:: Russia - Avtovaz on the brink

Several hundred Avtovaz workers took to the streets of Tolyatti on Saturday to defend jobs at the threatened car plant, amid a flurry of conflicting reports and denials about its future.

According to various reports, between 700 and 2,000 protesters presented a list of 13 demands, including no mass layoffs, raising wages to 25,000 roubles ($800) per month, nationalisation and an early return to full-time work from November. They also called for management to be suspended.

Another call for a change in management came from State Duma Deputy Anatoly Ivanov, who said that Prime Minister Vladimir Putin should be put in charge of the carmaker.

Pyotr Zolotaryov, the leader of the plant's independent trade union, Yedinstvo, told The Moscow News that there were about 2,000 workers and their supporters at the protest.

On the question of control over the plant, Zolotaryov said it should come under state ownership, but "whether [the CEO is] Putin or another manager appointed by him is a different question."

Zolotaryov also questioned Avtovaz's massive debt. "Some of the debt doesn't belong to Avtovaz but Russian Technologies," he said. "Avtovaz did not actually get much of this [aid]. We checked with the Audit Chamber, and based on our information, this money did not get through to Avtovaz."

The future of the car giant is unclear, with conflicting information from various sources in the government about the number of layoffs and rescue plans.

5,000 layoffs were confirmed by the company, but then an official in the Health and Social Development Ministry said the figure was 36,000.

Then the company's management reached a tentative agreement with the official trade union to axe 27,600 jobs, and then Yedinstvo received a notice of 17,700 job cuts, which was hastily withdrawn the next day, Zolotaryov said.

First Deputy Prime Minister Igor Shuvalov, visiting Tolyatti, categorically denied that any mass layoffs would take place.

Earlier this month, Deputy Industry and Trade Minister Andrei Dementyev concluded that without cancelling debts and restructuring the plant, 55,000 jobs would have to go, Vedomosti reported.

French carmaker Renault, which has a blocking stake of 25 per cent plus one share in Avtovaz, has been pressured by Putin to invest more. While a Renault spokeswoman confirmed that Renault is interested in keeping its stake and is prepared to help, she declined to elaborate, saying talks are still going on.

At the same time, Japan's Kyodo News Agency reported that starting in 2012, Avtovaz, Renault and Nissan will jointly produce cars in Tolyatti. According to Avtovaz's vice president for strategy, Grigory Khvorostyanov, Avtovaz will produce up to 70,000 Nissan cars a year and up to 130,000 Renault cars a year by 2013.

Nissan began production of its Teana sedan from June this year in St. Petersburg, but makes only up to 50,000 cars a year, and has no plans to make budget vehicles. If the deal with Avtovaz goes through, the Bluebird Sylphy small sedan will be produced in Tolyatti.

The total investment for the new joint venture will be 42 billion roubles ($1.4 billion), a press release from Avtovaz said. If the deal goes through, one of the conveyers will be overhauled to begin production of a new model. Spokespeople at Avtovaz could not be reached for comment.

Deputy Finance Minister Alexander Novak told RIA Novosti that converting Avtovaz's massive debt of 40 billion roubles into shares for a bank to buy may be one of the main options for saving the company, and VEB, was touted as the new shareholder-to-be.

However, a few days later, Vedomosti quoted sources in VEB and Avtovaz as saying that the government should use Sberbank and VTB to solve Avtovaz's problems, not VEB.

"It's unfair that we have to shoulder all the debt," said the VEB source. "We are a state owned bank, not a federal agency [for saving companies from bankruptcy]. The main creditors of Avtovaz - Sberbank and VTB - gave out these loans in sound mind and sound health, so let them deal with it now."

Avtovaz's debt will exceed 76 billion roubles by the end of this year, not taking into account the 9.76 billion roubles it owes its suppliers.

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