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26 Sep, 2009 10:53

Russia’s largest carmaker to lay off 27,000 workers

Russia’s Avtovaz says more than 27,000 jobs are to go due to plunging demand. It’s a severe blow for workers at the company, the largest employer in the city of Togliatti in the Samara region.

The country’s biggest car producer Avtovaz is a strategically important asset: it employs 102,000 people, which is one third of the whole workforce in the city of Togliatti

Many workers are now in despair.

Tatyana Madyakina, who has been with Avtovaz for twenty years, says she was notified a week ago that she’d lose her job in two months’ time. Her husband’s job in the construction business ended when the crisis began. Now she’s left with $3 a day to live on.

“I give my son $1.50 for public transport to the university, leaving me another $1.50 – all I have to feed the family. We live on milk and bread,” Tatyana said.

“It’s impossible to find another job in Togliatti. I’m 48, and the jobs Avtovaz is offering, like excavator driver, are obviously not fit for women,” she added.

Avtovaz has been struggling with financial woes for years. The government has tried everything to support it, from shuffling the board of directors to increasing import tax on foreign cars.

Even Prime Minister Vladimir Putin pledged to protect the brand, buying one of the cars himself.

But the financial crisis hit demand so hard that the company is now forced to lay off more than a quarter of its work force.

“With our cost-cutting measures we’ve already managed to save up to half a billion dollars this year,” said Viraly Vilchik, Executive Production Vice President of Avtovaz.

“But now we are looking for government help to support us as we are forced to cut staff, to pay pensions and compensation to our workers”, he added.

Huge levels of government support have so far saved the company from going to the wall.

The conveyor belt is still running, but in just one shift. That means the workers are already losing money, as they have a smaller workload. To add to this, they’re now nervous, as nobody knows who will be fired.

The company’s trade union claims all laid-off workers will receive full support.

“Our workers over retirement age will be offered a large bonus and pension upon retiring, up to $350 a month,” assured Nikolay Karagin, Chairman of Avtovaz trade union.

“As for our younger workers, we will offer them training for another profession and public works,” he said.

Avtovaz is planning to re-hire some of the dismissed workers in 2012, when it launches new models with its partner Renault. The French carmaker is confident the business is still viable.

“The cooperation has never been as strong as it is today,” said Hugo Demarchelier, member of management board and Senior Vice President for Planning, Products and Programs at Avtovaz.

“It has been reinforced recently. There is a clear will of Renault to work with Avtovaz using Avtovaz competence and resources for both itself and Renault”, he noted.

The company is to present its latest anti-crisis plan on September 30. It hopes it will be able to convince the government to give it another billion-dollar handout.