OBCHUK, Belarus - After the fall of the Iron Curtain, former Soviet space shuttle engineer Aleksei Vaganov found himself importing Ford cars into Belarus.
When Belarus, Russia and other former Soviet republics later signed an agreement allowing goods to flow among them without duties, the scientist-turned-entrepreneur saw an opportunity he could not pass up.
Vaganov approached Ford and the Belarus government about using an old truck factory to build cars. His timing was nearly perfect, said Len Meany, Ford associate director for European new markets. In July 1994, Ford took a team of specialists to Russia, Belarus and Ukraine. Meany calls the region 'the last great opportunity in the developed world.'
'It has a huge population and huge natural resources,' said Meany. 'It's not the Third World or an underdeveloped country. It's a misdeveloped country.'
Negotiations with the Belarus government moved briskly. Some 40 sites were checked, and the conversion of an aging truck factory with its own proving ground had the most appeal.
In exchange for a 26 percent share in the newly formed Ford Union, the Belarus government gave the land and buildings to Ford. Vaganov, with his 23 percent stake, and majority-holder Ford shared the cost of the new machinery and equipment.
By July 1997, the factory was assembling cars. Kits for Escorts came from Halewood, United Kingdom, and kits for Transits came from Genk, Belgium.
Production capacity is 6,000 units with one shift and 15,000 units with two. When the plant hits its maximum production capacity, expected within the next three years, Ford will add a body and paint shop, bringing total investment to around $100 million, said Meany. Annual capacity will climb to 30,000 vehicles.
Full automation is not foreseen. 'At this volume and even a higher volume, it wouldn't be worth it,' said Meany.
Ford Union also has searched for local parts makers, said Neil Campbell, general director, who arrived with three other New Zealanders after Ford shut its Auckland factory in 1996.
The first local part will be a wiring harness from a joint venture in Minsk, 20 miles away. United Technologies Automotive is the Western partner. Supplies will begin this month.
Many parts makers supply the region's heavy trucks, tractors and earth-moving equipment, but so far they do not meet Ford's quality requirements. Meany believes that will change.
'You have an entire industry here that supplied the complete optical system for satellites,' he said. 'It is just getting that repeatability and just-in-time mentality that you have to work on.'
Ford Union has 155 employees, 100 of whom assemble vehicles. The average age is 28, and 90 percent have an advanced degree. The average salary is $200 monthly, compared with the national average of $73.
The factory opened in July 1997 and started volume production at the end of October.