The international division of labor (IDL) builds up a basis for association of national economies into one global economy, which represents specialization of separate countries in manufacturing of particular kinds of products which these countries exchange among themselves.
In new conditions, when ideological preventions are rejected and transition to the open economy became a vital component of Russia’s transition to the market economy, our country starts to remove numerous impediments to its active involving in integration processes.
The automotive industry is one of the major branches of the world economy typical of most capital-intensive areas of the world. Passenger car industry can be described as global since absolute majority of its subjects is large TNCs that own manufacturing facilities, research centers, and distribution channels worldwide. Besides, these companies determine global scientific and technological progress, creating and introducing a huge number of innovations into everyday life.
Therefore it would not be exaggeration to assert that attraction of investments of both auto concerns and suppliers of accessories for manufacture of cars is one of the best ways of stimulation of general economic growth.
Taking into consideration the facts mentioned above it is worth noting that the world passenger car industry has faced a number of serious challenges:
- the major commodity markets: the USA, the Western Europe, Japan, have reached a high level of saturation;
- transport infrastructure in these regions works on a congestion limit;
- the price of fuel and transport tax are constantly growing;
- market stagnation is forcing companies-automakers to substantially revise its costs;
- the USA, Western Europe and Japan promptly lose the competitiveness that is connected, first of all, with high personnel costs, a high role of trade unions and the existing labor legislation that protects workers’ interests in every possible way.
All these problems are pushing automakers to actively search for countries and regions that could provide companies with cheap skilled labor force and adequate sales level. This situation would be very useful to countries that could be the recipients of their investments in the automotive industry. It is obvious that automotive TNCs:
- provide inflow of the capital to the economy;
- transfer a significant number of know-hows in technology, manufacturing, logistics, and marketing processes;
- promote development of adjacent sectors of economy;
- due to its transnational character, provide active involvement of countries into the international trade, etc.
It should be noticed that Russia seems to be quite attractive for multinational automobile corporations. It possesses the capacious market with a high potential of further development and exclusively high dynamics of growth. Thus personnel costs tend to be rather low; at the same time, Russian workers have adequate professional qualifications. Besides, Russia has its own automotive industry which is in great need of investments and state-of-the-art technologies.
The automotive industry is the leading branch of domestic mechanical engineering defining both economic and social development of the country. Predicting the growth of the automobile market and change of consumers’ preferences in the Russian Federation since 2005 for attraction of investments of foreign motor-car manufacturers, the economists faced the mode of “industrial assemblage” providing stage-by-stage localization of manufacture of automobiles and their components on the territory of Russia. As a result, the part of direct import of automobiles has been replaced by cars pro-duced in the Russian Federation.
The outcomes of the state policy on attraction of foreign investments into the motor industry that were regarded as positive, especially for end users, have appeared deficient for its high-grade development. That is why the Governmental commission on sustainable development of the Russian economy made the decision on working out the program of RF automotive industry development till 2020 on November 10th, 2009. The main objective of this strategy is maximization of the added cost on the whole network of car production in Russia provided customers are guaranteed a wide range and high quality of automotive industry products.
The basic actions aimed at implementation of this strategy are as follows:
Stage 1: 2010. Overcoming of the world economic crisis. Goals and objectives: overcoming of crisis in the automotive industry, choice of strategic partners, formation of standard base for localization of hi-tech manufactures of cars and their components, development of the national base of research and development and intellectual property.
Stage 2: 2011-2014. Post-crisis restoration of the industry. Formation of base for innovative development. Goals and objectives: post-crisis restoration of the industry during market growth; formation of the base for innovative development; implementation of major innovative and investment projects.
Stage 3: 2015-2020. Development of competitive automotive industry during market stabilization. Goals and objectives: development of the competitive industry during market stabilization, formation of internal sources of innovative development.
In 2011, Russian automotive industry creates 1 % of GNP, providing about 400 thousand workplaces in the manufacturing companies (cars and accessories). Besides, the industry creates about 1,000,000 workplaces in the dependent and dealer companies.
Current and perspective macroeconomic parameters of Russian automotive industry development are presented in Table 1. Table 1. Current and perspective macroeconomic parameters of Russian automotive industry development
Parameters | 2010 | 2011 (estimation) | 2020 (forecast) | GNP, billion rbl. | 44, 394 | 46, 303 | 63, 366 | Population, million people | 141,9 | 142,0 | 134,17 | Number of able-bodied population, million people | 87,9 | 87,5 | 79,4 | Automotive industry share in GDP, % | 0,98% | 1% | 2,38% | Share occupied in automotive industry from total number of able-bodied population, % | 0,5% | 0,6% | 0,6% | The world economic crisis has revealed that the Russian automotive industry appeared to be one of the most vulnerable branches of the national economy.
The technological level of Russian cars created for the last few years basically corresponds to the international requirements, with the delay up to 4-7 years, in particular areas, such as:
- emissions of harmful substances;
- protection of pedestrians in road accidents;
- electronic systems of stability;
- level of reliability and comfort, mileage life, fuel profitability;
- use of advanced engineering ideas and technologies in batch production.
The following are considered to be system problems of the Russian automotive industry:
- inadequate product range and low investment into manufacture. While a domestic producer launches 3-5 fixed complete sets for each model, a foreign competitor offers 5-10 complete sets with a possibility of additional options and individual car designs;
- low output and limited capacities combined with developmental retardation. Average volume of output for a model/a platform in Russia is considerably lower when compared with the best world companies. (The average volume of output for a platform in the USA, Eastern Europe, Spain and South Korea makes about 119 thousand units per year; in China and Brazil about 61 thousand units per year; in Russia only 27 thousand units per year);
- absence of modern practical auto componential industry. Low competitiveness on the market of accessories due to small number of international car manufacturers;
- absence of a logical step-by-step tariff and customs policy. According to the joint order of the Ministry of Industrial Trade and Ministry of Economic Development and Trade, privileges for import of auto spare parts will be received only by those motor-car manufacturers who can provide the annual output of 300 thousand cars at opening of new auto manufacture, or of 350 thousand cars at modernization of existing production line;
- absence of special stimulation policy for research and development and low volume of its financing. Expenses for research and development in Russian companies do not exceed 1 % of annual sales proceeds while in the leading foreign companies these expenses make 4-5 % of annual turnover and above. It results in longer development cycle and, as result, slower updating rate of product lines;
- imperfection of standard legal regulation. Standard legal documents in the field of technical regulation, tax and budgetary legislation need greater development;
- low level of investment appeal in Russia. The state policy on attraction of foreign investments into the motor industry demands further elaboration;
- low personnel potential and labor productivity. The problem of personnel deficiency that could be solved by hiring an adequate number of workers of state-of-the-art qualifications. Besides, this will result in developing efficient educational and personnel retraining programs, which will make it possible to use labor market potential in the regions to the best advantage.
In conclusion it should be said that the Russian automotive industry is on the threshold of dramatic changes. These changes should be connected with formation of innovative environment, development of import substitution and labor productivity growth. An ultimate goal of all these initiatives is the creation of steady national automotive industry. The major element of these changes is the dynamic movement towards new generation of innovative vehicles and automobile components.
References
1. Sharovatov, D.I. The competitive advantages of foreign auto manufacturers and their use in forming strategies passenger automotive industry in Russia. – [Electronic resource]. – 2007. – Mode of access is free: http://www.referun.com/n/konkurentnye-preimuschestva-zarubezhnyh-avtoproizvoditeley-i-ih-ispolzovanie-pri-formirovanii-strategii-razvitiya-legkovo [In Russian]
2. Sharovatov, D.I. The competitive advantages of foreign auto manufacturers. – [Electronic resource]. – 2007. – Mode of access is free: http://planetadisser.com/see/dis_1007118.html [In Russian]
3. “About introduction of changes to the procedure that defines the term “industrial assembly” of motor vehicles and establishes the application of this concept for import into the territory of Russian Federation components for the production of motor vehicles of headings 8701-8705 HS, their components and assemblies.” The order № 533/1018/137н Ministry of economic development and trade, Ministry of industrial trade and the Ministry of finance of the Russian Federation from December, 17th, 2009. – [Electronic resource]. – 2007. – Mode of access is free: http://www.rg.ru/2010/01/29/sborka-dok.html [In Russian]
4. The strategy of development of automotive industry of the Russian Federation for the period till 2020. The order of Ministry of industrial trade of Russia. – [Electronic resource]. – 2009. – Mode of access is free: http://toyota-club.net/files/reglament/10-05-10_strateg.htm [In Russian]
5. Fragment of the document “The strategy of development of the automotive industry in the Russian Federation until 2020”. – [Electronic resource]. – Mode of access is free: http://www.businessrealty.ru/pravo/DocumShow.asp?DocumID=168495&DocumType=12 [In Russian]
6. The analysis of a condition and prospects of development of the Russian automotive industry. – Federal portal. – [Electronic resource]. – Mode of access is free: http://protown.ru/information/hide/6144.html [In Russian]
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