Kremlin watches as tensions rise and factory doors stay shut (Feature)

By Alissa de Carbonnel Feb 9, 2009, 13:24 GMT

Tolyatti, Russia - The factory in this town on the Volga river has for years churned out thousands of cars and sports utility vehicles each day for the avidly growing domestic market, but since New Year, the conveyor belts have stood idle.

It is as if the meaning has gone from this sprawling industrial landscape. 'This town exist only for one aim - to build cars ... If the plant goes the whole city goes ... There is no future without the factories' are some of the blunt truisms uttered by residents.

It is a sign of the deep depression that people here now voice. They have only one hope: that the government will soon step in.

Amid the slowdown, other local factories, retailers and businesses have already cut thousands of jobs and the local employment centre is packed with all manner of people dejectedly perusing the sparse vacancy posts.

Victor Kholodov, 48, a former construction worked was passed over in a group of men hoping to be picked for an opening as a welder. He said he is living off his wife's partial pay from the car factory.

'I have to try. I am healthy - I make love every morning,' he said optimistically. 'My wife, my neighbours they're sitting at home. They're paid by the plant, but not enough to cover the rent, electricity, groceries ... Our city is dying.'

This is not Detroit, it is the heart of Russia's automotive industry, home to AvtoVAZ, maker of the legendary Lada and Niva models.

Tolyatti, about 1,000 kilometres from Moscow, is a throwback to the classic Soviet company towns, where the fate of the city itself hinges on the health of the factory.

There are about 500 such so-called 'mono-cities' that threaten to collapse if production stalls, facing the Kremlin with perhaps the biggest challenge yet to its authority.

At first, the plant's 104,000 workers - one in seven of the local population - took their partial pay and extended holiday in their stride.

But a sense of shock set in this week when the re-opened production lines shuddered to a halt after just three days. The whole city is tense with the fear that the factory doors may never open again.

'People were drunk over the holidays, but when they come back and saw that February didn't bring anything good and their utility bills have gone up 25 per cent, there will be mounting anxiety,' said Dyachkov, who worked 24 years as a sociologist for Avtovaz.

The first signs of unrest surfaced in this company town on Friday as workers picketed the GM-Avtovaz plant with placards reading 'Workers will fight for their rights,' 'We want to work!' and 'We demand a dialogue with the unions.'

The protesters were among 400 employees laid off last week from the Avtovaz joint venture with General Motors.

The 30 picketers, jumping up and down in the bitter cold, were almost exclusively women - young mothers, who had worked at the plant an average of five years.

'I really counted on that salary, it was the one stable thing. I planned everything around it and I just had enough. Now I don't know how everything is going to end,' said 26-year-old Ana Semyanova, a single mother.

The other workers laid off are activists of the harassed independent automotive trade union Yedintsvo.

The unions say they are planning a protest on Valentine's Day. But the mayor's office said no request had been placed to hold the rally - often a sign in Russia that police will intervene to breakup unsanctioned demonstrations.

Still, local observers scoffed at the planned protests and expressed surprise that as many as 30 people had turned up for the picket.

State control has replaced the mafia clans who forged Tolyatti's crime-ridden history in the early 1990s, when turf wars over dealerships and contract killings were frequent.

Avtovaz, which once dominated the Soviet car industry, remains by far Russia's biggest automaker, and its survival is a matter of national prestige that has elicited Prime Minister Vladimir Putin's personal attention.

The pro-Kremlin party United Russia seems on the watch and an aide to the regional parliamentary representative Anatoly Ivanov was at the picket Friday.

'I don't know how the deputy will react, but my job is to brief him this evening. And the situation as I see it is very critical,' Vasily Oskin said.

Ivanov, the former head of Yedintsvo, won his Duma seat when the unions grew strong as AvtoVAZ came close to bankruptcy in the 1998 financial crisis. He has since joined United Russia.

Moscow-based analysts say as the crisis expands the Kremlin seems to have made a choice to focus support in manufacturing hubs to stem potential unrest.

In December, the government hefted tariffs on foreign vehicles, sparking wide protests in Russia's Far East, where many make their living off of importing vehicles from Japan.

'The government's policy is to blame foreign car importers and set us up against them,' said Andrei Lyapin, head of an independent automotive union. 'But the problem is with the factory management - their failure to modernize.'

Despite a 500-million-dollar state bail-out late last year, Avtovaz announced an indefinite halt to production last week. Parts suppliers are no longer accepting the promissory notes Avtovaz had used for payment, analysts said.

Local expert Dyachkov estimates some 300,000 people are dependent on the factory in some way. 'If it stopped? You can't even get into your head what that would mean.'