Auto industry hardball, Russian style: Bo vs. Putin
Bo Andersson: “We all work for Mr. Putin.”
Photo credit: JOE WILSSENS
DETROIT -- Bo Andersson is doing to the Russian auto industry these days what he spent a decade doing to the North American industry: making it sweat.
Renowned and feared by U.S. parts makers as the demanding head of General Motors' global supply chain prior to GM's 2009 bankruptcy, Andersson, 57, is now CEO of one of Russia's largest vehicle manufacturers, GAZ Group.
He has butted heads repeatedly with Russia's very hands-on President Vladimir Putin in the course of executing very un-Russian efforts to save the money-losing GAZ, he told the Automotive News World Congress last week.
Faced with $1 billion in 2009 losses at GAZ, Andersson cut tens of thousands of manufacturing jobs, bulldozed outmoded factories, fired employees for drinking on the job, outsourced key parts, sold excess plant capacity and ended the company's 80-year history of making cars in order to focus on more profitable light commercial trucks.
Dropping cars got the government's attention. "Mr. Putin told me, 'You don't understand. This is a Russian tradition,'" Andersson recalled.
"I said, 'Not anymore. We lost $60 million making 50,000 passenger cars. I decided to step out of the business.'"
Putin also expressed displeasure when Andersson cut wages at the company, and also when he did away with many old buildings on GAZ's main manufacturing site.
"We all work for Mr. Putin," he told the audience when asked who his boss is at GAZ.
GAZ turned a $300 million profit last year.
Part of the turnaround involved laying off 10,000 salaried workers and 40,000 hourly workers. Andersson has invested in new products and funded human services, 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 improving GAZ's competitiveness. Last year GAZ began exporting to Turkey, a Eurozone market that forces GAZ to be competitive with European companies.
GAZ's suppliers are still wondering whether he will make GM-style demands for price cuts, he said.
"If your name is Bo, everyone knows what you're going to do next," he said, recalling the period after he restored profits at GAZ. "He'll ask for a price cut. But I didn't touch the suppliers," he said.
"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."
But now that he's done that, "We will turn our attention this year to supplier productivity," he said. "We have a lot of improvement to make."
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