Johnson Controls has picked a Russian partner to set up a joint venture in Tolyatti in a bid to satisfy demand for quality car parts in Russia, a senior company executive told the Moscow Times.
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The joint venture, to be based in Tolyatti, will initially produce between 60,000 and 70,000 seating parts, Rene Behiels, group vice president and general manager for Russia at Johnson Controls, told the paper during an automotive conference in Moscow. It will be Johnson’s second manufacturing facility in Russia.
Initial investment in the joint venture will be between $3m and $5m and the US firm is to own a majority stake, Behiels told the Moscow Times.
Behiels reportedly declined to identify the company’s Russian partner, saying the announcement would be made within the next five weeks. “We have a gentleman’s agreement,” Behiels said. “We’ve found a good, well-organised, reliable partner.”
The Moscow Times noted that Milwaukee, Wisconsin-based Johnson Controls already operates its own manufacturing facility near St. Petersburg, where it makes seating systems for the Focus model that Ford’s Russian plant assembles nearby.
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By GlobalDataAsked if his company planned to cooperate with Tolyatti-based AvtoVAZ, Behiels reportedly said: “We have currently no relations.”
Johnson Controls plans to grow its presence in Russia, cooperating with domestic and Asian suppliers, and eventually to export some of the parts to Western Europe, Behiels told the conference, according to the Moscow Times. The firm is now reviewing two “major supply contracts,” he said, without elaborating.
Securing a reliable local partner remains a major headache for Western manufacturers of car parts who are following global car giants to Russia, Behiels said.
“They can’t meet our expectations in terms of delivery time,” he said. “Quality of product is far behind Western standards,” he added.
The report noted that car component manufacturers have been trickling into Russia for the past decade to cater to the growing number of car manufacturers. To entice global car companies to set up shop in the country, the government last April lifted duties on key car components, and analysts now expect component manufacturers to grow their presence even further.
