The Ural Automotive Plant is rebuilding a Russian national brand

Yulia Goncharova

Russian automakers like to complain about their lack of funds and the tough competition from world manufacturers. But it is clear that money is not the main deciding factor today. The main problem is the lack of efficient company management and business development strategy. If these issues are not addressed now, Russia will lose its domestic auto industry.

A new orientation

Not all managers were ready to tackle certain problems, since in the past all economic issues were the responsibility of Gossnab (State Procurement Committee) and Gosplan (State Planning Committee), while plants and manufacturers thought in terms of “units.” Auto plants had to confront this problem when they began to function in a market environment. The “unit” psychology had its effect. Companies made a breakthrough in terms of output but no one had any idea what to do next. This was the exactly situation at the Ural Automotive Plant in Miassk, which produces all-wheel drive vehicles. After manufacturing vehicles primarily for the Armed Forces during the Soviet era, the enterprise found itself without state orders and with managers. The plant underwent external administration and production restructuring without a hitch, but there was no breakthrough. Ural’s operations had to change across the board and the most troubling problems had to be identified. The main problem was managerial staff. The company needed a team not only capable of coming up with a development program but also of acting within strict limits.
Six months ago, RusPromAvto Holding, of which Ural is a part, replaced its management team. Last October, Viktor Korman became General Director of OAO Avtozavod Ural and Director of the Heavy Truck Division.
The new team made a lot of effort to change the situation and make the enterprise break even. First of all, they removed the existing imbalance in the management system, where the sales department was in conflict with manufacturing.
The next task was to improve the quality and features of their products and to expand their distribution network. As a result, the company finished the fourth quarter of the last year in the black. In December, sales exceeded production volume. The stock of finished products fell by 500 vehicles. Today, the plant’s financial status is much more stable than ever before. It has no tax or government arrears or back wages to pay. Cost reduction is now under way. There is every reason to believe that Ural will finish this year on stable footing.
Of course, not everything went smoothly. The plant’s management thought seriously about how Ural should find customers. Naturally, company’s products had to be of high quality, and special attention was paid to this issue. For example, it plans to pass ISO 2000 certification in just six months. The quality control of parts and components has tightened, and only companies with an ISO-9000 quality certificate are qualified to become Ural suppliers.
On the other hand, a competitive car must have a reasonable price. The plant had to reduce production costs by cutting expenses and enhancing performance. The enterprise’s management has started laying off inefficient and undisciplined workers.
“There will be no massive job cuts,” states Viktor Karman. “The labor force will be redistributed, since the plant is practically the town.” For example, three production lines were closed down this year to streamline technical processing. New areas of activity will be developed in their place. For example, new production units will produce special equipment based on the Ural truck. However, all-wheel drive vehicles remain a priority for the plant. And here, great importance is traditionally attached to cooperation with the Ministry of Defense. Last year, the Ural Plant yielded on a number of positions to its rivals, and this year it will have to make a serious bid for an order from the Russian military.

Brand promotion

This year the plant is celebrating a major anniversary. Sixty years ago, it produced the first Ural truck, and its trucks were used throughout World War II and during the post-war economic recovery. As Russia changed, so did Ural trucks: new products were created and existing ones upgraded. The plant plans to demonstrate production prototypes of a new family of Ural vehicles by its 60th anniversary. The main areas of modernization on which the plant will work have already been defined. Without a doubt, it’s not enough to simply manufacture new vehicles. The company has to know who will buy how many Urals and has to use modern techniques to sell its equipment. Recently, the plant’s management completely reorganized sales of Ural trucks, spare parts, and other products, as well as its whole distribution network. A single company, AvtoUral, was set up instead of the previous three. Streamlining the distribution network and establishing a single sales structure was crucial. Both foreign and domestic manufacturers of four-wheel drive equipment are alive and kicking, presenting serious competition to Ural. However, the company still has some advantages: it has specialized in four-wheel drive vehicles for many years. It has proven technology, experience, and research and development potential. The company believes that Urals are the best four-wheel drive vehicle, as demonstrated by the fact that Urals always win both Russian championships and European truck trials. Furthermore, some foreign teams prefer the trucks from the Ural Mountains. “Ural trucks can be compared to Kalashnikov guns– it is a national brand,” says Alexei Vedernikov, Business Development Director at Ural.
This brand is well known not only in the Russian military and the oil industry. The plant exports its trucks to thirty countries across the world. The countries of the Middle East are its traditional partners. One of them is Iraq where the plant was supposed to supply 1,500 vehicles. However, the war there postponed this contract indefinitely. Nevertheless, the plant’s management is confident that when the political situation in Iraq stabilizes, contract will be renewed. Ural has been more successful in Latin America. A few Ural trucks have passed the test in Chile, and a large Chilean order is presently under consideration. Incidentally, the company plans to set up a center in Chile, through which Ural trucks will be supplied to other Latin American countries. Finally, India and China are two more promising partners for the plant.
According to Viktor Korman, “this year will be a hard one. The plant needs not only to regain lost ground but also to accomplish new tasks. The plant will be able to achieve more efficient performance by clearing this very high bar.” Still, no matter how high the bar, the plant has to clear it, for everyone’s sake: the Ural truck is the Russian auto industry’s only hope. 

More in Russian>> www.expert.ru