Mark Bursa looks back on how Dacia survived the post-Ceaucescu years and uncovers a story of resilience and determination that resonates strongly as the company goes global.
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In a corner of the Dacia plant, a drab, green machine chugs away. Bits of gearbox trundle in one end via conveyor, and trundle out of the other, milled into a slightly different shape. The machine is streaked with grime, oil and even a few spots of rust.
You’d have thought this ageing lathe would be the last thing the management of Dacia would want to show to visiting foreign media. But the green machine has a special resonance – it’s the last of the old communist-era machines in Pitesti’s powertrain plant that’s still operational. Here is a final chance to see Dacia as it was, before we’re shown Dacia as it is.
Behind the green machine, other worn-out former Soviet machines, complete with ‘made in USSR’ nameplates, stand silent. They’ve been cordoned off with red-and-white stripy tape, as if part of a crime scene. Their work is done. The scrap man cometh.
In their place, the Pitesti gearbox shop is now populated with newer, cleaner machines. Machines with computer screens, rather than analogue gauges and dials. Some are new, Japanese-sourced machines. Others are hand-me-downs from Renault plants in France, refurbished and shipped to Romania as Renault upgrades plants such as Flins and Cleon.
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By GlobalDataNine years after signing the deal that took Romania’s leading carmaker into the Renault group, a lot has changed. The launch of Logan nearly four years ago has put Dacia on the global map. Last month, the millionth Logan rolled down the line, though nobody is sure which line – Logans are currently being made in Russia, India, Iran, Morocco, Brazil and Colombia, as well as Romania.
But it’s more than likely that Job 1,000,000 was at Pitesti. Nowadays, the main assembly hall at Pitesti is a hive of activity. Two main assembly lines build Logan sedan, van, MCV and Sandero, while a third, smaller line puts together the new pick-up derivative. The combined production rate is 60 vehicles an hour – this year Pitsesti will churn out more than 300,000 cars, and in 2009 that will rise to 400,000.
This is a far cry from the state of Pitesti when Renault bought the plant in 1999. Indeed, it’s something of a miracle that Dacia was able to survive until then. Ten years had passed since the Iron Curtain fell. In Romania, Nicolae Ceaucescu’s brutal 25-year regime had ended with the summary execution of the tyrant and his wretched wife.
For Dacia, that’s when the problems began. The 1990s were tough for the old communist car producers. How Dacia must have envied Skoda, recipient of large quantities of VW Deutschmarks since 1991. Yet Dacia survived – during the 1990s, it even managed to develop its own new compact car, the Nova, to augment the ageing Renault 12s it had been producing since 1969.
That’s seen as ancient history nowadays. Dacia is becoming a global brand – it even received a smart new corporate image earlier this year. Dacia’s past is being ushered off to the scrapheap along with those old communist lathes and drills. But understanding the sheer effort and resilience it took for Dacia to survive gives considerable insight into why Renault values its Romanian subsidiary so highly. Not for nothing has Renault located its second-largest technical centre in Romania.
Back in 2001, Renault rather bravely took a group of journalists round the Pitesti plant – to show us what they’d bought, and with one eye on the future – so we’d have a point of reference in the future. And while the exterior of the buildings are still recognisable today, the changes inside are profound. Renault has spent EUR1bn on modernising Dacia since 2000, including EUR248m in 2007 alone.
One familiar face from the 2001 visit is Christian Esteve, then a rising star at Renault, who was sent in to fix Dacia’s woes. Now he’s Dacia chairman, planning the global drive. But in 2001, he had other more pressing things to sort out. “Dacia had become separated from the world,” Esteve told me at the time.
Years of communist neglect were reflected in how Dacia was run. Eighteen signatures were required to order photocopier paper. The sales department had a good call management system, but could hardly operate as the department only had one telephone line. An audit of the company found only 47 computers in the whole factory – Esteve ordered 1,200 more immediately.
More fundamentally, workers were paid on the basis of producing a certain number of cars per day – so there was no incentive to stop the line in order to address quality problems. When the plant ran out of door locks, faulty ones were fished out of the reject bin and fitted to the cars – just so the plant met its quota of cars for the day, and the workers got their full wage packet.
There were even greater problems with the way Dacia sold its cars in Romania. Now, there’s a sophisticated distribution network of large, modern, dual-franchise dealerships, with Renault and Dacia showrooms given equal prominence. Which is just as well, given the array of smart, rival-brand car showrooms along the main “motor mile” between downtown Bucharest and its two airports. Even Ferrari is there. The transition to a market economy has been rapid.
But before Renault came in, all cars were sold directly from the factory. The process was the old communist one – a long waiting list, with cars allocated to customers when their name came up. No choice – not even the colour. A beige one? Oh thank you, comrade! A 160-strong dealer network of sorts existed – but some of these turned out to be no more than a PO Box number.
Through all this turmoil, one man had held Dacia together. And back in 2001 we got the chance to meet him. Constantin Stroe’s career was an extraordinary one. He’d worked for Dacia since the first Renault 8 rolled off the line in 1968; he played the political game through the communist years, and after the revolution, he became company chairman. And not only did he keep Dacia afloat through the ‘90s; he rejected the advances of Daewoo and finally brokered the deal with Renault that guaranteed the company’s future.
Dacia was in a sorry state when Stroe took the helm. It was starved of investment, and sales had been decimated by floods of cheap imported used cars whose quality was vastly superior to the old Renault 12s that Dacia built. “I had two targets – to survive, and to find a strategic investor,” he said. Renault was the first port of call – initial discussions with then Renault chairman Raymond Levy were held in 1990. But Renault had just missed out on Skoda, and Levy decided against any move. Stroe was on his own.
Under the circumstances, an approach by Daewoo’s mercurial former chairman Kim Woo-choong would have seemed welcome. Kim offered massive investment – but as with Poland’s FSO, the price was the loss of the Dacia brand. Stroe said no. “I didn’t believe him,” he said. So Daewoo bought Dacia’s rival Oltcit (Automobile Craiova), instead – and struggled to compete with Dacia. That plant has now passed to Ford.
What Stroe did next was extraordinary. He persuaded the Romanian government to give him enough money to develop a new car. Excitedly grabbing a picture of the Dacia Nova, he exclaimed: “This is the first – and the last – car to be created 100% in Romania by Romanians!” Stroe admitted that the Nova (or its later Renault-improved incarnations, SupeRNova and Solenza) was not perfect. But it did its job. Dacia made 177,000 of the cars between 1995 and 2004 – production only ceased when Logan started. “We risked our careers on that car,” said Stroe. “If we hadn’t launched it in 1995, we would not have been able to do so later.”
The fact that Dacia had developed the Nova put the company back on the map, leading to approaches from other auto makers including Hyundai, Peugeot and Fiat – all of which Stroe rejected. And then Renault decided the time was right to return. “No-one else offered what Renault offered,” said Stroe. “Renault offered to rebuild Dacia as a brand.”
Stroe has outlived those old Russian factory machines – he was supposed to retire in 2003, but officially he’s still a Dacia vice-president. He still turns out for corporate functions every now and again, and he is – quite rightly – regarded as something of a national hero. However, he was nowhere to be seen on last week’s visit. Let’s imagine he was spending a long weekend at his Black Sea holiday home. A well-earned trip to the Dacha, by Dacia of course.
Mark ‘Coolbear’ Bursa
