Reporter Knut Moberg has visited Togliatti several times. The biggest change since his previous visit to the factory in 1992 was the people. The time is over when 'everything in Russia is perfect.' The people are open, and willing to talk about world news or local problems.
TOGLIATTI, Russia - Most of the people who work here call Togliatti 'The Detroit of Russia.' AvtoVAZ turns out 700,000 cars a year, building 90 percent of its parts in its own huge complex. The company has 110,000 workers. It is the biggest industrial company in Russia, and it pays more taxes than almost any other.
But some people have a different name for the town. 'It is like Chicago in the 1930s,' one woman worker at the plant tells me.
Togliatti is home to 15 criminal gangs, attracted by the money. Cars in Russia are more important than rubles, vodka, or any other product.
With cars people can have anything they want. A car is high-denomination currency in a barter economy. Cars are by far the best way to pay for a house or food or vodka in wholesale quantities.
Wealth attracts gangsters
Togliatti is one the very few towns in Russia where most people have some money. AvtoVAZ paid its workers every month except a few in 1993 and 1994. That is unusual in Russia.
AvtoVAZ didn't always pay its taxes. That created the worst of the company's current problems. The tax and financial matters are harder to solve than the criminal problem.
It is said that the mafia and gangsters in Russia want to control four things: vodka, gambling, prostitution and transport. Lada cars, old as they are, are like gold.
'Half of the cars we make here in Togliatti are sold to wholesalers or dealers here in Togliatti,' says AvtoVAZ President Aleksey Nikolaev. 'We also pay some suppliers with cars. We would very much like to change over distribution and sell far more of our cars to normal dealers around Russia - not to wholesalers here in Togliatti.
'This change can be difficult.'
Bodyguards stand outside his office. Security is very strong. People in Togliatti believe he is high on the list of people some gangsters would like to 'have a word with.'
When Lada executives started last autumn to make changes, the gangsters started to fight.
Two top managers were among the 27 people murdered in Togliatti during bloody October. Officials say the investigations are incomplete, but one of the executions may have been linked to a proposed change of a metal supplier, and another to suggested changes to distribution.
After Deputy Commercial Director Vladimir Shiskhov was assassinated, AvtoVAZ managers and workers appealed to Russia's President Boris Yeltsin for help.
City under guard
Now, 2,300 special militia are in Togliatti, paid by AvtoVAZ. The company has hired more private security guards, and it has asked the minister of internal affairs for a permanent militia base in Togliatti, with soldiers rotating through so they can't be corrupted by the gangs.
The militia began the cleanup at AvtoVAZ by sweeping through the plant for people that had no legitimate business there. More than 100 people were thrown out. Everyone linked to delivering cars to dealers or the proving ground has been changed.
The parking lot for new cars is protected like a prison camp. High towers in each corner look like those of a Siberian prison camp. Gates are protected by soldiers with machine guns. They do not smile.
Outside the gates, car carriers wait. They belong to the different wholesalers in Togliatti, or syndicates representing suppliers.
'Here we are at the center,' explains my guide.
He means that here is where the problems with gangsters took roots, where there were once 'holes in the fence.'
I am told the following background:
'A worker at Lada makes around $270 a month. An engineer around $400, but the money is not enough for daily life. You can survive - but prices increase every day. Before, all education and all medicine was free, but not now. And daily you can see people that are so very rich.
'Before in Russia there was nothing to buy. We had money, but no products. Today we have all the products to choose from - but no money.
'The gangsters pay a little here and a little there, and most to the people in power.'
Dirty plant, modern technical center
I have visited the Lada plant before, and it has not changed. The wooden floor is covered by a coat of hardened oil. The plant is dark, and I am surprised that these workers can produce more than 700,000 cars a year here.
Like Henry Ford's original Rouge plant in Detroit, the Lada plant is almost self-sufficient. More than 90 percent of the parts are made there.
But the quality problems are obvious. Most holes in the steel are not round but oblong, so that parts can be hammered and shoved into place, their tolerances adjusted. Stamping tools and dies are used long after they have worn out. Tools are expensive, and AvtoVAZ has little money.
In contrast, one of the most modern technical centers in the world sits next to the modern head office.
Experts from outside Russia who have visited the technical center are impressed.
'They use computer programs one generation more modern than Volvo, Audi and BMW,' says AutoLiv project manager Patricio Farias.
'My biggest priority is to introduce new models,' says President Nikolaev. 'We have at least five new models ready for production. We are ready to open up a new plant for a third production line. We have the prototypes, but not the money to start production.'
AvtoVAZ would like to build fewer old, rear-drive models and more of the new, front-drive Lada 2110. It would also like to get its new Lada 1119 out of development and into production.
'This is a car designed and developed here in Togliatti,' says Nikolaev. 'It would be the perfect car for Russian conditions, but we do not have the money to start producing.'
AvtoVAZ's money problems are rooted in its past.
'For some years we did not pay enough taxes,' says Nikolaev. To avoid bankruptcy, AvtoVAZ agreed to pay back $160 million a year in back taxes over the next 10 years.
'If we only had to pay normal tax and not also taxes from earlier years, we could have reduced the amount by 20 percent. I should have liked to use (the money) for investments.'
Nikolaev has many ideas for improvements. He wants to cut costs, get suppliers to do more, and increase efficiency in the factory. He wants an international partner.
'Yes, we have problems with criminal gangs in Togliatti,' he says. He does not try to cover up any facts about the problems.
'We must get the situation under control,' he says, 'and we will be able to do it. We must protect our deliveries. And I believe we also must change the whole distribution system to be better able to sell direct to dealers all over Russia. This is one of our main goals.'
Making a living
I return to my hotel. It was build in 1967 for Italian guest workers who guided the construction of the plant. The hotel was very bad at that time, and is not any better today. Not one wall is level.
Outside, the militia protects it 24 hours a day. Parking lot guards sit in houses of steel. During the night I hear shooting.
At the hotel I meet representatives from large companies making car seats in the USA and Germany and seatbelt suppliers from Sweden. I talk with people from banks in Germany. In the guest book I see that last week's visitors came from Italy, the USA, Germany. Mostly Germany. They all work for companies linked to the car industry.
I remember my meeting with an elderly woman at the plant. She will soon retire after nearly 30 years there. She was one of the young people who arrived in 1966, building the plant with a shovel and pick.
All her working life was spent at the plant. She met her husband there. AvtoVAZ gave her and her family daily food for 30 years.
As she looks back, she is a little sad. 'Many things are better,' she says. 'But not everything.'