GAZ Plans 5,800 Job Cuts image

According to business daily Kommersant, Russian automaker Gorkovsky Avtomobilny Zavod (GAZ) is planning to lay off up to 5,800 employees. Earlier, deputy chairperson of GAZ, Yelena Matveyeva, denied plans for 14,000 job cuts and said that people will be transferred to other companies such as independent service units or sent for re-training. The move comes on the back of a collapsing Russian vehicle market due to the severe economic conditions.

“Before now we had been able to avoid mass layoffs,” a company spokeswoman said on Wednesday, explaining that the firm’s production is now a third of what it was before the global financial crisis hit Russia last autumn, making many workers redundant.

GAZ Group, controlled by indebted metals tycoon Oleg Deripaska, has been named as an industrial partner in the deal to have Russia’s Sberbank and Canada’s Magna International buy control of Opel from its bankrupt U.S. parent company, General Motors.

Facing a 60 percent drop in sales this year and tough talk to restructure its debt, GAZ has until now been able to avoid serious job cuts with the help of emergency loans from state-run banks.

It has, however, fired 1,200 people working on the production of its unpopular Volga sedan.