The holiday will continue - other agreements will follow, including with manufacturers of components … And what, in fact, are the old conditions bad? At least by the fact that we did not acquire what we could, and therefore, lost - the expert in the automotive industry, deputy. CEO of AFM Holding Alexander Kovrigin
Industrial assembly, components
So after all, it seems, they did not fail …
But first, recall that in the “zero” years foreign companies were granted the right to import components for production of at least 25, 000 cars a year without duties. No duties, but not “for that”: 4.5 years after the organization of the full production cycle, they obligated to produce at least 30% of components within the country (this is called localization).
Preferential terms are more than - as a gift. But we had few options: the domestic auto industry was weak, the demand for its products grew - and it was necessary to attract powerful manufacturers with investments in order to ultimately give more cars for sale. And our calculations, it seems, were justified, and foreign companies did not fail. At least now it’s not difficult to buy a car; jobs have been created at new plants in Vsevolozhsk, Kaluga, Elabuga and other places.
Industrial assembly, components
Abroad to us or we to her?
Alexander Sergeyevich, do you consider the results of the work of foreign companies “guests” successful in the previous period?
- I will answer in another way: I consider those conditions to be our mistake. 25 thousand units can be a tense task for bus manufacturers, for "passenger" car plants - no less than 150 thousand. It is even more reasonable to set up two lines of conveyors for each with the release of 300 thousand cars. (This is not just a subjunctive mood: experts suggested the figures to the government.) Then the firms themselves would have a need to do what we set the goal now - to expand the model range, open design centers, bake on the production of components, increase exports, and not only take care of domestic sales. In other words, now we are catching up with what we previously missed.
Plants with conveyors are a small part of the automotive industry. Assembly takes only 10-12% of the total volume of labor and material costs. The rest is component production. And now they are mostly imported. It turns out that about 90% of the work was carried out at foreign enterprises (and until the terms of the existing contracts expire, it will continue to be performed). This means that due to the increase in the production of cars in Russia, they grew stronger and developed abroad, their profit grew (with which taxes are paid to the treasury of the states at the location), their workers were ensured employment, and they paid payroll taxes there. If roughly, the same 9 times more than our assemblers at factories in the Russian Federation.
Thus, with the increase in the production of foreign cars, the currency more and more went abroad - I think about 65% of sales revenue. So foreign investment that pleased us has the disappointing property for the most part to return “home”, and production in Germany, Japan, France and so on developed on them.
And here is the important thing. The industry is self-sufficient if it manufactures products based on advanced technologies. The technologies are not so much contained in the body iron or seat cushions (which are produced in Russia), as in other components, but they are made mainly abroad.
We plow ten, write one hundred
But foreign companies reported: the planned level of localization was achieved …
- If we consider it carefully, we get not 30% of the localization (which, I repeat, is very small), provided for by the old conditions, but somewhere three times less. Because foreigners in their Russian costs included everything that could only be on the production site - from wrenches to toilet paper. Moreover, “relatively double-entry bookkeeping” was conducted, relatively speaking.
For example, the Stavrovsky plant of automotive equipment (this is in the Vladimir region) makes plastic gas tanks for Nissan. “Doing” is said loudly. Half of the tanks are imported from abroad (factory workers would be happy to make the tank “from scratch”, but Nissan rejected Russian plastic), but they only connect them to Stavrovo. The cost of joining the halves occupies about a tenth of the cost of the gas tank, however, the full cost went into offsetting the localization - the old rules of calculation allowed doing this. This mistake is ours - after all, we proposed such a system.
Industrial assembly, components
Nothing is too much
“Could you afford to offer a tougher one?” After all, we were weak during the period of economic decline
- Not weaknesses, but strengths need to be considered. Our trump card is an amazing prospect for foreign companies in Russia. As for the "rigidity", we recall that China (and, incidentally, India, too) began to develop the auto industry in the same way as with world manufacturers. But they considered localization strictly and did not fear that something was too strict: they correlated the real cost of components produced domestically with the cost of a finished car. With these rigors, they set a super goal - to achieve a component output of $ 100 billion a year! And not for 7.5 years, as we have, but for 4 years.
And they could! Thanks to which, over the past few years, the PRC auto industry has been galloping: it grew annually by almost a quarter - 24%. In order not to lead to overproduction, the government intends to “hinder” the industry - to limit the growth rate to 11 percent. But even in the conditions of “moderation”, by 2020 the PRC will be able to produce 40 million cars a year. Compare: last year in all countries produced a total of 72.5 million passenger cars. So be sure that soon half the world will work on Chinese components.
How much tomorrow's ingots?
“You immediately recall the reputation of Chinese products: now it’s not super, but with the explosive growth in quantity, one can hardly expect better …”
- And I will repeat the well-known: we ourselves import into Russia that which is riveted in the sheds of the Chinese deaf-man. And what they do in joint ventures, for example, for VW, Mercedes or Ford, is no worse than the European one. And most importantly, it’s even super important that the component industry of China received support from the state in the form of favorable conditions and incentives.
In Russia it is necessary to introduce the same. In pursuit of the new industrial assembly rules, the government is obliged to take care of strong incentives for the development of distant approaches to conveyors - enterprises that feed the component industry: manufacturers of rubber, plastic, metal, metal products, etc. Specifically, change the economic and customs legislation. Do it without delay! After all, what is happening is unthinkable: in our "metallurgical" country there is practically no metal rolling market! Because rolling metal in Russia is not profitable: with the existing ratio of prices and duties you will earn more on exporting pigs than on selling sheet and profiles for cars. It comes to the point of absurdity - do not buy the elementary! At the plant in Nizhny Novgorod, they began to make the suspension. Everything went well, but there was no suitable pipe. All Russian enterprises have been redrawn - not found. I had to buy a cordon … And this stupidity reigns since the 90s!
The government and lawmakers need not only to “increase” taxes on the export of discs, but also to provide the same amount of privileges for metal processing. With such an incentive in 4–5 years, everyone will reorient. Otherwise, we will flounder.
The same rake, only in profile
But look, with the introduction of new industrial assembly rules, applications were received from two hundred foreign component companies, almost 400 contracts. Doesn’t such an influx inspire optimism in you?
“Of course, better later than never.” But! I’m afraid that the same rake will fill up new cones: it’s not at car assembly plants anymore, so component assemblies will reign in component enterprises - now components and materials will be imported here from abroad. For the same reason: in Russia you cannot find suitable rubber, plastic, metal, etc., but they are not, because there are no incentives to modernize the primary base. The new "rules of the game" for industrial assembly should apply to this area. And in general, to remind everyone for what they started: to develop the industrial capabilities of our automotive industry and not to miss the benefits. This is the lesson that, in the framework of the conditions that have existed so far, we, I think, have missed them.