New York Times Article:
December 9, 2008
Falling Sales in Russia Force Ford to Idle Its Plant
By ANDREW E. KRAMER
MOSCOW — Hopes that Russia and other emerging markets could help support the automotive industry despite a slumping performance in the United States and Europe dimmed on Monday as the Ford Motor Company followed Volkswagen and Renault in suspending production at its Russian assembly line.
While Ford’s fortunes were less than glittering elsewhere, the automaker had deftly anticipated a surge in demand for cars in Russia over the last decade. As sales fell in the United States, Russia remained an engine of growth for both imports and the domestically assembled sedans.
In fact, the Focus was the best-selling brand in Russia, easily outpacing its Japanese and European competition and proving Ford could do what it had struggled to achieve in the United States — efficiently build a popular, compact family car.
Ford opened its largest dealership in Europe outside Moscow; demand exploded so quickly that the company at one point had a six-month backlog of orders for Focus cars built at an assembly plant near St. Petersburg.
The company said Monday that it would idle that plant from Dec. 24 until Jan. 21 for an extended New Year’s holiday, citing poor sales; Focus sales were down 30 percent in October from a year earlier, the Interfax news agency reported.
When it opened in 2002, the Ford plant became the first fully owned foreign automobile assembly line in Russia. Nissan, Toyota and parts makers followed, and the district around St. Petersburg now has so many plants it has become known as Russia’s Detroit.
But that Russian car boom seems over now. Volkswagen and Renault have also idled Russian plants for an extended winter holiday to offset swooning demand.
“The company decided to cut Ford production volumes in Russia because of the situation on the market and lower sales forecasts for the automobile industry in general,” Ford said in a statement. The company will pay two-thirds of the wages of assembly line workers idled by the shutdown.
The loss will be partly offset by Ford’s plans to use the suspension to retool the factory for the introduction of local production of its Mondeo, a sedan aimed at more affluent buyers, the statement said.
“It’s not as awful as in Europe or the United States, but it’s moving in that direction,” Elena Sakhnova, a transportation analyst at VTB bank in Moscow, said in a telephone interview. “We will see a significant drop in sales.”
Russia had been the fastest-growing automotive market in Europe. In 2007, car sales grew 36 percent on a surge of trickle-down oil money. The forecast for 2008 is 20 percent, according to Ms. Sakhnova; in 2009 she predicts a contraction of 15 percent.
Ford’s succeeded in Russia partly because it never sold many pickup trucks there; that sector is now hobbled in the United States market. Instead, Ford concentrated in Europe on compact family cars, particularly the Focus, which became the centerpiece of its strategy of selling to newly well-off, but hardly rich, clientele.
In the United States, Ford is asking for $9 billion in standby financing from Congress to retool its American assembly lines to more fuel-efficient and electric cars, ensure financing for dealers and for other revamping costs. Ford’s worldwide sales are forecast to decline 13.9 percent next year, according to a note published by Deutsche Bank.
New York Times Article:
November 21, 2008
From Russia With Loathing
By CATHY YOUNG
SHORTLY before the presidential election, at a discussion about Russian-American relations I attended in Cambridge, Mass., speakers from both countries voiced the hope that the election of Barack Obama would signal the renewal of a beautiful friendship. These hopes were chilled the day after Mr. Obama won. In an address to the Russian Parliament, President Dmitri Medvedev welcomed President-elect Obama with a threat to deploy Russian missiles on the Polish border if the United States put anti-missile systems in Eastern Europe. While some conciliatory signals followed, it seems clear that the Kremlin intends to keep the “new cold war” going.
Just three days before Mr. Medvedev’s speech, the state-subsidized youth movement Nashi staged a Halloween-themed rally in front of the American Embassy in Moscow. Nearly 20,000 young people held pumpkins marked with the names of “America’s victims,” among them the casualties in South Ossetia. In an amateur film shown at the rally, an actor portraying a drunken George W. Bush bragged that the United States had engineered both world wars and the rise of Hitler to expand its power.
Leonid Radzikhovsky, a Russian journalist, has said that “the existential void of our politics has been filled entirely by anti-Americanism,” and that to renounce this rhetoric “would be tantamount to destroying the foundations of the state ideology.” There is a notion, popular in Russia and among some Western analysts, that this anti-Americanism is a response to perceived threats to Russia’s security — above all, NATO expansion and missile defense in Eastern Europe. Yet top military experts like Gen. Vladimir Dvorkin, a former high-level official in the Russian Defense Ministry, are convinced that neither the missile shield nor NATO expansion pose any military threat to Russia.
Russia’s post-cold war humiliation is real. But as the human rights activist Elena Bonner, widow of the great scientist and dissident Andrei Sakharov, told me recently: “Nobody humiliated Russia. Russia humiliated itself.”
In the post-Soviet era, many Russians are angry because their country has neither the stature nor the living standards that they believe it deserves. Polls shows that most Russians actually favor a Western way of life. Nearly two-thirds would rather live in a well-off country than in one that is poorer but more powerful and feared by others. Unfortunately, most also believe their country will not reach Western levels of well-being any time soon, if ever. As frustrations mount, it is often easier to blame an external force than the country’s own failings. It doesn’t help that the 1990s, when pro-Western attitudes were at their peak, are remembered as a time of poverty and insecurity.
The result is an inferiority complex toward the West and, in particular, the United States, as the pre-eminent Western power and cold war rival. This widespread sentiment combines admiration, envy, grievance, resentment, and craving for respect and acceptance as an equal. Most Russians viewed the recent conflict in Georgia as a victory over the Americans — a matter less of strategic self-interest than of psychological self-assertion.
In his Nov. 5 speech, President Medvedev asserted that “we have no inherent anti-Americanism.” True enough, but in recent years, anti-Americanism has been carefully cultivated by official and semi-official propaganda, especially on government-controlled television, which manipulates popular insecurities and easily slides into outright paranoia.
In 2005, Sergey Lisovsky, then the deputy chairman of the Committee on Agricultural and Food Policy of the upper chamber of the Russian Parliament, said that the avian flu was a myth created by the Americans to destroy Russia’s poultry farming industry. This year, Russian television commemorated the anniversary of Sept. 11, 2001, with a prime-time program promoting the conspiracy theory that the attacks were engineered by American imperialists in order to unleash war. A staggering 43 percent of Russians agreed in a poll last year that “one of the goals of the foreign policy of the United States is the total destruction of Russia.”
Today, the government may be especially anxious to ratchet up anti-Americanism in response to the election of Mr. Obama, who is likely to make it more difficult for Russia to exploit animosity toward the United States in Europe and even the Third World.
Mr. Obama and his administration need to respond with both firmness and flexibility. He should indicate that we will help the democracies of Eastern Europe and the former Soviet Union to resist Russian bullying while also making it clear that we do not seek confrontation with Russia for confrontation’s sake.
One of Mr. Obama’s top Russia advisers, Michael McFaul, has suggested offering Russia a path toward membership in NATO. The current Russian leadership would, of course, reject any such offer, because it would entail democratic reforms that Russia is not willing to undertake. But the offer would give Russian reformers a tangible goal, and make it harder to convince ordinary Russians that America will always treat Russia as the enemy.
Mr. Obama should make the offer in person, during a trip to Russia. Ronald Reagan’s visit to the Soviet Union in 1988 went a long way toward dispelling anti-American stereotypes in the minds of many Russians during the twilight of the cold war. Mr. Obama, the object of a great deal of curiosity and fascination, is one American politician who could repeat that feat.
Cathy Young, a contributing editor for Reason magazine, is the author of “Growing Up in Moscow: Memories of a Soviet Girlhood.”