A Detroit legend roils Russian vehicle making
Photo credit: Joe Wilssens
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DETROIT -- Bo Andersson was one of the most powerful and feared men in the Detroit a few years ago. Now he is a hero of the Russian auto industry.
He might still be a little feared, he admits.
The purchasing czar of General Motors until the U.S. giant's bankruptcy and upheaval in 2009, Andersson had been a demanding supply-chain boss who struck fear into the hearts of American suppliers for years by demanding price cuts and productivity improvements.
Today he is CEO of GAZ Group, one of Russia's largest vehicle makers.
It is a job where suppliers are still wondering whether he will make GM-style price cut demands, he told the Automotive News World Congress Tuesday night.
"If your name is Bo, everyone knows what you're going to do next," he said, recalling the period after he restored profitability at GAZ. "He'll ask for a price cut."
Treating suppliers 'gently'
"But I didn't touch the suppliers," he assured the audience.
"I've been taking it very gently on the suppliers there. I thought it was most important for us to get our own house in order."
The 57-year-old former Swedish military officer is now celebrated in the former Communist nation for saving the nearly obsolete government-controlled GAZ through a series of swashbuckling capitalist maneuvers that Russian President Vladimir Putin has not been altogether happy about.
To stop the losses at GAZ, the former Detroit scourge eliminated tens of thousands of Russian manufacturing jobs, bulldozed outmoded factories, fired employees for drinking on the job, outsourced key parts that had been produced internally, sold plant capacity to outside automakers and stopped making unprofitable passenger cars in order to focus on a wide spectrum of trucks.
Facing down Putin
The latter move drew Putin's attention. "Mr. Putin told me, 'You don't understand. This is a Russian tradition.'"
"I said, 'Not any more. We lost $60 million making 50,000 passenger cars. I decided to step out of the business.'"
After becoming CEO in 2009 and confronting the outdated money-losing company, Andersson laid off 10,000 salaried personnel and 40,000 hourly workers.
GAZ lost $1 billion in 2009. It turned a $300 million profit last year.
Andersson has invested in new products and directed more company money into human services at the employees' request, such as providing free hot meals daily at the factories and paying for 4,000 children of employees to attend summer camp.
He says he is slowly improving GAZ's competitiveness. Last year, GAZ began exporting into Turkey, a Euro-zone market that requires GAZ to be competitive with other European companies.
"We will turn our attention this year to supplier productivity," he said. "We have a lot of improvement to make."
You can reach Lindsay Chappell at lchappell@crain.com.
