Fearless former GM purchasing czar battles corruption, revives Russia's GAZ

Don't mess with Bo

Fearless former GM purchasing czar battles corruption, revives Russia's GAZ

Nick Gibbs is UK correspondent for Automotive News Europe.Nick Gibbs is UK correspondent for Automotive News Europe.
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Bo Andersson is arguably the toughest car executive on the planet. When he accepted the job of head of Russian automotive group GAZ in 2009, the former Soviet giant was on its knees. Debt had reached 1 billion euros and the core product was aging.

The company's vast factory complex in Nizhny Novgorod, 400km east of Moscow and 15 times the size of Monaco, was cash-hungry, crumbling and overstaffed. Corruption was rife.

Andersson, 57, turned the company around, leading GAZ to a record net profit of 8.5 billion rubles (210 million euros).

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Bo Andersson has turned GAZ into a profit machine.

In addition, GAZ won deals to build vehicles for Volkswagen Group, General Motors and Mercedes-Benz starting this autumn.

To revive GAZ, Andersson, General Motors' former head of procurement, drew heavily on his officer training in the Swedish military. As I discovered on a recent media trip to GAZ's plant, he's strict about timetables. He's also undeniably brave.

"I've said to the shareholders and I've said to Mr. Putin, corruption is still a big issue," he tells us at one point.

Telling the Russian president and self-styled hardman of politics Vladimir Putin that the country's business practices need to be cleaned up is pretty gutsy.

"When I took this job it was on the basis that I would have zero tolerance for corruption. And there was a lot," he says.

Fixing the problem has upset a lot of people so Andersson has a bodyguard when he's in Nizhny Novgorod.

To slash costs, Andersson had to fire half the work force, some 50,000 employees. And when GAZ won contracts to make VW and GM cars, he had to tell the unions that the automaker would reassign 5,000 of its existing workers rather than add staff.

Another one of Andersson's tough decisions was to stop production of what would have been the most modern car wearing a Russian badge.

The Volga Siber was axed after just 9,000 sales. Andersson thought the car, which was based on an early 2000s Chrysler Sebring, was too costly.

The move ended GAZ-branded car manufacturing, something the company had been doing since 1932. That didn't go down well with Russians who have memories of Volga cars such as the Chaika, which for years was the Communist politburo's limousine of choice.

"I've been in the car business too long and there is too much competition," he says. "I got a lot of gray hair closing out the Siber."

He was left with a range of aging trucks, buses and vans.

The job of biggest earner fell to the Gazelle light van, which was out of date – it had been changed very little since its 1994 launch – and considered unreliable by customers. Andersson started to demand more from component suppliers, dumping the worst, even those that were in-house.

We attended one of his daily shop floor morning meetings with managers and saw first-hand his tough approach. "The problem was your inability to manage your supply base," he says to one hapless manager.

The strategy is working. Andersson says warranty costs now account for 4 percent of revenue, close to the 3 percent he reckons they cost the likes of VW.

When he arrived at GAZ, he had to deal with a demoralized work force. Petty theft and drinking were a problem. Andersson dealt with this by withholding the newly launched profit-sharing bonuses. "The first year of the bonus program we had to exclude 4,000," he says. "Last year it was 1,000 people and this year if you're caught, you're fired."

He has Russian politicians breathing down his neck. He says Putin asked him to raise worker wages from 15,000 rubles (365 euros) a month to 20,000 rubles. He has, but only after he had seen increased productivity.

Andersson's toughness has paid off: costs have been slashed, the debts are being paid off and sales are healthy.

The town of Nizhny Novgorod has a lot to thank Andersson for. Without him, GAZ's famous leaping gazelle badge would have surely become extinct in Russia.

You can reach Nick Gibbs at ngibbs@crain.com.

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