Siegfried Wolf interviewed by Russian weekly 'Itogi'
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 06.12.2010 |
"In Russia the automotive industry has fared much better than in the US", - says the new chairman of the board of directors of RM Corporation, Siegfried Wolf.
The Russian automotive industry is - much like it's American counterpart - going through a difficult period of post-crisis reform. Siegfried Wolf, the former co-director of the Magna group and the current chairman of the board of directors at RM spoke with Itogi about a foreigner's perception of the Russian automotive industry in the 90s - as well as in the present, about solving the problem with roads in our country and about reaching an agreement with Oleg Deripaska.
- Mr. Wolf, how exactly did you find yourself holding a top managerial position in the Russian automotive industry?
- For the last 16 years Donald Walker and I have successfully managed Magna. Back when we'd only begun doing business in Europe, the company employed around 800 staff - and by the time I'd taken the offer to work at Basic Element the company had grown to almost 35 thousand. Magna is represented in almost every area of the automotive industry - from the production of individual parts to full-fledged car assemblage. I am currently heading the board of directors of several Basic Element companies: RM Corporation, GAZ Group and Glavstroy.
- Will you be retaining your post as co-director of Magna once you join Basic Element?
- No. For a number of legal reasons I've officially left Magna as of November the 15th. The thing is, in the Anglo-Saxon corporate culture, the CEO is also a member of the board of directors - so changing one's place of employment takes a relatively long period of time. But as of the middle of November I've severed all formal ties with Magna.
- So what are your plans and objectives at the Russian company?
- I think my role at Basic Element will be one of active training - introducing and implementing modern managerial principles. Oleg Deripaska is one of those people who see this as a necessity. In addition, I will have to form a team, look out for new talents and bring them together, for the prosperity of the company. And Russia has very high intellectual potential. I'm a team player, and here, at my new place of employment, I have the goal of winning over people's trust.
- In 2009 there had been a lot of information about Magna, GAZ and GM planning on creating a manufacturer of automotive components in Russia. At what stage is that project currently at?
- Back when I was working at Magna, we had two goals in mind: to modernize the supply network and the production of vehicle components. And we were working with GM on a project that was to create a mass market vehicle for under 10 thousand dollars, which would meet all of the basic requirements that motorists have - and would be assembled with components produced locally. I've never once seen a personal vehicle that was a good match for every single country. You always need to take local factors into consideration, the demands of the local market, the climate and of course the state of the roads. Which means that, for example, Russia needs a sturdier car, than, say, would be required in Austria or France.
Regarding Magna's relationship with GAZ - we had a joint production facility that did bumpers, car windows and so on. In the end we had to choose which was more preferable: to expand our own automotive brand or concentrate on contractual production? Expanding your own brand is something that takes a lot of money and a lot of work. In the end we decided on continuing our relationship with GAZ.
- There's a saying in Russia, that the country has only two problems: fools and roads. How can we address the second problem?
- Let me simply say: don't give people fish - teach them how to catch their own fish. And then even chronic problems can be effectively dealt with.
- What impression did the GAZ plant leave?
- The level and quality of assemblage at GAZ meets international standards. And Magna has introduced state-of-the-art technology into the company's production process, especially in Gazel production.
- What is, in your opinion, the difference between the western and Russian managerial models?
- While working at Magna I'd built 19 factories in China and can say that Russia, as far as managerial culture goes, is quite akin to Europe. Russia has a good basis - solid schools and higher education. It's really more of a question of relating to the experience of the industry in general.
- Last year the American automotive giant GM, having found itself in a tough financial situation, filed for bankruptcy, allowed itself to recover and is now getting ready to hold an IPO. Whereas in Russia the government did not allow AvtoVAZ to go bankrupt. In your opinion, which measure has proved more effective?
- You really need to distinguish between the systems by which the businesses function. An unregulated, public company - that's the American economic system, but a partially government subsidized or partially government controlled company is the European economic model the future Russian model. As I see it, the problem with AvtoVAZ was an employment issue. When you have 100 thousand people working at the company - and a million more in related businesses, all of whom are reliant on your course of action, then your hands are somewhat tied. On top of that, the Russian automotive industry is currently under a severe burden of debt. So the government aid was very useful in this regard. But at the same time the most important thing is to establish a level playing field for business, to make sure that every market participant has the same rights as everybody else.
And if we were to compare with General Motors... The American government invested 60 billion dollars into the company before it's bankruptcy, and now, when the automotive group is once again on the exchange, the government plans on getting back around 40 billion dollars. But when you invest 60 billion and see a return of only 40 billion, is that good business?
- Not particularly, no.
Exactly. The automotive industry in Russia fared better, but much still needs to be done. And it's important that we don't disrupt the positive trend that we've been seeing.
- What would you say needs to be done to modernize our economy?
- Let me give you an example. Magna opened a plant that produced steel molding. It requires about 40 thousand tons of steel annually. But because of quality issues we are forced to import around 85% of the metal, which leaves only 15 percent to local steel producers. Or another example. Russia is one of the largest exporters of oil product, yet you import plastic materials. Why are you selling only the initial, raw materials? This is the area where the country needs to develop. There shouldn't be a situation when Russia conducts missions to the moon, yet has problems in the production of automotive steel. Everything needs to advance as a whole.
- Your impression of Russia on your first visit here? When did it take place?
- Back in the 90s Magma absorbed Steyr, an Austrian company that had at the time been working with GAZ. When I first visited the Russian plant (it was 1998 I think), I saw the Gazel production line. Since the vehicles were being fitted with Steyr engines, it was my job to check the quality of the finished product - it wasn't of the highest level. A couple of years later I visited the plant again, Oleg Deripaska showed me around. It was as though I had come to an entirely different factory. In just a number of years everything had changed - GAZ had been one of the first in Russia to implement "lean production", considerably increase efficiency and incorporate new technologies into production. That's when I'd come to the conclusion, that it would be better for Russia to develop business not by themselves - but in a partnership. I said that I would be interested in working with Oleg and in combining the production of automotive components with local production facilities. That day we'd agreed to cooperatively build a component plant in Russia.
- Does that mean that you believe in Russia?
- When we were launching the Siber passenger car production line with GAZ, I saw 40-50 young Russian engineers that could program and customize assembly robots by themselves (keep in mind that the equipment was American) - that's when I knew that investing in Russia would be a sound decision. Since then Magna has invested 250 million Euros into your country. If you don't see the benefits of investing - don't, that's the principle I live by.
Itogi
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