Andersson revives Russia's GAZ
Nick Gibbs is a correspondent for Automotive News Europe.
Bo Andersson is arguably the toughest car executive on the planet. When he accepted the job as head of Russian automotive group GAZ in 2009, the former Soviet auto giant was on its knees. Debt had reached $1.25 billion and the core product was aging.
The company's vast factory complex in Nizhny Novgorod, 250 miles east of Moscow, was cash-hungry, crumbling and overstaffed. Corruption was rife.
Andersson, General Motors' former head of purchasing, turned the company around, leading GAZ to a record net profit of $274.9 million in 2011. In addition, GAZ won deals to build vehicles for Volkswagen Group, General Motors and Mercedes-Benz starting this fall.
Bo Andersson cut costs, improved sales at Russian automaker GAZ.
To revive GAZ, Andersson, 56, drew heavily on his officer training in the Swedish military. As I discovered on a recent trip to GAZ's Nizhny Novgorod plant, he's strict about timetables. He's also undeniably brave.
"I've said to the shareholders and I've said to Mr. Putin, corruption is still a big issue," he tells us.
Telling Russian President Vladimir Putin that the country's business practices need to be cleaned up is pretty gutsy.
"When I took this job it was on the basis that I would have zero tolerance for corruption. And there was a lot," he says.
Fixing the problem has upset a lot of people, so Andersson has a bodyguard when he's in Nizhny Novgorod. To slash costs, Andersson had to fire half the work force, some 50,000 employees. And when GAZ won the VW and GM contracts, he told the unions that the automaker would reassign 5,000 workers rather than add staff.
Another of Andersson's tough decisions was to stop production of what would have been the most modern car with a Russian badge.
The Volga Siber was axed after 9,000 sales. Andersson thought the car, which was based on an early 2000s Chrysler Sebring, was too costly. The move ended GAZ-branded car manufacturing, something the company had been doing since 1932. That didn't go down well with Russians who have memories of Volga cars such as the Chaika, which for years was the Politburo's limousine of choice.
"I've been in car business too long and there is too much competition," he says. "I got a lot of gray hair closing out the Siber."
He was left with a range of aging trucks, buses and vans.
The job of biggest earner fell to the Gazelle light van, which was out of date -- it had been changed very little since its 1994 launch -- and was considered unreliable by customers. Andersson started to demand more from component suppliers, dumping the worst, even those that were in-house.
We attended one of his daily morning meetings on the shop floor with managers and saw firsthand his tough approach. "The problem was your inability to manage your supply base," he says to one hapless manager.
The strategy is working. Andersson says warranty costs now account for 4 percent of revenue, close to the 3 percent he reckons they cost the likes of VW.
When he arrived at GAZ, he had to deal with a demoralized work force. Petty theft and drinking were problems. Andersson dealt with this by withholding the newly launched profit-sharing bonuses.
"The first year of the bonus program we had to exclude 4,000," he says. "Last year it was 1,000 people and this year if you're caught, you're fired."
He has Russian politicians breathing down his neck. He says Putin asked him to raise worker wages. He has, but only after he had seen increased productivity.
Andersson's toughness has paid off: Costs have been slashed, debts are being paid and sales are healthy.
The town of Nizhny Novgorod has a lot to thank Andersson for. Without him, GAZ's famous leaping gazelle badge surely would have become extinct in Russia.
You can reach Nick Gibbs at firstname.lastname@example.org.