Ford Sollers manufactures a range of Ford passenger cars and light commercial vehicles in the St Petersburg region and in the Republic of Tatarstan. Its president, Ted Cannis, addressed delegates at last week’s Russian Automotive Forum organised by Adam Smith Conferences and attended by Simon Warburton in Moscow.
Sollers OJSC is one of Russia’s leading automotive companies, engaged in the production, distribution and servicing of passenger cars and commercial vehicles under its own brands and in cooperation with international OEMs.
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Sollers owns five automotive plants, an engine production facility, Sollers-Finance Company and a number of dealerships in Russia with more than 20,000 employees.
The joint venture is based around Ford’s existing production facilities in Vsevolozhsk (Leningrad Region), with two Sollers manufacturing plants in Naberezhniye Celny, Elabuga (Tatarstan) and also a Ford Sollers head office in Khimki (Moscow Region).
The first production milestone for the new business was manufacture of a new vehicle in Elabuga, the Ford Transit. Transit sales in Russia during August 2012 exceeded 1,000 units – the best-ever sales month for Transit in the country. For the first eight months of the year, Transit was the best-selling nameplate in the commercial vehicle segment among foreign brands.
j:a Why did Ford decide on the partnership with Sollers?
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By GlobalDataTC: Henry Ford had a philosophy of build where you are going to sell – that is [why] we are in Russia. St Petersburg grew and ran out of space- there is just no more.
We needed to spend more time on the segments that are growing – that is SUVs.
j-a: Europe is undergoing tremendous challenges at the moment – what is your view from Russia?
TC: Europe is going through a very difficult time and we have a good turnaround plan modelled on what the US did and I am quite confident we will come out stronger.
j-a: How is the Tatarstan operation shaping up?
TC: In Tatarstan we took advantage of the existing Sollers workforce and trained them in the Ford processes. It is not like they needed training in manufacturing – they needed training in how Ford does things.
j-a: Russia looks a fairly healthy and growing environment at the moment – how do you see it?
TC: All manufacturers are looking ahead to try to estimate capacity but everyone wants a growing market. The customer will be delighted because competition suppresses prices.
The growth – retail sales – is not as fast as it was – it is not a concern.
j-a: Are you satisfied with the Russian government approach to the automotive sector?
TC: We hope the government takes care of the industry – the automotive industry has always been a public and private partnership.
If regulations start going with safety and emissions, then of course project planning can go to waste. A predictable environment is always a big help.
j-a: How do you see the Russian auto market evolving?
TC: My vision is about five years. If Russia wants to be serious about production, it is about getting affordable Tier 2, Tier 3 materials cost effective.
j-a: What about the importance of sourcing local content and components?
TC: The issue is not whether localisation needs to be done. The government makes the pace very fast – mostly it is a pace issue.
It is not a problem of supply, but as the cost of Tier 2 gets more localised, it will get better. We would like to be there faster.
j-a: And as far as Tier 1 overseas suppliers go, what are the possibilities for them in Russia?
TC: I don’t see government policy will change much. Most of the work is with the suppliers and supply base. They have to want to come to Russia and it takes work, people, effort and investment, mainly effort.
Nobody does anything on their own. The industry and scale of some of the segments has created opportunities where previously, there were not opportunities.
Everybody can get capacity in – the more challenging part is always fulfilling that capacity. We have a plant that makes sure we can offer exactly the right products we think our customers want in Russia.
j-a: What does the future hold for the Russian market?
TC: We all look at the same data and [however] you look at it, Russia should have a bright future. It has rich resources and an educated population.
Most of us project [in the] next few years, Russia will surpass Germany, that is why we are all here. Whether you can export is dependent a lot more on cost. Things like the customs union should happen, but cost is the most important thing.
We won’t deviate from the One Ford strategy.
By mid-2012, the Ford Kuga, Ford S-MAX, Ford Galaxy and the Ford Explorer had joined the Ford Transit on the Ford Sollers assembly lines in the ‘Alabuga’ Special Economic Zone. Together with the Ford Focus and Ford Mondeo made in Vsevolozhsk, Ford Sollers is currently producing seven different Ford vehicles in Russia.
The share of locally-built Ford models now exceeds 95% of all Ford vehicles sold in Russia. By providing Russian customers with Tatarstan-made Ford Kuga and Ford Explorer vehicles Ford Sollers says it is looking to meet the demand in the SUV segment – the fastest-growing market segment in Russia.
From the end of July 2012, Ford Sollers started to hire additional employees at its Elabuga Plant to help with the expansion in production.
During the next four years, Ford Sollers expects to hire more than 4,000 additional staff.
