Issue #1178(44), Friday, June 16, 2006

Issue #1178(44), Friday, June 16, 2006

GM Head Hails City as ‘Detroit of the North’

By Anna Smolchenko and Yuriy Humber

Staff Writers

General Motors CEO Rick Wagoner on Tuesday broke ground at the company’s first Russian factory at Shushary, near St. Petersburg, while at the city’s economic forum Nissan CEO Carlos Ghosn was signing an investment deal to build another plant nearby.

GM and Nissan will invest $115 million and $200 million, respectively, into their St. Petersburg plants.

“St. Petersburg is often called the Venice of the North,” Wagoner said at the Shushary ceremony. “It may soon be called the Detroit of the North — and believe me, I know Detroit.”

Wagoner, whose last visit to Russia was in 2001, when he signed up for a $300 million venture with AvtoVAZ, delivered a short speech, answered a few questions and then dashed off to meet with President Vladimir Putin.

Wagoner said that he had listened to Putin’s comments at the economic forum earlier Tuesday and said he “shared his vision of a strong and growing economy for Russia and the Russian people.”

Carl-Peter Forster, president for GM in Europe, said after the ceremony that GM hoped to grow its partnership with AvtoVAZ and that the introduction of new models was “possible.” But he added that GM had not received any “immediate answers” on its proposals.

Flanked by First Deputy Prime Minister Dmitry Medvedev, St. Petersburg Governor Valentina Matviyenko said at the ceremony that the GM project was “a good indicator of Russian-U.S. relations,” and that it was bound to succeed now that Medvedev had become its “godfather.”

Shushary is also the site for a Toyota factory due to open next year, while a Ford plant in Vsevolozhsk, also near St. Petersburg, opened in 2002.

GM’s Shushary plant is expected to go into production in late 2008. The plant will initially produce 25,000 Chevrolet Captiva sport utility vehicles per year and will later begin producing a next-generation compact car.

While the plant is being built, GM has rented a factory in northern St. Petersburg at which it will initially produce more than 4,000 cars from kits beginning this September.

GM is already assembling some of its brands, including Hummers and Cadillacs, at a private Russian carmaker’s factory in Kaliningrad and is making Chevy Nivas and Vivas at Tolyatti with AvtoVAZ. Earlier this year, GM-AvtoVAZ halted production amid a pricing dispute between the partners.

Asked whether the joint venture was more of a liability than an asset for GM, Forster said: “I don’t see the liability there yet.” Forster said he had met with AvtoVAZ’s new general director, Igor Yesipovsky, for the first time two weeks ago. Late last year, the Kremlin sent in a team of managers from state arms trader Rosoboronexport to turn around the ailing carmaker.

Forster praised the new managers, calling them “good businessmen.” But he said that since the new team had little experience in the car industry “it takes a bit longer” to negotiate.

At the Nissan signing ceremony, Ghosn said the firm would start building its factory in spring 2007, with the first cars expected by early 2009.

At the forum, Economic Development and Trade Minister German Gref said he was in talks with five other carmakers on building new factories in Russia. By the end of the year, “I think that three out of five will be more than possible,” he said.

On-line version available at: http://www.sptimes.ru/index.php?action_id=2&story_id=17909

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