Volkswagen has laid the foundation stone for its first Russian plant.

In a ceremony on Saturday 28 October, Volkswagen chairman Bernd Pischetsrieder and Russian minister of economic development and trade German Gref laid the symbolic foundation in Kaluga.

The contracts for setting up the plant were signed in Moscow last 29 May.

The plant should begin assembling semi knocked down (SKD) Volkswagen and Skoda models as early as next year. The full plant with an annual capacity of 115,000 vehicles is to commence production in 2009. A body shop, paint shop, assembly lines and offices will be built on the 400 hectare site located on the outskirts of the city of Kaluga.

"The automotive market in Russia is one of the world's most interesting. So far, group brands have only been represented in Russia through sales companies. However, if we wish to enjoy sustained benefits from the growth forecast for this market, we have to produce in Russia as well," Pischetsrieder said.

Pischetsrieder stressed that production in Kaluga would bring as many as 3,500 direct new jobs for Volkswagen in Russia. Further positive labour market effects were expected as component suppliers and other enterprises active at various stages in the automotive value chain located in the region. "Furthermore, numerous components will be delivered from other group plants in the medium term. That will stabilise jobs at other plants in the group," Pischetsrieder added.

Skoda chairman Detlef Wittig said that dealerships and service companies would be expanded to keep pace with the increased production capacity.

Construction work at the site some 100 miles (160km) south west of Moscow began as soon as the contracts were signed at the end of May. In the final construction phase, the new plant in Kaluga will have its own railway line to ensure the reliable delivery of parts and components. One section of land has also been earmarked for suppliers wishing to settle on site.

Skoda assembly by end-2007

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