AvtoVAZ Chairman Bo Andersson said he is fighting back against the domestic suppliers that still have Soviet-era views and don’t support his efforts to lift quality and lower acquisition expenses at Lada, the top-selling car brand in Russia.
On Monday the company had to cease production at its massive car assembly facility in Togliatti after the second round of problems caused by the chain of supply for parts. The production was resumed on Tuesday, but the automaker faced such difficulties for the second time after a supply glitch shut down output last November as some suppliers simply refused to send the needed parts. “They shut me down, ” the executive said about the November glitch. “They have been used to special benefits,” he added, hinting that business models for the suppliers are still the same as they were during the Soviet era. Being the company’s first non-Russian chief executive officer, the former General Motors purchasing head is now confronting executives from 15 suppliers, who even complained to Russia’s president Vladimir Putin about his new business stance. “They are working to my terms now: I want five things from them: quality parts, delivery, service, competitive pricing and terms of payment,” he adds.
The manager is lowering the working positions besides working to cut acquisition costs in a drive to bring AvtoVAZ into profitability – last year the automaker lost a net 25.4 billion rubles ($384.67 million). He has dropped 17,000 jobs at the company since becoming chief executive officer in 2013 and is now focusing on the suppliers, with Lada models manufactured in Togliatti having 81 percent domestic parts content. Renault, Nissan and Datsun models have around 50 percent and he has added 100 new purchasing employees in a bid to increase the local sourcing of parts to make up for the collapsing local currency.
Via Automotive News Europe