Warning Strikeat Vaz: the Position of Traditional and Alternative Trade Unions in Questions

Karelina M.

Metalina T.

WARNING STRIKEAT VAZ: THE POSITION OF TRADITIONAL AND ALTERNATIVE TRADE UNIONS IN QUESTIONS OF INCREASING PAY

CHARACTERISTICS OF THE ENTERPRISE

The Volga automobile factory (AvtoVaz), constructed in 1966 in Tolyatti, is a key structure in the automobile cluster that has developed on the territory of the Samara-Tolyatti agglomeration.[1]It has a 75% share in the Russian production of cars. More than 320 organizations in the oblast’work in cooperation with the VAZ. VAZ remains a city-forming enterprise, the material welfare of more than half the population of Tolyatti (in view of members of families working and employed at accessory producingenterprises) depends on the success of its work. The state of affairs at the enterprise continues to have significant influence also on the economic situation in Samara oblast’ as a whole.

VAZ is an open joint-stock company which for many years has been managed by local top-managers. At the end of 2005 the state, having received the majority of seatson the board of directors, initiated changes in the management of the company. VAZ passed under the effective management of the Federal State Unitary Enterprise Rosoboronexport (‘Russian defence export’).[2] The new managementaimed to liquidate the scheme of cross-holdings of shares through which the factory actually belongs to itself.Thought up in the middle of the 1990s to protect the company from raiders,the scheme gives full and complete authority to the current management, but does not make AvtoVaz attractive to investors from the point of view of the transparency of the structure of ownership.It is expected that this process will be completed by the end of 2007. By this time"Rosoboronexport", becoming the official shareholder of AO AvtoVaz,[3]will consolidate the necessary 75 % + 1 share, that, in the opinion of experts, will allow it to realize various ways of attracting partners and strategic investors.[4]In its 2 years of management of VAZ Rosoboronexporthasalready replaced two heads of the factory. In the middle of September, 2007 the ex-head of the Russian agency for industry, Boris Alyoshin, was appointed president - general director of VAZ. This change of managementtook place because the previous occupant of this post, Vladimir Artyakov, was appointed the governor of Samara oblast’ on 29.08.2007.

The management team of Rosoboronexportdid not take over the enterprise in the best situation. A heritage of previous years was a tax burden of 2,4 billion roubles. The share of the new car market of AO AvtoVazhas been radicallyreduced since 2003.[5]The increased solvency of the population and the organization in Russia of the assembly of foreign economy class automobiles comparable in price with the products of the Tolyatti car factory, have caused a sharp growth in the sales of foreign cars. In the new competitive situation the most serious problem for AvtoVazis its high production costs. The specificity of the enterprise is that since Soviet times it has retained a complex, vertically integrated structure (about 70 divisions), providingthe fullproduction cycle. From the end of the 1990s the question of reforming the structure was actively discussed with the purpose of increasing efficiency. Some divisions (for example,AvtoVazagregat) were hived off into subsidiaries and removed from the basic platform. But radical changes of industrial structure have not taken place. Besides, on the balance of the enterprise there is a ramified social infrastructure for the maintenance of which VAZ spends not less than 1 billion roubles a year.

The program of strategic development of the enterprise till 2020 designated by the new management is aimed at providing a range of models adequate to the consumer market and structural changes at the factory, allowing it to optimize its assets. It is planned to increase series production of the Kalina and Priori models and to create new assembly productionwith a capacity of up to 450 thousand automobiles a year for the production of essentially new models in cooperation with foreign producers. Besides the Canadian Magna, with which an agreement has already been signed, negotiations are ongoing with Renault and Fiat. The investment program for the next 3 years exceeds $5 billion. At VAZ they are seeking for ways to attract financing for this ambitious project.

The program of reorganization and reduction of costs is carried out in several directions.

ﾷDivision of functions of production, purchasing and selling and consolidation of marketing assets in the holding company. A wholly owned subsidiary trading company has been created with the purpose of cutting out the“grey” dealers and organizing a transparent system of sales. By the end of 2007 the creation of a uniform marketing structure will be completed. Apart from this, already at the beginning of 2006 the rights to sell VAZ cars on foreign markets and purchase equipment for VAZ abroad were transferred to Rosoboronexport. In the opinion of analysts, such measures are quite justified, as they are directed at getting some order into the financial flows of the enterprise.

ﾷActions to reduce losses from the theft of components and the use of counterfeit spare parts in the market. There has been a rotation of themanagement and personnel of the security service of the factory and the control of entry and the accounting and control of expenditure on materials has been toughened.

ﾷMore active work with suppliers, refusal of intermediaries and reduction of prices on supplies.

ﾷReduction of superfluous number. Within the next several years it is planned to reduce employment by 25 thousand at the expense of engineering-technical staff (ITR), managers, service personnel, and also through the sale of non-coreassets and removing auxiliary production for the frameworks of AO AvtoVaz. Plans for reduction do not mention assembly production workers.

ﾷRemoval from the structure of the enterprise of auxiliary production divisions and non-core assets, including the extensive social and welfare apparatus. Some of the objects will be transferred to municipal and federal ownership with the termination of financing of their economic activities on the part of the factory, others it is planned to assign to subsidiary companies and non-commercial organisations. A special group, with the participation of the Avtosel’khozmash (Auto and Agricultural Machinery) trade union (ASM),is discussing the situation in each of 80 objects in view of the social obligations of the enterprise to workers. It was planned to finish the transfer of objects by the end of the first quarter of 2008.

It is necessary to note, that, in initiating the program of reorganization of the enterprise and reduction of costs, the new management initially declared its aspiration to avoid a growth of social tension. During his time as chairman of the board of directors of VAZ, V.Artyakov declared:All actions will not lead to social tension. We must separate non-corework from the basic production, transfer objects of social provision to the municipal level, but with corresponding budgetary provision. There should not belosses here.[6] It seems that the understanding of the difficult social context of the started reforms has led to an extremely cautious approach of the managers of Rosoboronexportto their realization. Some painful problems have been solved, but as a whole it has not been possible for the newteam to achieve a radical change in the situation over the past 2 years. Despite the optimisticstatements of top-managers about the stabilized position of the enterprise and the success of new models of the factory, at the beginning of 2007 VAZ faced a crisis of overproduction. For February overstocking amounted to about 130 thousand automobiles. According to the official reporting of the enterprise on the results of work in the first two quarters of 2007 there was a reduction in the volume of receipts from the saleof automobiles in comparison with the corresponding period of 2006.[7] The sales volume of VAZ cars in the Russian market for the first half-year of 2007 was also reduced by 12,4 %, while sales of foreign cars grew by 69,9%.[8] According to experts, the sum of financial losses of VAZ for this periodis not as critical, as the probability of the irrevocable loss of that share of the market which the factory has lost because of the sales crisis. The share of VAZ in the Russian market on the results of the second quarter of 2007 had fallen to 28%.

These crisis events at the enterprise objectively demand the active continuation of the program of reorganization and reduction of costs, and also the acquisition of a strategic partner and injection of investments either on the part of the state or private investors, or on the part of western producers. Judging by the first public statements of the new head of VAZ, B.Aleshin, the idea is being discussed of the creation of a large autoholding company with the support of the state which would strengthen the position of the Russian producers by combining the functions of logistics, marketing, research and development, and centralization of the management of financial flows. However, at the moment the prospects of this idea are rather uncertain.

Social - labour situation at the enterprise on the eve of the workers’ action

105 thousand people worked at the factory at the moment of the research, 30% are young people under 30 years old. For the last several years there ahs been a gradual reduction in the number employed (from 120 thousand), but the number remains superfluous. The ASM trade union as a whole supports the plans of management to reduce about 25 thousandjobs in the next few years. As the chairman of the trade union committeehas noted,if today the factory will reduce the number by 30 thousand the factory will not stop. There are divisions which,working only for the needs of the factory, have plenty of workers without anything to do. And there are not only workers, but also other specialists. The number needs to be optimized. The position of the trade union committeeis to try to achieve redundancies not though mass lay-offs, but through natural wastage. In 2006 the administration notified the trade union committeeofthe possible redundancy of more than 4500 people, in 2007 1500 people over the year. But in reality this has not happened. The planned removal from the structure of the factory of social and welfare facilities can also be connected to the reduction of staff, therefore the ASM trade union committeeholds this question under constant rewview:With the removal of objects from the structure of the factory our people will suffer, many of whom are members of the trade union. And our demands are that the quantity of jobs should be kept and that the level of pay shall not decrease(chairman of the ASM trade union committee).

Against the background of a superfluous number VAZ continues to experience a shortage of skilled workers in spite of the fact that the factory has managed to keep its technical training colleges. There are problems also with qualified ITR. If several years ago very few peoplein Tolyatti could compete with VAZ on wage level and the wide set of social privileges, today the appeal of its jobs has appreciably decreased and it is necessary to strugglefor staff.

Although the workers of the enterprise have retained a large package of benefits, the basic problem causing turnover and creating grounds for social tension in the collective is the low level of wages in relation to the cost of living in Tolyatti. According to the chairman of the ASM trade union committee, the average salary at VAZ[9]is higher than at other domestic automobile factories.[10] Even in comparison with the assembly factories of Ford(Vsevolozhsk) and Renault, the VAZ workers, in his opinion, receive approximately as muchif you take pure time:there they earn more because they have more volume, they workthree shifts, a lot of overtime work, accordingly they earn more.However, owing to the sales crisis at the beginning of this year, VAZ did not need to organize overtime working that has resulted in the loss of almost half their pay for some categories of workers.This, certainly, is not all 105 thousand people, it is about 6-7 thousand. The people on conveyors, on engines, transmissions - about 9 thousand people. And the others are not involved in overtime. Forassembly-line workers, among whom are a lot of women and young people, this hit harder also because work on the conveyor objectively does not demand high qualifications and is limited to grades 3-4. Even the staged increase of overall pay by 9,8 % from the beginning of 2007 has not changed the situation substantially.Against an average salary in July of more than 16 thousand roubles, workers who did not have overtime work only received 8-10 thousand roubles, and non-production personnel even less. Accordingly, in their hands people received a net 6-8 thousand roubles. Moreover, according to the information of the trade union committee, about 600 grade 1-3 production personnel received pay below the factory minimum wage (6,5 thousand roubles).[11] Meanwhile Tolyatti is a rather expensive city. Payment of municipal services for a standard 2-room apartment amounts to about 2,5 thousand roubles, and the prices in the shops do not differ from Samara and Moscow. It is quite natural, that such a state of affairs caused sharp discontent of workers and created conditions for protest actions.

THE TRADE-UNION ORGANIZATION “YEDINSTVO” ( "UNITY")

Creation of the organization. Interaction with higher trade-union bodies.The trade union Unity was formed at VAZ in November, 1990 as an alternative to the traditional trade union which is included in the FNPR branch union ASM. A powerful push to its creation was the first strike which occurred at VAZ in September 1989 and wasfollowed by repressive measures against theparticipants in collective action. The ASM trade union then actually supported the administration, and it pushed participants in the strike committees to unite and to create a new trade union, to protect the rights of workers using lawful opportunities. First it was referred to as the Independent trade union of VAZ, and then received the name "Unity". From the moment of its creation the new trade union was included in the all-Russian association "Sotsprof", and the chairman of the trade union committee,A.Ivanov, was a member of the Federal coordinating council. From the moment of A.Ivanov's election as a deputy of the State Duma in 1999,[12] the organization has been headed by Petr Zolotaryov who over these years has become very well-known in Tolyatti. In 2004 he became the main competitor of the existing mayor of the city in the elections, getting 41,69 % of the votes in the second round (47% of Tolyatti citizensvoted for the existing mayor). Zolotaryov does not reject the possibility of standing for election to the post of head of the city in future elections.

Until 2006 the trade union Unity carried out its activity under the aegis of the All-Russia Confederation of Labour(VKT).With the assistance of VKTand the active participation of Unitythe Inter-regional trade union of motor industry workers (MPRA) unitingthe alternative trade-union organizations of a number of automobile enterpriseswas createdon July, 14, 2006.[13]The chairman of the Unitytrade union committee, Petr Zolotaryov, became co-chairman of MPRAtogether with Alexei Etmanov (FordMotor Company - Vsevolozhsk). Unity sends20% of the dues collected to the higher organization.Between the organizations included in MPRA there is constant information-methodical exchange, their leaders participate in joint training seminars and meetings, including international ones. Protestactions at one of the enterprises of the trade-union association, necessarily stimulate a solidary response of colleagues at other factories. The trade-union activists of Unityprovide practical help in the creation of alternative trade unions at other enterprises. With their support and methodical help a trade union wascreated at theGM-AVTOVAZ factory in Tolyattiin July, 2006. Now representatives of an assembly factory in Taganrog have appealed for help. And Unityactively cooperates with the International Metalworkers’ Federation.

Membership of the organization.The membership of the alternative trade union reached its maximum value in October, 2000 on a wave of strike activity. Unity then had 3425 memebrs, some of whom at that moment had dual membership and were also members of ASM. Double membership in the organization was allowed from the very beginning so as not to push away those who were afraid of pressure on the part of management and deprivation of social privileges if they left ASM. The basic difference of Unity from the traditional trade union ASM was always that it does not accept managers as members, i.e. people who have been given the power to impose summary punishments on workers. Only after some time an exception has been made for production foremen who are accepted in Unity, taking into account the opinion of the collective.

Since 2000 there has been a significant fallin the membership of the organization. Now in Unity", there are no more than 1000 people in total paying membership dues. The practice of exact accounting of membership has never developed through the whole period of the existence of the trade union, personnel resources for conducting this labour-consuming work are not sufficient:We have a lot of membership applications and registration forms, but we cannotsay precisely how many people we really have. The factory is huge, some have already left, and we do not know about it, the accounts department too gives us inaccurate lists, the chairman of the trade union committeecomplained in an interview. In his opinion, the decline in membership is a result, first of all, of repressive measures of the administration of the factory concerning members of Unity, and also activization of the work of ASM to preserve membership and struggle against the practice of double membership.