OREANDA-NEWS. October 13, 2011. Nizhny Novgorod Region Government, GAZ Group and its controlling shareholder Russian Machines entered into an agreement on a comprehensive development of the automotive cluster in Nizhny Novgorod Region. At the 16thInternational Industrial and Economic Forum “United Russia” the document was signed by Nizhny Novgorod Region Governor Valery Shantsev, Chairman of Russian Machines Board of Directors Siegfried Wolf and GAZ Group President and CEO Bo Andersson. Russian Machines and GAZ Group are planning to invest over RUR 7 bln in the development of the regional automotive cluster projects from 2011 to 2015, reported the press-centre of GAZ Group.

The agreement provides for interaction between Nizhny Novgorod Region Government, Russian Machines and GAZ Group regarding a number of future investment projects in vehicle manufacture and automotive components production.

Nizhny Novgorod Region Government intends to assess the cluster projects’ needs for investments, to develop mechanisms of budget support, and to assist in raising funds for the development of Nizhny Novgorod Region infrastructure.

In the framework of the agreement on a comprehensive development of the automotive cluster in Nizhny Novgorod Region, the companies have decided to jointly work on the legislative, regulatory and legal framework required for the state support of the automotive cluster companies; to identify the methodological, information, consultancy and educational mechanisms for the cluster project support; to develop new and to modify the existing educational programs to subsequently provide the automotive industry with a new type of employees.

GAZ Group is currently implementing several strategic investment projects in Nizhny Novgorod Region in cooperation with international partners. The company is setting up contract assembly of Skoda Octavia, Skoda Yeti, Volkswagen Jetta and Chevrolet Aveo cars, and Mercedes-Benz Sprinter commercial vehicles at Gorky Automobile Plant. GAZ Group signed the respective agreements and memoranda of understanding with VOLKSWAGEN Group Rus, GM and Daimler at the end of 2010 – beginning of 2011. Cooperation with the leading international vehicle manufacturers will make it possible to increase utilization of GAZ’s manufacturing capacities and to upgrade them, to provide additional training for the employees at the international level and to improve competitiveness of the company’s products.

GAZ Group is also implementing automotive component projects to develop production of foreign-brand components at GAZ facilities both for the company’s own products and for other vehicle manufacturers. These include a JV with international manufacturer BOSAL to produce exhaust systems and a JV with Swedish manufacturer of fasteners Bulten.

The company’s plans for the Nizhny Novgorod automotive cluster development include new projects to upgrade the manufacturing facilities and to renew the model range of Pavlovo Bus plant, the leading Russian manufacturer of small and medium buses. At all bus plants, starting from Pavlovo Bus Plant, GAZ Group is planning to introduce a module production principle that conforms to the latest international trends of bus manufacture. A full bus range 7 to 18 m long, including city, suburban, intercity buses and coaches with unified style, will be created based on the module principle at the company’s plants. Implementation of this project will make it possible to considerably reduce the product cost and to offer the customers a unified bus range of all classes and purposes with advanced consumer and technical characteristics at a competitive price. The upgrade of Pavlovo Bus Plant facilities also includes renovation of the small parts paint shop.

Among the key investment projects of Russian Machines and its subsidiary Military Industrial Company implemented in Nizhny Novgorod Region is upgrade of the manufacturing facilities of Arzamas Machine-Building Plant for new projects. These include mass production of special-purpose vehicles Tigr-M, and armored personnel carriers BTR-82 and BTR-82A at Arzamas Machine-Building Plant. The brand new armored vehicles were built on the platform of Tigr and BTR-80 that had proved themselves in the army. The tactical and technical characteristics of cross-country and armored vehicles produced by Arzamas Machine-Building Plant conform to all modern requirements of the military and law-enforcement authorities. They are highly reliable, easy in operation, have enhanced cross-country and maneuvering capabilities. The first trial samples of Tigr-M and BTR-82A went sent straight from Arzamas Machine-Building Plant to the army in the North Caucasus where they proved themselves in the process of operation. Taking into account the demand for this product and its prospects in Russia and abroad, a decision was taken to launch it into mass production at Arzamas Machine-Building Plant.

One of the most promising projects in the automotive component business of Russian Machines in Nizhny Novgorod Region is expansion of elastic polyurethane products at the research and production company Sotex. Sotex is currently the biggest automotive component manufacturer in Russia, its share in the total volume of polyurethane products production in Russia is 42%. The customers of Sotex include large automotive assembly plants in Russia. Modern Sotex production lines with capacity of over 600 thousand automotive kits per year, in-house laboratory, equipment for sub-components production– all this will help to expand production of high quality parts in the near future and to satisfy growing needs of the Russian automotive industry.

Chairman of Russian Machines Board of Directors Siegfried Wolf: “In the rapidly changing macroeconomic conditions it is especially important that the manufacturers and investors should single out the most promising projects that can provide the market with modern high-tech products in guaranteed demand, and develop these projects as the priority ones. An investment climate of maximum attraction has been created in Nizhny Novgorod Region, and due to this investment climate the automotive cluster being formed in the region will reach a new level of its development. The agreement signed today is to a great extent aimed to help solve this task”.

GAZ Group President and CEO Bo Andersson: “Signing of this agreement opens up a new stage in the automotive cluster development in Nizhny Novgorod Region. With assistance from Nizhny Novgorod Region Government GAZ Group has started a number of promising projects in cooperation with international vehicle manufacturers. These projects will not only favor the development of Gorky Automobile Plant, but they also should give a new impetus to establishment of new automotive component facilities in the region and to attraction of new investments in this area. Joint efforts of GAZ Group, Russian Machines and the regional administration will help to create the most favorable conditions for this process. I am sure that Nizhny Novgorod Region will become one of the most dynamically developing clusters on the automotive map of Europe”.