GAZ Group says it is constantly evaluating its supplier base as a depreciating rouble provides genuine opportunity to capitalise on what otherwise is a bleak Russian economic position.
The significant drop in the value of the rouble against the euro and the dollar is the one bright spot amidst a raft of depressing financial challenges, many of which originate from political decisions taken by Moscow and which have triggered Western capitals into applying severe sanctions, that may even be on the point of being extended.
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But domestic component production is poised to gain a significant boost from the West’s disapproval and the Russian automaker has a dedicated ‘war room’ in in its Nizhny Novgorod headquarters where it positions all major heads of department on fixed positions on the floor and thrashes out any supplier issues which arise.
“We very closely watch what is happening on the supplier market, their investment, their cash flow,” GAZ Group president, Vadim Sorokin told just-auto in his Nizhny office east of Moscow.
“Even foreign supplier [quality], I am not satisfied. We are not going to subside our own business if we can buy components better and cheaper. What is our worry? The war room is where we control our suppliers and local suppliers.
“We know how to drive down cost. We have very good suppliers, but are they all capable of scaling down cost?
“We have a total of 450 suppliers – most of them are Russian. This year is the 15th anniversary of the consolidation of automotive assets by Basic Element, so the Yaroslavl plant [producing Mercedes-Benz Sprinter engines and where components for YaMZ-530 powerplants are being localised] has a supply cluster around it and they are making use of it.
“After consolidation, GAZ Group, we also consolidated those suppliers and we formed a single purchasing department. First thing we did was start steel purchasing for the whole Group.”
The GAZ chief added the manufacturer did operate some single sourcing, for example with ZF for Gazelle steering systems, but had alternatives if for some reason this did not last.
Sorokin also hailed the Russian government’s provision of SME incentives.
