolidation of the Russian carmakers might came more sooner then we taught like a amalgation of Lada and GAZ?

  4. Too bad they can’t make a version of the Renault Logan there.

  5. I wonder if the Russian government will do less or more than the other European governments did to prop up their auto industry?

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