December 1997/January 1998

by Laurel Henderson

The city of Togliatti is a major center of Russia's automotive industry and the second largest city in the Samara oblast--one of three key regions designated by the U.S. and Russian governments for their joint "Regional Investment Initiative." Togliatti was never closed to foreigners during the Soviet era and today the municipal administration welcomes foreign firms to help diversify the city's economy. Situated 1,000 kilometers southeast of Moscow on the Volga River, Togliatti has one of Russia's highest standards of living.

Industry
The city owes its relative wealth to AvtoVAZ, Russia's largest manufacturer of passenger cars, which employs 120,000 people in Togliatti--roughly one-sixth of the population. AvtoVAZ produces the popular Lada automobile--also known as the Zhiguli--as well as the Lada Niva four-wheel drive vehicle. The company supports numerous local suppliers and is engaged in a variety of non-automotive ventures, as well.

AvtoVAZ is also Russia's largest tax debtor, owing $1.37 billion to the Russian Federal Government, and is troubled in other ways as well. Much of its manufacturing equipment is original to the plant, which was built in cooperation with the Italian carmaker Fiat in the 1960s. Significantly, the Italian company recently announced plans to invest in joint production of its "Palio" model with GAZ, a major AvtoVAZ competitor.

Togliatti is also home to Transformator, a manufacturer of power generation equipment, the TogilattiAzot chemical plant, and a number of other manufacturing enterprises. Togliatti is the home of Dovgan, a private manufacturer of food and beverages that are widely distributed in Russia. Danone Volga, a joint venture between France's Danone, the Togliatti Milk Plant, and AvtoVAZ, produces yogurt in Togliatti.

Transportation
Togliatti is well-located for both domestic and international transport. Samara International Airport, located 60 kilometers from the city, offers frequent flights to Moscow and other Russian and NIS cities, as well as to destinations in Western Europe and the Middle East. Lufthansa offers regular connections to Frankfurt and a local carrier, Samara Airlines, has scheduled service to Vienna, Tel Aviv, and Larnaka. The airport is beginning a $675 million modernization which will include a new landing strip, terminal, and service zone. Negotiations are underway with Lufthansa Cargo and DHL on financing the modernization project.

The entire Samara oblast, including Togliatti, is well-served by Russia's road and rail networks. The European Union's TACIS program has selected Togliatti's river port to receive technical assistance for developing Russia's inland waterways.

Foreign Activity
According to the city administration, Togliatti attracted $87 million in foreign investment in 1996. Some 33 foreign companies are represented in Togliatti, including General Motors, Lufthansa Airlines, DHL, Federal Express, Estee Lauder, and Hyundai. Price Waterhouse works with various local clients, including AvtoVAZ Bank and AvtoVAZ. The European Bank for Reconstruction and Development's Russia Small Business Fund works with local banks to fund Togliatti small businesses.

Since 1993, the United States Peace Corps has worked with the city administration to attract foreign investment to Togliatti. Each year, the city hosts the InterVolga International Business Conference, which promotes trade and investment in Togliatti and the Samara oblast. The next InterVolga Conference is to be held in May 1998. For more information on Togliatti and the Samara region, visit BISNIS Online at www.mac.doc.gov/bisnis/country/regions.html#VolgaUrals.

Laurel Henderson works for BISNIS in Washington, D.C.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)